The factual situation shown in the record on this appeal presents these determinative questions:
1. When the secretary-treasurer of a corporation borrows money from a third party for the express purpose of paying, and pays his indebtedness to the corporation for purchase of shares of its capital stock- — • *511evidenced by bis note to which as collateral security certificate previously issued to him for such stock is attached, and, for the money borrowed, executes and delivers to such third party his note with and secured by such stock certificate and. with the knowledge and at the request of such third party, endorsed by the secretary-treasurer in the name of the corporation by him as such officer, without express charter authority, is the corporation liable to such third party by reason of such endorsement ?
2. When the secretary-treasurer of a corporation thereafter borrows money from the same third party with which to buy and does buy from the corporation shares of its capital stock and stock certificate is issued to him, and, for the money borrowed, he executes and delivers to the third party his note, with and secured by such stock certificate, and endorsed by him in the name of the corporation by him as such officer, without express charter authority, is the corporation liable to such third party by reason of such endorsement?
3. If not, do the facts that checks of the third party, covering the amount of the first loan to the officer, secretary-treasurer, were actually received by the corporation and entered upon “Notes Receivable” ledger account as credit on the note of officer, and that the check for the second loan was actually received by the corporation and entered upon its “Accounts Receivable” ledger as a charge to capital stock account and credited to the officer, so inure to the benefit of the corporation as to render it liable under the doctrine of estoppel ?
4. Does the fact that the corporation, in paying dividends on the stock, represented by the two certificates issued to the officer, individually, and deposited by him with the third party as collateral to his notes, made checks payable to the third party, and credited same to the personal account of the officer, constitute a ratification of the endorsement on the notes of the officer entered by him in the name of the corporation without express charter authority, and held by the third party?
5. Upon the facts of this case, is the principle that where one of two persons must suffer by the wrongful act of another the loss must fall upon the one who first reposed the confidence and made it possible for the loss to occur, available to claimant?
Careful consideration of them calls for a negative answer to each of these questions.
At the outset it is pertinent to note that all the evidence leads to one conclusion, that is, that the transactions here involved were for the sole benefit of A. F. Patterson individually.
In this light, the first and second questions are controlled by the decision of this Court entered cotemporaneously herewith in the case of Brinson v. Supply Co., ante, 499, involving a claim filed in the same receivership by the executrix of Mrs. Harriett L. Hyman, deceased. *512There the Court, speaking through Barnhill, J., holds as ultra vires the act of the Executive Committee of the Board of Directors of The Mill Supply Company in undertaking to guarantee the payment of a note of $5,000 given by A. E. Patterson to Mrs. Hyman and secured by certificate issued to him for fifty shares of the capital stock of said company.
The ruling is prefaced upon the principle that for a contract executed by an officer of a corporation to be binding upon the corporation it must appear that it was either expressly authorized or incidental to the business of the corporation and was properly executed.
The Court, then referring to the powers granted in the charter of The Mill Supply Company, the same powers involved in the present action, holds that no express authority is given to the corporation to issue accommodation paper or to guarantee the obligations of a third party. The Court further holds that under such circumstances the contract of guaranty is not incidental to or in furtherance of the powers expressly granted. Hence, the power to endorse or to guarantee the payment of a negotiable instrument for the benefit of a third party is not within the implied powers conferred upon the corporation. Therefore, the corporation had no authority to use its credit for the benefit of a shareholder or an officer. Reference is here made to the full discussion of the subject there. Further treatment here would be useless repetition.
3. As is stated by Barnhill, J., in the case of Brinson v. Supply Co., supra, the principle that where a corporation has received the benefits under a contract which is incidental, it will be held liable under the doctrine of estoppel for the reason that it should not be permitted to accept and retain the benefits and at the same time disavow the contract on the plea of ultra vires has no application to the situation in hand. “It is when the corporation has received the full benefit of the contract that it will not be relieved of liability because the contract is ultra vires ” citing authorities.
Here, A. F. Patterson, in the first instance, being indebted to the corporation for shares of its stock, and in the second desiring to buy more of its stock, purposes personal to him, borrowed money from Mrs. Duffy with which to discharge the first and to accomplish the second. No such benefit as is contemplated in the above principle accrued to the corporation.
4. Generally, a ratification, to bind the corporation, must be made with full knowledge of the material facts of the transaction. The principle is applicable when benefits of the unauthorized act or contract of the officer or agent accrue to the corporation and it fails to repudiate the transaction and to offer restitution. Likewise, a ratification will be implied when, in addition to receiving the benefits of the unauthorized transaction the corporation, with full knowledge of the facts, makes pay*513ments on account of such benefits, as where it pays interest under an unauthorized contract or makes payments on a note executed or endorsed on its behalf without authority. However, the general rule does not apply where no benefits result from the transaction, or where it receives the benefits under a separate and distinct transaction. 19 C. J. S., 488 and 500, Corporations, sections 1015 and 1020. See, also, Lumber Co. v. Elias, 199 N. C., 103, 154 S. E., 54; Morris v. Basnight, 179 N. C., 298, 102 S. E., 389.
In the present case it is sufficient to say that not only is there an absence of benefits to the corporation from the unauthorized acts of A. F. Patterson in endorsing the notes, but the payment of interest was for A. E. Patterson. He was entitled to dividends on the stock which he had deposited with Mrs. Duffy. The method of payment adopted, in so far as the corporation is concerned, merely constituted payment of dividends to Patterson.
Furthermore, it is a well settled principle of law that a corporation is not chargeable with the knowledge of its officers or agents in respect to a transaction in which such officer or agent is acting in his own behalf and does not act in any official or representative capacity for the corporation. Brite v. Penny, 157 N. C., 110, 72 S. E., 964; Stansell v. Payne, 189 N. C., 647, 127 S. E., 693.
5. In regard to the fifth question, the principle of law is well settled that an officer of a corporation cannot bind the corporation by his acts in respect to matters in which he is personally interested, Brite v. Penny, supra; Grady v. Bank, 184 N. C., 158, 113 S. E., 667; Stansell v. Payne, supra, and third persons are bound to know that an officer has no authority to use the credit of the corporation for his personal benefit. Stansell v. Payne, supra. Hence, the principle referred to in this question is not open to claimant.
Mrs. Duffy had notice that Patterson was acting, in these transactions, in the interest of himself and not for The Mill Supply Company. It appears that both she and Patterson acted in good faith, and believed that an endorsement made upon the note in the name of the company by him would be valid. But, as stated in Stansell v. Payne, supra, “this fact elicits sympathy . . . but cannot fix defendant with liability for the unauthorized act of” Patterson.
The judgment below is
Eeversed.