Case ID: mass_11/html/0264-01.html
Source: Caselaw Access Project
Author: {"author": "Parker, C. J.,", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

The President, Directors, and Company, of the Northampton Bank versus Silas Pepoon.
    The directors of an incorporated banking company have power to authorize one of their number to assign over any securities belonging to the company.
    A blank endorsement, in pursuance of such authority, by such attorney, is sufficient to transfer a negotiable security.
    This was an action of assumpsit upon a promissory note, declared on as made by the said Pepoon on the 28th of January, 1809, for the sum of 3190 dollars 91 cents, payable in six months from the date to the Berkshire Bank, and by them endorsed to the plaintiffs.
    A trial was had on the general issue, before Jackson, J., at the last May term in this county, and a verdict taken by consent for the plaintiffs, subject to the opinion of the Court upon the report of the judge who sat in the trial; it being agreed that, if the Court should be of opinion that the plaintiffs were not entitled to recover, the verdict was to be set aside, and a verdict entered for the defendant; and judgment be rendered accordingly.
    * The defendant made the note described in the dec- [ * 289 ] laration, and made a mortgage of certain real estate to the Berkshire Bank, to secure the payment thereof. In July or August, 1809, the plaintiffs, having demands against the Berkshire Bank to the amount of 17,000 dollars and upwards, left them for collection in the hands of J. C. Williams, Esq., of Pittsfield. The said Williams then had in his hands for collection divgrs other demands against the Berkshire Bank, amounting to about 20,000 dollars, and had received from said bank sundry notes and effects, for the purpose of securing those demands.
    On the 18th of August, 1809, the Berkshire Bank, by the president and three other of the directors thereof, executed a power of attorney to Simon Lamed, the said president, authorizing him, in behalf of the said corporation, to assign over to J. C. Williams any negotiable promissory notes which then were or might thereafter be given to the said president, directors, and company, or which might have been assigned to them; and also to assign to him, the said J. C. W., and his heirs and assigns, any mortgage deeds, bonds and notes, given and made payable to the said president, &c., giving to the said attorney full power and authority, in behalf of the said corporation, and in their names, to do and accomplish what soever should be necessary to be done in the premises; thereby ratifying and confirming whatever he should lawfully do in behalf of the corporation, by virtue of the said letter of attorney. Sealed with the seal of the corporation, and signed by the president and three, purporting to be a majority, of the directors. There were then seven directors, including the president. The said Lamed, as attorney of the said Berkshire Bank, afterwards endorsed the said note in blank with his name as attorney, and delivered the same, and also the said mortgage, to the said Williams, as agent of the plaintiffs, towards the payment or security of their said demands. The said note and mortgage were delivered to the said W. at different times, and the times could not be precisely ascertained.
    * One of them was delivered in the evening of the 4th [ * 290 ] of October, 1809, and the other some time afterwards. In November following, the said Lamed, at the request of said W., caused a seal to be affixed to his said endorsement; and, on the 27th of that month, the said Berkshire Bank, by the directors then in the office, executed a deed of assignment to the plaintiffs of the premises mortgaged as aforesaid, and of the said note.
    At a meeting of the stockholders of the said Berkshire Bank, on the 5th of October, 1808, seven directors were chosen, including the four who executed the said letter of attorney. Ebenezer Center was present at that meeting, and acted as clerk, at the request of the persons present. He had been chosen clerk at the first organiza tian of said bank; and it did not appear that there had been any formal choice of a clerk after that time. The votes of said corporation were sometimes entered in a book kept by them for that purpose, and sometimes entered on separate papers, and kept on file. There was a meeting of said stockholders on the 4th of October, 1809, when seven directors were chosen; but no evidence was offered, that a notification for said meeting had been published in any newspaper.
    The act incorporating said Berkshire Bank,  was to be con sidered as filed in the case; and it was agreed that either of the parties might make any extracts from the records of the bank, pertinent to the case, which were to be filed, and considered as part of the judge’s report.
    
      Gold and Ashmun, for the defendant.
    The principal objection to the plaintiffs’ recovery in this action is the want of a legal assignment of the note to them. It is not endorsed with the name of the promisee. It is, then, incumbent on the plaintiffs to show that what they consider as ah endorsement is equivalent to a regular transfer by the promisee. The report shows no such fact. The endorsement by Lamed did not pursue the power given him, and was not authorized by it. He should have acted in the name of his principals, and have said that he assigned the note in [ *291 ] *the name of the corporation, or that the corporation did it by him, their attorney.  The principle insisted on applies to writings without seal as well as to deeds.
    Further, Lamed’s power had ceased by the death of his princi pals before he executed it. The official powers of the directors, who gave him the letter of attorney, ceased -on the 4th of October, 1809. It is not material that the same persons were again elected. They acted after that time under a new warrant or commission. But the election at the pretended meeting, in October, 1809, was void. The meeting was not advertised as the statute and the by-laws of the corporation required. Lastly, it was insisted that the directors, being clothed with a mere personal trust and confidence, cóuld not delegate their powers to another, and especially so important a one as that of assigning and transferring all the mortgages and personal securities, constituting nearly the whole stock of the corporation.
    
      Mills for the plaintiffs.
    
      
      
        Stat. 1805, c. 44.
    
    
      
      
        7 Mass. Rep. 24, Fowler vs. Shearer
      
    
   Parker, C. J.,

delivered the opinion of the Court.

The declaration being on a promissory note payable to the bank, and endorsed by them, the signature of the promisor is confessed, and there is no dispute as to the consideration, nor any pretence of payment; but the plaintiffs’ title is called in question, and to this defence the promisor is by law entitled. There is no suggestion of fraud, accident, or mistake, in the assignment; but the question is, whether what was intended to be done by the parties, with a fair view and for a valuable consideration, has been done with such legal formalities as to give it effect according to such intention.

In common cases of actions by the endorsee of a promissory note, the possession of the note, with the name of the promisee upon it as endorser, the hand-writing being proved, is prima facie evidence of a legal transfer; and the burden is thrown upon the defendant, to show circumstances which will defeat the action.

* This would have been the course in the present [ * 292 j case, had it not been necessary (as the promisee was a corporation, who, in such a transaction, can act- only by attorney) to prove the authority of the person who endorsed the note.

The note, then, appears to have been endorsed by Simon Lamed,calling himself attorney; and the endorsement has been filled up in court in such manner as to support the declaration, if Lamed was the attorney of the corporation for this purpose, and has executed his power in a legal manner.

It is objected, however, that, admitting Lamed to have been regularly constituted the attorney of the corporation, for the purpose of endorsing this note, yet the manner in which he has executed the power defeats his purpose ; as he has not declared that he acted for and in behalf of the corporation, which, it is said, is the only legal way in which an attorney can bind his principal or transfer his property.

There are authorities which tend to support this objection; but they seem to be chiefly applicable to deeds or instruments undei seal, and to questions of the liability of the principal, or of the at* torney, because he had not bound his principal. We are not satisfied that the same strictness is required in regard to personal, simple contracts, and especially those of a commercial nature; it being certain that even a letter of attorney, under seal, is not necessary to enable one person to bind another in very important contracts in transactions of that nature,

But our opinion upon this point is not required, as we are all satisfied that, if the authority of Lamed was good to endorse as attorney, he having endorsed in blank, the plaintiffs may erase the words written over his name, and substitute other words, which will give effect to the endorsement; and this they may do without any amendment of the declaration, because the words to be supplied will comport with the declaration as it now stands. [ * 293 ] *This difficulty being overcome, the great question is, whether Lamed was, at the time he endorsed this note, the attorney of the promisees for the purpose of endorsing it, so that his act of transfer would bind the corporation, and pass the property of the note from them to the plaintiffs.

Upon this point it is contended, first, that the directors, as such, had no authority to appoint an attorney for that purpose, having themselves no authority to pass away by transfer any of the property or evidences of debt belonging to the corporation.

But we are satisfied that such power is necessary to the convenient management of the business of the bank ; and that, under the authority given by the act of incorporation, and by the by-laws of the corporation, presuming them to have acted as other banking companies, it was within the lawful authority of the president and directors to negotiate the securities which were under their direction. It will not be denied that, if the president, pursuant to a vote of the directors, should, for a valuable consideration, hand over to a third person a note, which had been discounted at the bank, having the blank endorsement of the promisee upon it, the holder would have a right of action against the promisor or endorser. This power puts the whole property of the bank under the control of the directors ; and, without doubt, the power may be abused. But the stockholders should provide against this evil in their choice of directors. Having this power, there is no reason why it should not be exercised by one of the body, with the consent of the rest, expressed by their vote. We are satisfied, therefore, that the directors might, by their vote or power of attorney, authorize the • president, or any other officer of the bank, to assign over the promissory notes payable to the company.

It is, however, further objected, that the persons assuming to act as directors were not legally in that character, there having been no legal choice of them ; so that, at the time they executed the power of attorney, they were mere private corporators.

* The letter of attorney was executed August 18, [ * 294 ] 1809. The endorsement of the note was made October 4, 1809. It is said the directors were not legally chosen, because the annual meeting of the stockholders was not that year notified by advertisements in the newspaper.

The true construction of the statute in this particular, we think, is; that notifications should be so published, when a meeting is called by the directors, and not when the annual meetings are appointed by the stockholders themselves.

But if this were not so, we are satisfied that, as the meeting in 1808 was regular, as the same persons were chosen directors, and as the letter of attorney was made long before their term of office expired, the execution of the power afterwards was legal, because the constituent, to wit, the corporation, continued in existence, even if there had been a defect, which vacated the choice of officers.

A new trial is not granted, and judgment must be rendered according to the verdict, 
      
       Dewey, J., having been of counsel, did not sit in thin cause.
     
      
      
         Sed vide Mayhew & Al. vs. Prince, ante, 54. — Long vs. Colburn, ante, 97. — Alfridson vs. Ladd, 12 Mass. Rep. 173. — Stackpole vs. Arnold, ante, 27. — Forster vs. Fuller, 6 Mass. Rep. 58. — Thatcher vs. Dinsmore, 5 Mass. Rep. 299.—Fowler vs. Shearer, 7 Mass. Rep. 14.— Copeland vs. Merchants' Ins. Co. 6 Pick. 198.—Elwell vs. Shaw, 16 Mass. Rep. 42.
     
      
       3 Mass. Rep. 274, Josselyn vs. Ames.
      
     
      
      
         Vide Spear vs. Ladd, ante, 94, and note.