Case Name: The Merchants' National Bank of Gardner, Me., Resp't, v. John Clark et al., Impl'd, App'lts
Court: New York Supreme Court, General Term
Jurisdiction: New York
Decision Date: 1892-05-09
Citations: 45 N.Y. St. Rep. 629
Docket Number: 
Parties: The Merchants’ National Bank of Gardner, Me., Resp’t, v. John Clark et al., Impl’d, App’lts.
Judges: 
Reporter: New York State Reporter
Volume: 45
Pages: 629–631

Head Matter:
The Merchants’ National Bank of Gardner, Me., Resp’t, v. John Clark et al., Impl’d, App’lts.
(Supreme Court, General Term, Second Department,
Filed May 9, 1892.)
1. Bills and notes—Addition of official title to signature.
Negotiable paper may be executed by an agent or an officer, but. the name of the principal must appear on the paper, and the mere addition of the official title of the agent or officer is only a personal description and is insufficient of itself to constitute an exemption from personal responsibility. The mere fact that the name of the principal appears in the margin of the note is not sufficient.
2. Banks—Notice to officer.
Where notice or information is received by an officer of a bank in his official capacity the bank is presumed to have it; otherwise it is received as a private individual and that is insufficient to charge the bank with notice.
Appeal from judgment in favor of plaintiff, entered upon verdict.
Henry Daily, Jr., (Geo. G. Reynolds, of counsel), for app’lts; Edward B. Merrill, for resp’t.

Opinion:
Dykman, J.
This is an action upon two promissory notes in this following form:
1 $5,000. Brooklyn, N. Y, Sept. 1, 1890.
Ridgewood f Three months after date we promise to pay to the
Ice Co. f order of Clark and Chaplin Ice Co. Five Thousand J Dollars at Mechanic's Bank. Value received.
E. H. Close, Treas.
John Clark, Pres't.
The other note is precisely like this.
Clark was the president of the Ridgewood Ice Company and Close was its treasurer, and they were clothed with power to issue commercial paper for the corporation, and these notes seem to have been made in the usual course of business. They were forwarded to the payee, and by it endorsed over to the plaintiff.
The cause was tried at the circuit where a verdict was directed for the plaintiff for the full amount of both notes, and the defendants, Clark and Close, have appealed from the judgment entered upon that verdict.
The action is defended by them upon the theory that the notes are the obligations of the company of which they were officers and not their individual paper, and we are to ascertain whether their defense is meritorious.
Whether the contract evidenced by the notes is obligatory upon the defendants personally or upon the company whose officers they are depends upon the interpretation to be placed upon the instruments.
If, as we must assume, these appellants intended to execute valid instruments which would be obligatory upon the maker, it was very necessary for them if they desired to avoid personal liability to use plain words to denote such purpose.
Preliminarily it may be remarked that a liberal construction is ordinarily adopted in the interpretation of commercial instruments, and if from such an exposition it can be reasonábly concluded that the intention was to bind the principal and not the agent, the courts will adopt that construction. Story on Promissory Notes, § 69.
Let us now see what intention is expressed by these instruments. In the first place, the name of the Ridgeway Ice Company is not contained in the body of the notes, and the name of the company printed in the margin is no part of the notes. Neither did the appellants undertake to sign for this company or to bind it in any way. They say in the notes: "We promise to pay," and sign their individual names, with the addition "of their official designation. Thus, there is the entire absence of any language indicative of an intention to charge their company or exempt themselves from personal liability.
If an agent desires and intends to bind a principal he must contract in his name, and that is the cardinal rule which must control this appeal, for there is nothing in the body of these notes or in the manner in which they are executed indicative of an intention to exempt themselves from liability.
The security of the holder of commercial paper must always appear upon the face of the bill. Makers and endorsers, acceptors and drawers, are liable in the order of their names, but they are responsible only because they have executed the instrument Any other rule would launch the commercial world upon a sea of uncertainty. We do not intend to say that negotiable paper must be signed by a party personally. It may be executed by an agent or an officer, but the name of the principal must appear in the paper, and the mere addition of the official title of the agént or officer is only a personal description, and is insufficient of itself to constitute an exemption from personal responsibility.
The foregoing observations are sustained by the following authorities : Moss v. Livingston, 4 N. Y., 208; Dewitt v. Walter, 9 id., 571; Stone v. Wood, 7 Cowen, 453 ; Pentz v. Stanton, 10 Wend., 271; Taft v. Brewster, 9 Johns., 333.
If there are decisions which seem to form an exception to the general rule they will be found in cases where the name of the principal appeared upon the instrument and the court in pursuance of the inclinations we have noticed above has adopted a liberal construction to deduce an intention to bind the principal and not the agent. There remains however another question for examination.
In the answer of these appellants they say their company was incorporated and had a contract with the Clark & Chaplin Ice Company for ice, and that these notes were made by them in the usual course of business for the benefit of the company in payment for the ice furnished under such contract and that the plaintiff had knowledge of such facts, and the proof of those allegations in the answer would constitute a valid defense to this action. Bank of Genesee v. Patchin Bank, 19 N. Y., 312.
The payee in these notes could not recover upon them against these defendants because it was in full possession of all the facts and had notice that they were made for the company in payment for its liability by its officers with ample authority in the usual course of its business. The plaintiff, however, claims to recover as an innocent holder for value without notice, and it was competent for the defendants to disprove its innocence by proof of notice, and they made an effort in that direction upon the trial by asking this question of the defendant when he was under examination as a witness: " Before the commencement of this suit had you conversation with Mr. Dennis, the president of the plaintiff, with regard to these notes, in which he told you that at the time the bank received these notes they knew that they were notes of the Ridgewood Ice Company and given upon this contract. Defendant's exhibit 3. Objected to. The Court: It is sustained on the ground that the declarations of the president are not competent evidence against the bank. Defendants except."
This question called for nothing but knowledge acquired by the president as a private person, and that was insufficient to charge the bank with notice where notice or information is received by an officer of a bank in his official capacity, the bank is presumed to have it, otherwise it is received as a private individual. Atlantic State Bank v. Savery, 18 Hun, 36; aff'd, 82 N. Y., 291.
The exception, therefore, presents no error.
The judgment should be affirmed, with costs.
Barnard, P. J., and Pratt, J., concur.