Case ID: ny-sup-ct_95/html/0043-01.html
Source: Caselaw Access Project
Author: {"author": "Beadlet, J. :", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Henry Van Wagenen, Respondent, v. Genesee Falls Permanent Savings and Loan Association, Appellant.
    
      Estoppel as to facts peculiarly within the knowledge of a corporate officer or agent— payment of money to an officer of a savings and loan association — when not a payment to the association — the possession of a pass hook does not conclude the association.
    
    When an agent or officer of a person or corporation acts -within the apparent scope of his authority the principal is estopped from effectually asserting want of power in a particular case against a party who, in reliance upon such authority, has in good faith proceeded upon it and would suffer injury were the authority of the agent or officer repudiated by the principal. In such a case the principal is concluded by the representation of the agent as to any extrinsic fact which rests peculiarly within his knowledge, although false, and which is not ascertainable by reference to the power conferred in relation to the act so-done by the agent.
    A party dealing with an agent is presumed to have ascertained his power and that his act corresponds with it. He may then take his representation as to the fact dehors the power, unknown to him, although such fact be.misreprescnted by the agent, who, by reason of the fact not being as represented, is denied the right to do the act which he assumes to perform as such agent.
    It was shown upon the trial of an action that the plaintiff, by the solicitation or advice of the secretary of a savings and loan association, consented to take twenty-five shares of stock therein and handed to the secretary a certain sum to be paid to the association (the defendant) as his entrance fee into membership, and that soon after the next regular meeting of the association the secretary handed to him a passbook of the association regular inform. Thereafter from time to time the plaintiff handed to the secretary (into whose company lie was frequently brought and with whom he was on intimate relations) sums of money to pay for him to the association, which amounts were credited on such pass book. The secretary paid none of the.money to the association but converted it to his own use.
    The articles of association of the defendant provided that all payments of the character of those made by the plaintiff must be made at the regular weekly meetings of the association, and on the plaintiff’s pass book the amounts therein entered were entered as having been made on dates the same as those upon which the regular weekly meetings of the association were held.
    The duties of the secretary of the association, prescribed by the articles of association so far as pertinent, were to keep a correct account of all the proceedings of the association and to enter them in a book kept for that purpose ; to keep an accurate account of all moneys paid the association and enter the same in a book kept for that purpose; to keep a true account between the association and. the shareholders and to give the shareholders at all times any desired information in relation to its financial affairs.
    
      Tlie duty of tlie treasurer of the association was to be present and receive all moneys paid to tlie association and give Ills receipt to the secretary for the same.
    The practice was, that the money was paid to the treasurer, and his receipt to the secretary was not given as each payment was made by each member, but the entire payments at a meeting were embraced in a single receipt.
    
      Held, that the handing of the money to the secretary to pay to the association could not be treated as a payment to the association;
    'That the secretary had no authority to represent the association in so receiving the money, nor could any such power be implied from the fact that he had on other and previous occasions received money from members and paid it in at the weekly meetings of the association;
    That tlie payments could be legitimately made only at the regular meetings of tlie association;
    That under the circumstances no equitable estoppel as against the association could be based upon the fact of the plaintiff's possession of the pass book.
    Appeal by tlie defendant, tlie Genesee Falls Permanent Savings and Loan Association, from a judgment of tlie County Court of Monroe county in favor of tlie plaintiff, entered in the office of tlie cleric of the county of Monroe on the 27th day of April, 1894, upon tlie report of a referee.
    
      Fdwim .McKnight and II. Nelson Peck, for the appellant.
    
      Frank M. 'Goff, for the respondent.
   Beadlet, J. :

The defendant, a domestic coloration, was organized in 1887. Its place of business is the city of Focliester, N. Y.

The plaintiff alleges that he became a member in June, 1891, by the purchase of twenty-five shares of its stock and payment of his •entrance fee; that between that time and June 13, 1892, lie paid to the defendant $140, and that having the right to withdraw the money so paid with dividends, etc., he demanded payment of such amount, which was refused. The defendant puts in issue all the allegations of the plaintiff other than that of its corporate existence and place of business.

The defendant’s articles of association provide that members not having received a loan may withdraw their shares, and thereupon the amount paid thereon shall be refunded as soon as tlie necessary funds are in the treasury. If the plaintiff was a member he had a riglit to withdraw his shares and demand payment from the defendant of the amount paid in, etc. He gave the requisite notice for withdrawal, and demanded payment. The defendant refused to recognize him as a member of the association, and asserted that he had paid nothing to it. The main question which will be considered here, is whether or not he had by payment created any fund in the association.

It is provided by the articles that the association shall hold regular meetings on every Monday evening, and that all payments must be made at the regular weekly meetings. The plaintiff attended no-meetings and personally made no payments at any such meeting.

Early in June, 1891, the plaintiff, on the solicitation or advice of George II. Butts, consented to take twenty-five shares, and he then handed to Butts two dollars and fifty cents to be paid to the defendant as entrance fee into membership, and soon after the next regular meeting of the association Butts handed to him a pass book regular in form as such, and thereafter from time to time until in June, 1892, the plaintiff handed and sent to Butts sums of money to-pay for him to the association, which money, with that first mentioned, amounted to $140. This with the alleged dividends constitutes the. amount of the fund which the plaintiff seeks to recover. It turns out that Butts paid none of the money to the defendant,, and this fact was first brought to the attention of the plaintiff when he afterwards had delivered to another person a sum of money to pay to the defendant, and who having offered to pay it at a meeting, of the association, was advised that the plaintiff was not a member, and that no money had been paid in by or for him. This last-mentioned sum was returned to him. The question, therefore, is whether or not the defendant is chargeable with the money so paid by the plaintiff to Butts. The plaintiff was a conductor on the New York Central and Hudson River Railroad, and resided at Niagara Falls. Butts was an express messenger. They were frequently brought-together, and their relations wTere intimate. Butts became secretary of the defendant in 1887, and continued in that relation to it until in July, 1892. When the pass book was handed to the plaintiff it contained the entry of the sum of two dollars and fifty cents as of the date of the previous meeting of the association. The pass book accompanied all the other sums handed to Butts, and when it was returned by bim to tlie plaintiff it had the entry upon it as of date of regular meetings respectively of the sums so delivered and sent to him by the plaintiff.

The plaintiff knew the methods of the transaction of the business of the association and what was required by the articles in that respect. He also knew that Butts was its secretary. He had in like manner previously transacted business through him when the plaintiff was a member of the association as trustee for his children, which relation was terminated some two years before. The claim of liability of the defendant is founded mainly on the fact that Butts was such secretary. By reference to the articles of association it is seen that it is the duty of the secretary to keep a correct account of all proceedings of the association and to enter them in a book kept for the purpose; to keep an accurate account of all moneys paid the association and enter the same in a book kept for the purpose; to keep a true account between the association and the shareholders, and to give the shareholders at all times any desired information in relation to its financial affairs. There are certain other duties to which it is unnecessary to refer. He is also required to give security for the faithful performance of his duties. These are duties which he ■owed to the defendant in his official relation to it. There is also a treasurer whose duty it is “ to be present and receive all moneys paid to the association, and give his receipt to the secretary for the same, and to pay all orders approved by the board of directors and .signed by the president and secretary, to compare and settle with the secretary quarterly all accounts.” Whatever may be the construction to which that provision of the articles is entitled it seems that the practice was such that money was paid to the treasurer, and his receipt to the secretary was not as payment was made by each member, but the entire payments at a meeting were embraced in a single receipt • It is very clear that the handing of money to the person who was secretary to pay to the defendant cannot be treated as a payment to it. He had no authority to represent the association in so receiving it. Nor can any such power be implied from the fact that he had on other and previous occasions received money from members and paid it in at the weekly meetings. It was the payment there and that only which can be deemed recognized by the defendant in behalf of such members in relation to such payments. The payments could legitimately be made only at the regular meetings. It is unnecessary to inquire whether it may not by estoppel be charged with payment to a depository authorized by it to receive money elsewhere to be handed to its treasurer. No such question arises in the present case. The agency assumed by Butts to take the money to the defendant was for the plaintiff, who testifies: “ When I gave him this money I simply told him to take it to the association for me I suppose.” Such relation was necessarily the consequence of the purpose for which the money was delivered and received by Butts. He failed to execute the commission, and that is the end of the controversy unless some other reason is applicable to the fact that the plaintiff had a pass book upon which the sums so delivered to Butts were entered by him as of such dates as to lead the plaintiff to suppose that the money was paid as represented by it to the association. It is difficult to see how any equitable estoppel as against the defendant can be predicated on that state of facts. When an agent or officer of a person or corporation acts within the apparent scope of his authority the principal is estopped from effectually asserting the want of power in the particular case against another who in reliance of such authority has in good faith proceeded upon it and would suffer in jury by the repudiation of the act of the agent or officer. In such case the. principal is concluded by the representation of the agent as to any extrinsic fact which rests peculiarly within his knowledge, although false, and which is not ascertainable by reference to the power in relation to the act so done by the agent. (Griswold v. Haven, 25 N. Y. 595; N. Y. & N. II. R. R. Co. v. Schuyler, 34 id. 30; Bank of Batavia v. N. Y., L. E. & W. R. R. Co., 33 Hun, 589; 106 N. Y. 195.)

The party thus dealing with an agent is presumed to have ascertained his power, and that his act corresponds with it. He may then take his representation of the fact dehors the power unknown to him, although misrepresented by the agent who, by reason of the falsity of the fact, is denied the right to do the act which he assumes to perform as such agent.

For instance, in the Banlt of Batavia case the extrinsic fact peculiarly within the knowledge of the freight agent of the railroad company was whether the property described in the bill of lading issued by him had been received by the company for transportation. lie, by the bill of lading, falsely represented tliat it bad been so received, and on the faitli of that representation the bank discounted a draft with the bill of lading annexed as a collateral. In an action by the bank against the railroad company to recover damages resulting to it by reason of the fraud, the company was estopped from making available as a defense the fact that such property had not been, received, and that the representation in the bill that it had been was utterly false. The agent there assumed to perform the act for the company. In the present case Butts, in taking the" plaintiff’s money, assumed to act for him, and he failed to perform what he undertook and what the plaintiff expected he would do. It was not within his power as an officer of the defendant to receive the money as he did from the plaintiff, nor did he in that relation to the association put it in his pocket, retain and appropriate it to his own use. The money never went to the defendant, nor was any entry of it made on its books. The fact that the plaintiff had a pass book does not, nor do the entries made upon it, furnish any aid to him as against the association. These facts, concurrently with the transaction, facilitated the opportunity for deception practiced by Butts upon the plaintiff. The entries made by Butts upon the pass book were merely his representations that he had paid the money to the defendant for the plaintiff, as he had been requested, and as he had promised to do. And that has no more potency for the purposes of the questions presented than would his verbal representations that he had paid the money to the treasurer of the defendant have been entitled to. The omission to do it was merely the default of the plaintiff’s trusted and untrustworthy bearer of his money, and not of the defendant’s secretary in that relation to the association. Then there is a further reason (not essential for the purposes of this case), preclusive of the asserted claim, in the fact that the plaintiff parted with nothing upon the faith of any representation in the pass book of payment of his money to the association. The money which produced each entry in the pass book was. delivered to Butts before, and not after, the representation thus furnished by it was made.

.Our attention is called to Fifth Avenue Bank v. F. S. S. & G. S. F. R. R. Co. (137 N. Y. 231). That case gives no support to the plaintiff’s claim. There the person who was the secretary, treasurer and transfer agent of 'the company issued a certificate of a number of shares of stock of the company, and to accomplish it he forged the name of the president of the company. It was within the power of the . secretary, as transfer agent, to countersign certificates, and he, as such, countersigned the certificate there in question and affixed the corporate seal. This was the method of authentication, and in effect was the representation of the secretary and transfer agent in the manner he was authorized to make it that the certificate was duly issued. And for that .reason it was held that, as against the plaintiff, which had advanced money on the faith of the certificate, the company was estopped from asserting the fraud of the agent who thus authenticated it. Butts, because he was secretary, had no power, real or apparent, more than any other person had, to charge the defendant, as with payment to it, by his representation that money delivered to him to pay for another to the association liad been paid to it when such representation was false. In such case it is a matter of confidence in the person selected to pay the money. The misfortune of the plaintiff arises from his misplaced confidence in the person who was faithless to him.

The judgment should be reversed and a new trial granted, costs to abide the event.

Dwight, P. J., Lewis and Ward, JJ., concurred.

Judgment reversed and a new trial granted, Costs to abide the event.