Court Opinion

ID: 6406447
Source: CourtListenerOpinion
Date Created: 2022-06-25 11:49:20.459605+00
Date Added: 2024-06-11T15:51:13.582292
License: Public Domain

Per Curiam.

The giving of the company’s security for the private debt of the agent, was not fraudulent, it being done by the authority of the directors, and the question then is, whether the directors were warranted in giving such authority. To determine this it is necessary to look into the nature of this corporation. It was created for the purpose of manufacturing paper, and is in effect a trading corporation ; it has power to buy and sell, and to do other acts incident to a trading company ; it has occasion to give and take extensive credits ; and under the Sf. 1808, c. 65, the directors have a general authority to manage its concerns. There can be no doubt, therefore, that the directors had authority to make an advance or payment of wages to the agent, and that for these pmposes they might empower him to use the company’s credit.
The only question of any difficulty arises on the point made by the defendants, that the vote of the directors conferred a limited authority to give a promissory note, and that this authority was not strictly pursued.
If the term note had been used technically to designate a promissory note, we have no doubt that the company would not be bound, because the law is very clear, that the party giving the authority may limit it precisely, and even arbitrarily, and it is not enough to say that the security given is not more onerous than the one authorized. But we think the term was not employed in that strict sense, and that a due bill, a memorandum check or other similar security, would fairly fall under the denomination of “ note.” Banorgee v. Hovey, 5 Mass. R. 23. The question then is, whether this bill of exchange comes within the term note, as above explained; and we think that it does. There being no funds in the hands of the drawees, and this being known to the agent, the effect of the bill was to charge the company only, and this precisely in the same manner as a memorandum check, a due bill or a promissory note would have done. It was suggested that the company would be chargeable with damages on the dishonor of the bill, and if it were so, the bill would not bind them ; but this objection is without foundation, for the statute (1819, c. 41, §2,) makes no provision for damages upon a bill of exchange drawn within *294the commonwealth and payable at a place within the same, distant less than seventy-five miles from the place where it is drawn.

Judgment on the default.