Case Name: Lawrence and others vs. Gebhard
Court: New York Supreme Court
Jurisdiction: New York
Decision Date: 1864-05-02
Citations: 41 Barb. 575
Docket Number: 
Parties: Lawrence and others vs. Gebhard.
Judges: 
Reporter: Barbour's Supreme Court Reports
Volume: 41
Pages: 575–586

Head Matter:
Lawrence and others vs. Gebhard.
If the power of malting and indorsing promissory notes for and in the name of a corporation is not expressly conferred upon its agent and attorney, hy the instrument hy which he is appointed, general words, at the conclusion thereof, authorizing him “to do all other acts and things for and in behalf of the said company that he may deem proper to further and protect its interests,” cannot have that effect. Sutherland, J. dissented.
Proof that the agent of a corporation is in the habit of giving notes for the company is inadmissible, unless accompanied by proof that the company had some knowledge that the agent was in the practice of giving notes in its name.
The fact that such agent is a director gives him no authority, except when acting as a member of the board; unless there is some by-law conferring power upon him.
THIS action was tried May 14, 1862, before the court at the circuit, the parties having waived a jury. The action was commenced against the defendant as a stockholder of the Saint Anthony Falls Water Power Company, located in the state of Minnesota, to recover $2455.34, being the amount of two promissory notes; one for $543.27, dated St. Anthony Falls, February 1, 1859, signed as follows: “St. Anthony Falls Water Power Company, by Richard Chute, agent and attorney in fact;” the other for $1908.57, dated St. Anthony, May 5, 1859, made payable to the order of said corporation, and signed and indorsed “St. Anthony Falls WaterPower Company, by Richard Chute, agent.” The charter of the company provides that “each of the stockholders of said company shall be personally liable for the debts of said company to an amount equal to the amount of the capital stock held by said stockholders.” The defendant was a stockholder in said company to the amount of $80,000 from July 4, 1856. The note for $543.27 was a renewal of a note for $522, dated August 31,1858, for goods sold said company by William Garcelon & Co. These goods were sold from October 1, 1857, to August, 1858. The note for $1908.57, was a renewal of a note for $1829.20, dated January 5, 1859, which last note was given in renewal of a note dated November 14, 1857. This note was given for merchandize sold and delivered about that time.
The charter authorizes the company to appoint a general agent, and provides that the company shall give the agent a power of attorney, and if it “be general, the said company shall be bound by the acts of said agent to whatever extent said agent assumes to act.” The company, by its stockholders, in the manner prescribed by the charter, April 26, 1856, appointed Richard Chute general agent, and passed a resolution giving said agent full and complete authority to do any and all acts he might deem for the interest of said company, except that he should not sell the water power of said company ; and instructed and authorized the president and directors to make, execute and deliver to him a power of attorney, granting him “full power and authority to do all things ■contemplated by this resolution.” The defendant gave his written consent to this resolution. The company in pursuance of said resolution duly executed a power of attorney to said agent, dated May 1, 1856, by which he was constituted and appointed “the true and lawful agent and attorney of the St. Anthony Water Power Company, for and in its name to take charge of, manage and transact all "business affairs and concerns connected with the real and personal estate and property, water right, privileges and appurtenances belonging to the said St. Anthony Falls Water Power Company, wherever situated, that they do now or may hereafter own, and in its name to contract for the improvement or sale and delivery, or for the leasing or letting of said real estate and personal property, and to collect and receive the consideration money of such sale or sales, and the income arising from such leasing or letting) and full receipts, acquittances and discharges for the same to give, and in the name of said company to commence and prosecute to final adjudication, or to compromise or terminate all suits and proceedings, whether at law or in equity, that he may judge necessary to maintain in relation to its real estate and personal property, and to collect and receive the proceeds of such suits and proceedings, and full receipts and discharges for the same to execute and deliver; and upon the sale of any of the real or personal estate, or property of said company, to sign, seal, execute, acknowledge and deliver, for and in behalf of said company, and as their agent and attorney, all or any necessary or proper contracts, deeds, conveyances or other instruments, and to insert in such deed or deeds the full covenants and warranty usually inserted in the western states and territories of the United States, and generally to do all other acts and things for and in behalf of said company that he may deem proper to further and protect its interests.” Provided, however, that he should not sell the water power. The consideration of the note for $543.27, was merchandise, sold and delivered to the said company by Wm. G-arcelon & Co. The consideration of the note for $1908.57, was for merchandize, sold and delivered under substantially the following circumstances, viz: Said company, owning a large tract of land at St. Anthony Falls, desired to have a first class hotel erected in the middle thereof, in order to increase the value of the company’s lands, and to induce parties to purchase lots of said company and erect buildings thereon. The company assumed an agreement, dated ¡November 10, 1855, made with James M. Winslow, as to the erection of said hotel, which had been made by the defendant and the other stockholders prior to said company being chartered. The company expecting to derive a large benefit from the successful maintenance of said hotel, had subscribed, together with several citizens, for the furnishing and opening of said hotel. In-1857 the hotel had been completed, but not furnished, and Winslow leased the same to U. Y. Mattison & Brother. Mattison went east and purchased furniture, &c. including the amount for which said $1908.57 note was given. The vendors came on with the furniture purchased, to Prairie du Chien, and refused to deliver the furniture unless the same was paid for or payment secured. As an inducement for Mattison to go east and purchase furniture, the company and the citizens made a subscription of $10,000, said company agreeing to pay $5000 thereof, pursuant to an agreement by a majority of the directors. It was found, after the said furniture arrived at Prairie du Ohien, that the Mattisons could not pay for the goods and open the hotel so as to comply with the conditions of the $10,000 subscription, and consequently the goods would be returned to the eastern Sellers; and in order to induce the eastern sellers to deliver the goods, the company made a further subscription of $1000, and gave the note in question in part payment of their said subscription of $6000. Bichard Chute deemed this for the best interests of said company. The company had contributed the blocks of ground on which the hotel was built and $4150 in money to induce and insure the building of the hotel. The purchasing of the furniture and opening said hotel,- was but carrying out one of the great aims and objects of this company.
Bichard Chute was examined as a witness, under a commission. Being asked whether he, as agent of said company, under said power of attorney, had made or given • any other promissory notes for said company, and whether it had been his practice to give notes for said company, the defendant’s counsel objected to the interrogatory as irrelevant. The court sustained the objection and excluded the interrogatory, and the plaintiffs excepted.
The judge before whom the cause was tried found that Chute had no power or authority to make or indorse the notes in suit in the name of, or for the company, so as to make the defendant liable for their payment or consideration, as a stockholder, and that said notes and their several renewals were made and indorsed by Chute, professing to act as the company’s agent without any authority given him by the board of directors.
And as a conclusion of law, he found that the defendant was entitled to judgment against the plaintiffs, with costs. Judgment being entered accordingly, the plaintiffs appealed.
Solomon L. Hull, for the appellants.
J. W. Gerard and T. C. T. Buckley, for the respondent.

Opinion:
Leonard, J.
The judgment should be affirmed. 1st. The power of attorney does not authorize the making of notes. There is no general power given to the agent, except in respect to the matters previously specified.
2d. The judge was correct in refusing to allow the plaintiffs to prove that the agent was in the habit of giving notes for the company. The plaintiffs should have accompanied it with an offer to prove that the company had some knowledge that the agent was in the practice of giving notes in the name of the company—otherwise the proof offered was immaterial.
The fact that Chute was a director gave him no authority, except when acting as a member of the board, unless there was some by-law conferring power on him.
Clerks, J. The case of the British Bank v. Turquand, (6 Ellis & Blackburn, 327; 88 Eng. Com. L. R. 325,) referred to in the opinion of Judge Sutherland, is totally different from the case "before us. In that case, the deed of settlement, organizing the company of which the defendant was the manager, allowed the directors to borrow on bond such sum or sums of money as should from time to time, by a resolution passed at a general meeting of the company, be authorized to be borrowed. The directors accordingly borrowed on bond the amount for which the representative of the company was sued; but the plea set up that there had been no general resolution of the company authorizing the making of the bond. On demurrer, the court held that the dealings with such companies are not like dealings with other partnerships, and that the parties dealing with them are bound to read the statute and the deed of settlement. Exit they are not bound to do more. The lender, on reading the deed of settlement, would find not a prohibition from borrowing, but a permission to do so, on certain conditions. Finding that the authority might be made complete by a resolution, he would have a light to infer the fact of a resolution authoxizing that which on the face of the docximent appeared to be legitimately done. In the case under" consideration, the charter of the St. Anthony "Water Falls Company does not allow any agent who may act for them to make notes, binding the company, for any purpose which he may deem proper, whether it is or is not within the specific powers confided to him. The question here is as to the extent of the power given to the agent; if we do not find that this xxnlimited power of signing notes is specified, the general words at the conclusion of the instrument, constituting him agent, cannot have that effect.
I agree with Judge Leonard, in thinking that the judgment should be affirmed with costs.