Case ID: app-dc_37/html/0118-01.html
Source: Caselaw Access Project
Author: {"author": "Mr. Chief Justice Shepard", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

BLUTHENTHAL & BICKART v. CARSON.
    Principal and Agent; Negotiable Instruments; Direction of Verdict; Evidence.
    1. Where a person, held out by a corporation to be its general manager and one of its vice presidents, indorsed, a promissory note, and procured its indorsement by others, for the accommodation of the corporation, and agreed to indemnify them against loss, and the plaintiff alone had a pecuniary interest in the transaction, it was held in an action by the corporation on the note, against all of the parties, except the maker and the general manager, and on a review of the evidence, that the trial court properly refused to direct a verdict for the plaintiff, and left to the jury the question whether the general manager, in procuring the indorsements by the defendants, and agreeing to indemnify them against loss, acted within the scope of his authority as agent of the plaintiff.
    2. Evidence that the plaintiff in an action on a promissory note, against the indorsers, never attempted to discount the note, is not admissible to show that the indorsements were not procured for his accommodation.
    No. 2271.
    Submitted March 16, 1911.
    Decided April 3, 1911.
    Hearing on an appeal by the plaintiff from a decision of the Supreme Court of the District of Columbia, on verdict, in an action on a promissory note.
    
      Affirmed.
    
    the Court in the opinion stated the facts as follows:
    Blutbentbal & Bickart, a corporation, whose principal office is in Baltimore, Maryland, brought this action against W. A. Carson, John J. Allen, William Stockman, and Bred Schafbirt, as indorsers of a note for $600, executed by R. R. Corn-well to plaintiff, October 2, 1908, and payable four months after date. the special plea of the defendants is that the indorsement of the note was without consideration, and at the special request, and for the accommodation, of plaintiff.
    Plaintiff made a prima facie case, by reading the note in evidence, with the names of defendants indorsed thereon. The note bore the indorsement of Thos. P. McNulty, also. Neither he nor Cornwell, the maker, were joined in the action.
    Defendants’ evidence tended to show that McNulty was the general manager of plaintiff in the city of Washington, where the defendants all lived; and that he was advertised in the papers, in bills, in the street cars, and on the letter or billheads of the plaintiff, as one of its vice presidents, as well as general manager in Washington. That McNulty represented to Burch, who had a little money to invest in business, that he had a good place in Baltimore that was good for $300 per week. Burch went twice with McNulty to look over the place, which was a barroom, conducted by one Kemp. McNulty said the place could be bought for $4,000, and asked what Burch could raise. Burch and Carson agreed to raise $1,000. McNulty said he would raise $1,000, if they could get indorsers. A note for $1,000 was executed and indorsers were sought. One party refused to indorse after talking with McNulty. Allen, who was requested to indorse, said to McNulty that he was not in circumstances to do it. McNulty said to him: “That has nothing to do with it. It is a matter of form, so that the deal would go through.” Allen said he would indorse it, if McNulty would also. This was done and Allen indorsed. Stockman and Schafhirt did likewise, upon the same representations, and the first indorsement of McNulty.
    Burch took possession, but found that the business did not pay.' Burch said: “When I failed to pay the $1,000 note, I turned the place over to Bluthenthal & Bickart,—that is, I did not exactly turn it over to them. Cornwell came down and said he would take the place off my hands. * * * I said: ‘If you can take it off my hands, take it.’ I just turned it over, everything entirely to him, and handed the key right over to him.” He said he never saw Kemp in the first transaction. Everything was attended to by McNulty, who said if they became dissatisfied, lie would take the place off tbeir bands. When called upon, be said be could do nothing; the parties would bave to do the best they could. Upon cross-examination be said the purchase price was $4,000. They were going to pay it to McNulty. Did not know whether Kemp ever got it or not. So far as be and Carson knew, the $1,000 was to go to Kemp as part of the purchase price. McNulty said be could raise the $1,000 if be could get indorsers. the indorsers would not bave gone on the note if McNulty bad not done so. Cornwell testified that be executed the $6,000 note in plaintiff’s office in Baltimore. McNulty was present and said be could get the indorsers. Never asked defendants to indorse. McNulty kept the note. Blutbenthal ordered witness to take possession and get the key from Burch, which be did. Paid Blutbenthal $500 about September 28th, 1908.
    Carson testified that be indorsed the note in suit through solicitation of McNulty, the representative of plaintiff. He beard the conversation between Cornwell and Blutbenthal. Cornwell paid $500. Blutbenthal said be wanted $100 of this for rent due, and $400 would be taken off the $1,000 note. the $1,000 note was signed by Burch May 20, 1908, and payable to order of McNulty at four months. McNulty mailed the $600 note to them at Washington. Parties refused to indorse, and witness took the note over, and in Cornwell’s place, said to McNulty: “We are not going to indorse that note under any such conditions, unless you promise us the same thing that you did before,—that we will not lose anything, and bave your guaranty the same as we did before.” He said: “Certainly. It is only a matter of form. I will indorse it myself. Take it back and tell the boys to put tbeir names on it, and it will be all right.” He indorsed the note in Cornwell’s place. He said: “You boys shall never lose one cent. I will take the place off your bands any time you want. I can sell it for the same amount of money to anybody that comes along. It is an accommodation to us, if you will just do this.” He said again: “You will not lose a cent. Do this as an accommodation for us, and there will be nothing more about it. To show you, I will indorse it myself.” He then took a pen and indorsed it. The others indorsed it after witness brought it over. McNulty came-to Washington and talked it over again with witness, Allen and Stockman. It was taken to Schafhirt, who, upon the same understanding, signed as a favor to McNulty’s friends. Cross-examined, he said that he was a member of Burch & Carson for two weeks. Simply advanced $500 to Burch. Had nothing to do with the license. Did not know if the $1,000 note was passed to Kemp as a part of the purchase. Indorsed it at McNulty’srequest, who said: “You boys do it to accommodate us.” He said also: “I will make a note to fix up the balance of the price of the place, and you boys just indorse it for an accommodation to me. I will fix this note up for myself and for the accommodation of the balance of them.” Further said: “Do it to accommodate us; you will never hear anything more about it at all. You shall not lose one cent. I cannot allow you to lose-anything.” He was representing plaintiff. Bluthenthal & Bickart each spoke of McNulty as vice president and general manager. Allen’s testimony in respect of the circumstances attending the indorsement of the second note was similar to Carson’s.
    On hehalf of the plaintiff, Bickart, secretary and treasurer of plaintiff, testified that Burch & Carson bought out Kemp for $4,000, paying $1,000 in cash, and executing the-$1,000 note. Burch sold out to Cornwell. Plaintiff had bought the note from Kemp, giving him $1,000 in merchandise therefor. After sale to Cornwell, Burch & Carson wanted the note hack. Plaintiff credited $400 on their books, of cash paid by Cornwell, and he executed the $600 note. After receiving this, plaintiff returned the $1,000 note. Plaintiff had no interest in the Kemp place when sold. He advanced $2,000 to Burch, to pay the balance of the purchase of Kemp, and took a chattel mortgage to secure the same. Cornwell took subject to that trust. The- $1,000 note was not a part of that trust. McNulty was neither vice president nor general manager for Washington. Was only an agent there, and plaintiff had others there also. It may have advertised McNulty as vice president. He-said lie thought it would give him a certain amount of dignity if the office was created for him. It was agreed that he should be created second vice president, but McNulty, ascertaining that the dignity made no difference to him, declined it, and as a matter of fact the office was not created and he was not elected to it. He was not held out as vice president when this transaction ■occurred. He had general authority to sell goods and collect money; nothing more. McNulty testified that Burch, who was then a barkeeper for Allen, wanted to buy Kemp’s place. Kemp wanted to sell, asking $4,000. Allen asked witness’s opinion, and he told Allen that it had been a place for thirty year3, and there was no question of success, if a man gave it strict attention; that the man who owned the property had made a fortune there. Allen inspected the place with Burch and Carson, •and adyised the purchase. Kemp wanted at least $2,000 in cash. “We agreed that I was to lend them $1,000 and negotiate a loan for $1,000; Carson was to raise $500 and Burch $500. I was to raise the $1,000, provided they could get proper indorsements on the note, so that I would not have to stand the loss.” Witness said there was no danger if the parties attended to business. The $600 note is the outcome of the purchase by Cornwell, Burch having because dissatisfied. Had no conversation with any of the parties about indorsing the note, save Allen. Did not know the other indorsers. Allen said if he had his way, he would wipe it all out; that these men were signers of his license, and he would bear the whole; that he had one trial with Burch, and now would have a failure with the ■others.
    Plaintiff moved the court to direct a verdict in its favor. Certain instructions supplementary thereto, relating to the authority of McNulty to bind plaintiff, were also asked. These were all refused, but as the appellant rests its case on the error assigned on the refusal to direct the verdict, they need not be set out. At the request of defendants, the court gave the following instructions:
    “If you believe upon all the evidence that Thomas F. Mc-Nulty, as the representative of plaintiffs, and while acting within the scope of his authority as such representative, requested the defendants to indorse. the note for $1,000 which is mentioned in the evidence for the plaintiffs, and stated to them that .-said indorsement was a mere matter of form, and that he would see that they would not lose anything by so indorsing, and that they did thereupon indorse that note, relying upon said statement and in compliance with said request, and that thereafter, while said note was held by the plaintiffs, and after the amount ■due thereon had been reduced to $600, McNulty, in the performance of his duties, and within the scope of his authority as .-collector for the plaintiff, requested the defendants to indorse said $600 note, and stated to them that such indorsement would be upon the same conditions as those upon which they had indorsed the said $1,000 note, and that in compliance with said request, and relying upon said latter statement, the defendants did indorse said $600 note, your verdict should be for the defendants.”
    This was excepted to on the ground that “it substantially instructed the jury that if McNulty, as representative of the .plaintiff, and while acting as such, requested the defendants to indorse the note, but promised personally that he would see that they lost nothing by it; and such statement of the law is liable to be misleading to the jury, and is an erroneous statement of the law.” The court further charged to the effect that the question was whether the plaintiff was bound by the conditions made with McNulty; whether McNulty had authority to Apeak for plaintiff in that behalf. And that if they believed McNulty made the representations, this alone would not bind the plaintiff. If McNulty was speaking simply for himself, plaintiff would not be bound. The question is, was he acting for the plaintiff, and within the scope of his authority. If he was not acting for the plaintiff in making the representations, and the same were not within the line of his authority, plaintiff was entitled to a verdict.
    
      Mr. H. Winship Wheatley for the appellant.
    
      
      Mr. Lorenzo A. Bailey and Mr. Henry I. Quinn for the appellees.
   Mr. Chief Justice Shepard

delivered the opinion of the. Court:

The defense is founded on the provision of sec. 1333 of the Code, relating to accommodation makers and indorsers, and it is not denied that defendants would be entitled to a judgment if the evidence showed that McNulty was not only representing plaintiff in the transaction, with authority so to do, but also that he procured the indorsements for the accommodation of plaintiff, and that his agreement to hold them harmless was for the plaintiff, and on its account, and not merely his own personal agreement.

The contention is that the evidence tended to show that the indorsement was for the accommodation of the plaintiff, but was secured by McNulty on his personal, individual agreement of indemnity. We do not concur in this contention. Plaintiff is a corporation, and can only act through its officers and agents. It advertised and held McNulty out as one of its vice presidents, in order to give him “a certain amount of dignity,” and also as general manager of the city of Washington, where the negotiations with the parties were had.

Defendants’ evidence tended to show that plaintiff alone could have had any pecuniary interest in either the first or the second transaction. That plaintiff held McNulty out to the defendants as its vice president and general manager, and that he practically transacted the whole of the business. That some of his representations as to the accommodation were applicable to plaintiff as well as to himself. Then there was Cornwell’s evidence as to the circumstances of his purchase and entry into possession. While plaintiff was not compelled to join McNulty and Cornwell in the suit, there is no reason why they should not have been, if one was a bona fide indorser, and the other a real out-and-out purchaser.

In our opinion this evidence was properly submitted to the jury with instructions carefully defining the grounds upon which, alone, the defendants would be entitled to a verdict.

Another assignment of error is on an exception taken to the refusal of the court to permit plaintiff to prove that it had never attempted to discount either note. The contention is that this circumstance was of a nature to warrant an inference that the indorsements had not been obtained for accommodation, and therefore a material one for the consideration of the jury. We are unable to perceive either its materiality or relevancy.

The trial was without error, and the judgment will be affirmed with costs. Affirmed.