Case Name: Patrick W. Cullinan, as Commissioner of Excise of the State of New York, Appellant, v. Harry J. Bowker, Defendant, and The Aetna Indemnity Company, Respondent
Court: New York Court of Appeals
Jurisdiction: New York
Decision Date: 1904-12-30
Citations: 3 Liquor Tax Rep. 469
Docket Number: 
Parties: Patrick W. Cullinan, as Commissioner of Excise of the State of New York, Appellant, v. Harry J. Bowker, Defendant, and The Aetna Indemnity Company, Respondent.
Judges: 
Reporter: Liquor Tax Law Reports
Volume: 3
Pages: 469–482

Head Matter:
Court of Appeals.
Reported. 180 N. Y. 93.
Patrick W. Cullinan, as Commissioner of Excise of the State of New York, Appellant, v. Harry J. Bowker, Defendant, and The Aetna Indemnity Company, Respondent.
Principal and agent—When authority of principal cannot be delegated— Liquor Tax Law.
A surety company which has appointed an agent “to execute and deliver and attach the seal of the company to any and all bonds to be filed * * *
under the Liquor Tax Law," the bonds to be valid only when signed by such agent, is entitled to his personal judgment in respect to issuing bonds, and he cannot delegate his power to a clerk in his office; where, therefore, a county treasurer, with knowledge of the agent’s authority and in his absence, accepts a bond issued by his clerk, who had been authorized so to do, and who stated that the agent would sign it upon his return, and in the meantime the certificate on the application for which the bond had been issued had been forfeited by the principal for a violation of the Liquor Tax Law, the company is not liable on the bond, although upon his return and in ignorance of such forfeiture the agent affixed his signature to the bond.
Cuilinan v. Bowker, 88 App. Div. 170, affirmed.
(Argued November 30, 1904;
decided December 30, 1904.)
Appeal from an order of the Appellate Division of the Supreme Court in the third judicial department, entered November 25, 1903, reversing a judgment' in favor of plaintiff entered upon a decision of the court at a Trial Term without a jury, and granting a new trial.
This action was brought by the plaintiff, as State Commissioner of Excise of the State of New York, against the principal and surety upon a bond, which had been given to the People of the state upon an application for a liquor tax certificate, to recover the penalty of the bond, by reason of a violation of its provisions. The plaintiff had judgment against the defendant; but, upon appeal to the Appellate Division in the third department, the judgment was reversed and a new trial of the action was ordered. From that determination the plaintiff has appealed to this court.
The bond was executed by the applicant, the defendant Bowker, as principal, and by the Aetna Indemnity Company of Hartford, a corporation of the state of Connecticut, as surety. The Aetna Company was authorized to execute bonds in such cases and had appointed, under an instrument filed with the county treasurer, one Channell as “its resident assistant secretary to execute and deliver and attach the seal of said company to any and all bonds to be filed in any city or county of the state of New York, under the provisions of the Liquor Tax Law of the state of New York, * * * all said bonds shall be also duly signed in all cases by the president or vice-president.” The bond, in the present instance,. when delivered to the county treasurer upon the application for the liquor tax certificate, bore the signature of the president of the company; but it had not been signed by Channell. The bond recited its penal obligation to the People and the proposed application by Bowker, the principal, for a liquor tax certificate. Its condition, briefly stated, was that the principal in the bond, while the business for which the liquor tax certificate was given shall be carried on, would not violate its provisions, or any of those of the Liquor Tax Law. It concluded in this language: “In witness whereof, the said principal hereto has duly signed these presents and the surety hereto has caused its corporate seal to be hereunto affixed, and these presents to be signed by F. T. Maxwell, its president. This bond shall bind said surety company only when signed by F. S. Channell, its lawful resident assistant secretary at Malone, 2í. Y., county of Franklin, N. Y., whose certificate of authority is duly filed with the officer authorized to issue liquor tax certificates for the county in which the traffic in liquors is to be carried on by said principal.”
At the time of the application to the county treasurer for the liquor tax certificate, Channell was absent and a clerk in his office undertook to deliver the bond, without Channell’s signature. Prior to Channell’s departure, his clerk had asked him the question, whether, in his absence, it would be “all right if I issue a bond to any one who makes application and that you will sign it w'hen you get home”; to which Channell answered: “Yes, if it is agreeable to Mr. Adams.” Adams was the county treasurer and, before this bond was delivered to him, Channell’s clerk had telephoned to him that Bowker had made application for a bond He testifies that he “said Mr. Channell is not here, but I will issue the bond and give it to him and Mr. Channell will sign it when he comes home, and I said how will it be with you ? He said all right, or words to that effect.” Thereupon the bond was given and filed, and Bowker obtained his liquor tax certificate Subsequently, and prior to the expiration of the period for which the certificate ran, he was tried and convicted and his certificate was declared forfeited, upon a charge of having violated the Liquor Tax Law in the sale of liquor to Indians. Channell, the agent of the Aetna company, upon his return, but without any knowledge on his part, or on the part of his clerk, that Bowker had already been convicted, affixed his signature to the bond. It, also, appears that the company was not informed that Channell’s signature was lacking to the bond when accepted by the county treasurer.
S'. B. Mend and Albert 0. Briggs, for appellant..
Channell’s powers were unlimited. He had the power to waive, and did ivaive, the provision in the bond which required his name to be signed thereto. (Berry v. A. C. Ins. Co., 132 N. Y. 58; Marvin v. U. L. Ins. Co., 85 N. Y. 283; Walsh v. H. F. Ins. Co. 73 N. Y. 5; O’Brien v. P. Ins. Co., 134 N. Y. 34; Quinlan v. P. W. Ins. Co., 133 N. Y. 364; Pechner v. P. Ins. Co., 65 N. Y. 264; Van Schoick v. N. F. Ins. Co., 68 N. Y. 439.) Channell did not exceed his authority in directing his clerk to issue the bond in suit, and it was a legal and binding contract in the hands of the county treasurer. (Bodine v. E. F. Ins. Co., 51 N. Y. 123; Comcl. Bank v. Norton, 1 Hill, 506; Clark v. G. F. Ins. Co., 21 Wkly Dig. 197; Wood v. Am. F. Ins. Co., 149 N. Y. 382; Robbins v. S. F. Ins. Co., 149 N. Y. 477; Arff v. S F. Ins. Co., 125 N. Y. 57; Story on Agency [9th ed.], § 14; May on Ins. [4th ed.], § 154; 2 Wood on Ins. [2d ed.], § 433; E. L. Ins. Co. v. Fahrenkrug, 68 Ill. 468; M. M. M. Ins. Co. v. Armstrong, 45 Ill. App. 217.)
John P. Badger, for respondent.
Channell, the assistant secretary' of the surety company, possessed only such powers as were conferred by the instrument of authorization, or “such as third persons had the right to assume he possessed.” (Quinlan v. P. W. Ins. Co., 133 N. Y. 364; Marvin v. U. L. Ins. Co., 85 N. Y. 281; G. E. Co. v. L. & L. & G. Ins. Co. 159 N. Y. 418.) While Channell could delegate to his clerk ministerial duties of his agency, he could not so delegate duties discretionary in their character, such as his decision as to the application and character of the applicant. (Comcl. Bank v. Norton, 1 Hill, 505; Lewis v. Ingersoll, 1 Keyes, 355; Carroll v. Tucker, 50 N. Y. S. R. 611; People v. Bank of N. A., 75 N. Y. 555.)

Opinion:
Gray, J.:
The salient facts in this case are that the bond, which the county treasurer accepted, was an incomplete instrument, for the want of the signature of the company's representative at Malone; that the company's representative had never passed upon Bowker's application for the company to become surety for him; that the county treasurer was aware of these facts, at the time the bond was offered and that the company never had knowledge of the delivery of its obligation in an incomplete form and without the exercise of its agent's judgment upon the application.
The appellant's claim is that the powers of Channell, the company's resident agent, were unlimited and that he could "waive the provision in the bond which required his name to be signed thereto." Undoubtedly, Channell possessed a wide and general authority to bind the company, by issuing its bonds to secure the grant of liquor tax certificates to applicants; but I know of no principle of the law of agency, and 1 am not aware of any authority in the reports, which will sustain the doctrine now contended for by the appellant, in all its length and breadth. In order to do so, we should have to hold that, though Channell was appointed the company's agent for a particular class of business, wherein the assumption of an obligation was to be through his own act and evidenced by his own signature, he might, nevertheless, waive the exercise of his judgment and delegate to another the performance of the duty confided to him.
The powers of a general agent extend to the doing of all acts connected with the business of his; principal and his authority will be deemed to include all usual means for the effective performance of his duties; in the employment of clerks, or of subordinate agencies, for the performance of acts where an exercise of the agent's judgment, or discretion, is not demanded, nor presumed. Reference is made by the appellant to decisions in cases arising upon contracts of insurance and they furnish many illustrations of the extreme lengths to which the courts have gone in enforcing the liability of insurance companies, upon obligations created for them by their agents with an apparent disregard of the conditions imposed upon the exercise of their powers. How ever far those decisions have gone, in this court, certainly, I think I am safe in observing that there has steadily been an observance of this qualification, that, if the limitations upon the agent's authority to act are known to the person with whom he is dealing, or if the transaction is such as to charge him with the duty of inquiring into the extent of the agent's authority to do the particular act, the principal will be protected, if the act be unauthorized, or in clear excess of the agent's powers, and if the principal be an innocent actor in the transaction. The general rule, with respect to the powers of a general agent, was stated by the Supreme Court of the United States in Insurance Company v. Wilkinson, (13 Wall. 222), in this language, that "they are, prima facie, co-extensive with the business entrusted to his care, and will noi) be narrowed by limitations not communicated to the person with whom he deals." This statement of the rule has received the indorsement of this court in Pechner v. Phoenix Ins. Co., (65 N. Y. 195, 209); Marvin v. Universal L. Ins. Co., (85 ib. 278, 283), and Walsh v. Hartford F. Ins. Co., (73 ib. 5). In the latter case it was said that " if a person dealing with an agent knows that he is acting under a circumscribed and limited authority, and that his act is in excess o£, or an abuse of the authority actually conferred, then, manifestly, the principal is not bound, and it is immaterial whether the agent is a general, or a special one. The principal has the unqualified right, as between himself and the agent, to define and limit the agent's authority." Quinlan v. Providence W. Ins. Co. (133 N. Y. 356), more recently, re-asserted the same doctrine. In that case it may be noted, it was held, where a policy of insurance prescribed that the company should not be bound unless the éxecution of the agent's power was indorsed in writing upon the policy, that " the condition is of the essence of the authority, and the consent, or act, of the agent not so indorsed is void." Broad as may be the authority of corporate agents to waive conditions, which enter into the validity of a contract of insurance at its inception, however appearing in the policy when delivered (Berry v. American C. Ins. Co., 132 N. Y. 49, 58), I think that the present case is not within the operation of any such rule. It is a case where the extent of the agent's authority to bind the principal at all was made known to the party with whom he was dealing, and where the principal had the right to rely upon the- fact for its protection. The instrument, by which the Aetna Company constituted Channel its agent, authorized him " to execute and deliver and attach the seal of the company to any and all bonds to be filed, under the provisions of the Liquor Tax Law of the State," etc., and this implies, plainly, that he was intrusted with a duty which, necessarily, involved the exercise, on his part, of judgment before executing and delivering the bonds of the company, which were deposited with Mm for the purpose. The bonds, themselves, were explicit in declaring that they " shall bind said surety company only when signed by F. S. Channell, its lawful resident assistant secretary at Malone, IT. Y., county of Franklin, IT. Y., whose certificate of authority is duly filed with the officer authorized to issue liquor tax certificates," etc. The county treasurer, who, was that officer and who, as such, was to approve of the bond accompanying the application for a certificate, had full knowledge upon the subject of the agent's powers. Indeed, when notified of Channell's absence by his clerk, he was willing to accept the bond, upon the representation of the clerk that Channell would sign it when he returned. Therefore, he took the risk that the. obligation might never become binding upon the surety company.
Whatever we might assume with respect to the general powers of Channell to bind his principal, he was not authorized to delegate to another the exercise of the power to decide upon an application and upon the character of the applicant in such cases. He might authorize his clerk to do a great many things, in the ordinary course of the business of the agency, which, possibly, b'. reason of its magnitude, he might be incapacitated from doing personally, or which were more or less mechanical, or mere matters of detail; but the purpose for which his agency wás consi ituted was that his judgment, or discretion, should be exercised in issuing the bonds. To that extent, the authority was personal. He could not delegate to his clerk the power to pass upon the application for the company to become a surety; any more than, in the case of Commercial Bank v. Norton, (1 Hill, 501), to which the appellant refers, the general agent was deemed capable of delegating to a clerk the power, generally, to bind the partnership by an acceptance of commercial paper. In that case, the agent had passed upon the question of accepting the bill and he merely directed the bookkeeper of the firm to write the acceptance. That was a mechanical act. In the present case, what Channell did, prior to his departure, was to authorize his clerk to " issue a bond to any one who makes application" and to say that he would sign it upon his return. That was, obviously, the delegation of a particular power, with the exercise of which the agent was personally intrusted. He never passed upon the application in question and the company could not be deprived of the benefit of the exercise of his judgment in the matter, for which it had stipulated.
For these reasons, I advise that the order appealed from should be affirmed and that judgment absolute should be rendered against the plaintiff, pursuant to the stipulation.