Court Opinion

ID: 6560579
Source: CourtListenerOpinion
Date Created: 2022-07-20 19:15:05.490172+00
Date Added: 2024-06-11T15:56:31.273387
License: Public Domain

Hallett, C. J.
This cause was before this court at the last term, and several questions, now again presented, were then considered and definitely determined, so far as this court may do so. Of this number is the sufficiency of appellant’s pleas, by which the competency of appellee to maintain an action for a sum exceeding ten per cent of its capital, was denied, and that question is not now open to examination in this court. The legality of appellee’s demand is now however further challenged, upon the additional ground that an overdraft upon a bank, of which the account in suit is an example, is fraudulent per se and cannot be made the basis of an action of assumpsit. Por this we are cited to the case of an agent, who, by collusion with the book-keeper of a bank, obtained money in the name of his principal, for which it was said the latter was not liable for several reasons ; although the agent had authority to draw upon the funds of his principal in the bank, his authority did not extend beyond that point to enable him to borrow money j credit was not given to the principal, the bank being misled by fraudulent entries of its own book-keeper. Union Bank v. Mott, 39 Barb. 180. That this has no application to a case in which a depositor is allowed to overdraw his account, either by the express permission or inadvertence of the officers of the bank, is apparent at a glance, and the court say, in their opinion, that the doctrine cannot be applied to a case where money, drawn by an agent, is received by the principal, or the act of the agent is ratified by him. If it be true that one who, without notice, draws upon a bank in which he has no funds, commits a fraud *255upon the payee of the check, and upon the bank, it will hardly be claimed that the latter is without remedy against him for the money paid. Although, in such case, the bank may have a remedy against the officer who pays the check, for the perversion of its funds, it may, nevertheless, ratify the proceedings and treat the money paid as a loan. U. S. Bank v. Macalister, 9 Penn. St. 478. But, if this were not true, the case of an agreement between the parties, by which the depositor is allowed to overdraw his account, does not involve turpitude on the part of any one. The transaction is then a loan simply, which is not obnoxious to any law.. Morse on Banks, 318. A national bank is, by the act of its incorporation, required to take security for its loans, but this does not relate to the form of the loan or the evidence by which it is manifested. Security may be taken for a loan to which the parties have orally assented and which has been made by payment of an overdraft as well as any other. If such security is omitted, that circumstance is not available to the borrower, who can never be heard to say, that he obtained the money upon terms more favorable to himself than the law would sanction. In this instance the money was obtained from the cashier, who appears to have had charge of the business of the bank, and it was charged to appellant upon the books of appellee. If this is not sufficient to show the authority of the cashier to make the loan, I doubt whether appellant can rely upon the want of authority in him; for appellant is to be charged, if at all, upon the hypothesis, that,the act of Sabin in borrowing the money was its own, and one who has obtained money from an agent who assumed to act for his principal cannot question the power of the agent. By the act of borrowing, the borrower concedes the authority of the agent to lend, or if this be incorrect, it is not material that the money has passed through unauthorized hands. Shall A, who has obtained money from B, allege in his defense, that 0, who gave it to him, was without authority from B, inthat behalf ? As the money came from the bank, and the negotiation was conducted in its name, it appears to me that the authority *256of the cashier is not to be drawn in question in this suit, and aside from the matter of Sabin’s authority to bind appellant, the case is one of money obtained by overdraft in pursuance of the arrangement of the parties. Whether the cashier is liable to appellee for the amount is a question which does not arise in this suit, nor is it connected with the question of appellant’s liability, which alone we are now considering.
Upon the latter question, the objection that the indebtedness was created by overdrafts is regarded as untenable. It is urged, for the first time in this court, that appellant is incapable of borrowing money, there being no provision,, in the act under which it was organized, which confers authority to that end. Although it was at one time thought that express authority was necessary to enable a corporation to borrow money, the weight of authority is now opposed to that view. If not forbidden to do so, a corporation may borrow money as a means of carrying out the purposes for which it was created. Mills v. Gleason, 11 Wis. 470; Angell & Ames on Corp., § 257.
In this instance, the money was expended in the mine, and it would seem that the company ought to be bound for its payment in the same manner as for debts contracted in the prosecution of its enterprises. In addition to this, it has been said, that as to a contract executed and fully enjoyed, a corporation is estopped to deny its capacity. Bradley v. Ballard, 55 Ill. 413; Underwood v. The Newport Lyceum, 5 B. Monr. 129. The reasons upon which this rule is founded apply with great force to a contract for borrowed money, whatever may be said of them when applied to other contracts.
But it was not shown that the company was prohibited from borrowing, and as it might have incurred debts in carrying on its mining business, so it could borrow money for the same purpose. At the trial and before any evidence was produced, two promissory notes, executed by Sabin in the name of appellant, were brought into court, and at the request of appellee, they were canceled by the court.'
*257It does not appear that any objection to this proceeding was made by appellant, and, therefore, it is in no position to question its regularity here. Upon the trial below, as upon the former trial, it was made a question whether Sabin was an agent of appellant at the time of the transaction with the bank.
This question, comprehending also the nature and extent of the agency, was important for the purpose of ascertaining whether those transactions were within the powers conferred upon Sabin; and, if it should be found that Sabin had no authority to contract indebtedness, it was also material to the question of the ratification of his acts by appellant.
To establish an agency in the absence of better evidence, it is the common practice to resort to facts, which tend to show recognition by the principal of the alleged agent’s authority. Of this nature are communications between the principal and agent, in which the authority of the latter is expressly or impliedly admitted, of which the letters from the president of appellant to Sabin afford an example. Nor, under the circumstances of this case, is it essential that these letters should be supported by evidence of express authority from the company, to its president, to write them. Of all the officers of the company, the president alone visited the territory and assumed personal control of its property ; he paid the company’s debts; gave directions' respecting its lawsuits, and conducted its correspondence, in all of which we must presume that he was discharging the duties of a faithful executive, with the knowledge and approval of his company. If an officer of a corporation is allowed to exercise general authority in respect to the business of the corporation, or a particular branch of it for a considerable time ; in other words, if he is held out to the world as having authority in the premises, the corporation is bound by his acts in the same manner as if the authority were expressly granted. Commercial Mutual Marine Insurance Co. v. Union Mutual Insurance Co., 19 How. 322; Peyton v. The Governor of St. Thomas Hospital, 3 C. & P. 363; Chi*258cago, Burlington & Quincy R. R. Co. v. Coleman, 18 Ill. 298; Daugherty v. Hunter, 54 Penn. St. 382; Alleghany City v. McClurkin, 14 id. 81; St. Louis, Alton & Chicago R. R. Co. v. Dalby, 19 Ill. 375; Ardesco Oil Co. v. Gilson, 63 Penn. St. 150.
The case presented is that of a foreign corporation owning property in this territory and its president, who has at all times largely managed its business in communication by mail with a person in possession of its property and alleged to be its agent. In such case, to require proof that the draft of every letter had been submitted to the board of directors and approved by them, or that the president was appointed to conduct the correspondence, would be unreasonable as well as unjust to those who have dealings with the corporation. These remarks apply with equal force to the negotiations between the officer of the bank and the president of the company in respect to the demand in suit. The company could not be approached except through its officers, and of these the president alone was in the territory; and he, in virtue of his position as the chief officer of the company, his familiarity with its affairs and the control of its business that he enjoyed, was the fittest person to represent its interests. If, under such circumstances, the bank could not present its demand to the company through the president of the latter, it would be impossible to obtain a hearing at all.
Hence, at the last term, we affirmed the right of the bank to present their demand to the president of the company, and the power and duty of the president to bring the matter to the attention of the latter. In this we did not assert that the president had power to pledge the company to the payment of any debt, but merely that he must hold open the door of approach to creditors and give audience to all demands. And we also declared that the company could not avoid responsibility in this respect by claiming that he acted for himself solely, and not as president of the company, and thus divest his acts of all legal significance. This proposition is quite as applicable to the testimony before *259us, as to that adduced upon the former trial, and therefore it is here again repeated. The payment of debts contracted by Sabin in the name of the company affords some evidence that they were regularly incurred, and therefore it had a tendency to establish the fact of the agency. I do not see that it was otherwise pertinent to the issue, for certainly the payment of one debt is no evidence that the company was liable for another. Forsyth v. Day, 41 Me. 382. But the agency of Sabin was in issue, and, upon this point, I think that the evidence had a bearing sufficiently direct to entitle it to admission. At the last term it was said that Sabin’s authority as superintendent of appellant’s mine did not enable him to borrow money in the name of his principal, and that the liability of appellant for money obtained in its name, must be determined upon evidence showing its acquiescence in, and approval of, the transaction with the bank. Upon the evidence then presented, it appeared that the president of the company was informed of the loan about the middle of December, and that he then communicated the fact to his company; following this, on the 1st of January, he entered into an agreement with the president of the bank, by which, if the claim should not be paid at an earlier date, it was to be submitted to the board of directors of the company in New York city, at a meeting to be held in February, in order that they might provide for its payment. It did not appear that the company, at any time before the commencement of the suit, replied to the demand of the bank or disapproved of Sabin’s act in borrowing the money, and this was regarded as evidence of satisfaction sufficient to warrant the finding of the fact. The general propositions here stated have been vigorously assailed, but not at all shaken. It is certainly true, that ratification oí the acts of an agent, done in excess of his authority, may be manifested by the silence of the principal. Law v. Cross, 1 Black, 533. And the rule is applicable to corporations as well as to natural persons. Hoyt v. Thompson's Ex’rs, 19 N. Y. 218; T. W. & W. R. R. Co. v. Prince, 50 Ill. 27. A distinction has been made between the acts of an agent who *260has gone beyond Ms authority, and those of a mere stranger intermeddling in affairs with which he is in no way concerned. In the case of a stranger, it has been said that the act will not be binding upon the principal unless expressly ratified by him. Ward v. Williams, 26 Ill. 451. But the better opinion appears to be, that in this, as in the case where an agency exists, the approval of the principal may be inferred from his silence and acquiescence when informed of what has been done in his name. Philadelphia, Wilmington & Baltimore R. R. Co. v. Cowell, 28 Penn. St. 329; Ladd v. Heilderbrant, 27 Wis. 135. But all agree that the relations of the parties are of great consequence in determining the question of ratification, the presumption arising from acquiescence being very much stronger where the agency exists than in the case of a mere stranger. Story on Agency, § 256. Hence the agency of Sabin is an important question in this cause, although the dealings with the bank were not within the powers conferred upon him. So, also, it seems that the appropriations of the money, and the fact that the use of it was advantageous to the party to be charged, are circumstances of some weight respecting the question of ratification. Harris v. School District, 28 N. H. 58; Wilson v. School District, 32 id. 118; Philadelphia, Wilmington & Baltimore R. R. Co. v. Cowell, 28 Penn. St. 329. It is fair to presume that a party will more readily repay money which has come to his use, although without his knowledge, than he would if it had been wholly appropriated by the person assuming to act in his behalf. And where the money has been of advantage to the party to be charged, his willingness to repay it may depend largely upon that circumstance. It is true that no legal obligation arises out of these circumstances, for no one can make himself th creditor of another by doing an act beneficial to him, without his consent. But much less evidence of the assent of the principal to the act of the agent may be required in a case where the money has come to his use, and has been expended in a manner advantageous to him, than would otherwise be necessary. Referring only to the consideration *261that use of the money gave rise to no legal obligation to repay it, and to the instructions to the jury then before the court, in our former opinion, we were led into the broad declaration that the use of money was not material to the question of ratification. The statement then made must be modified or revoked to give place to the true principle here announced. It is urged that appellant was not informed at or before the time of the alleged ratification that Sabin had extended his mining operations into the property of the president of the company and into his own property, all of which adjoined that of the company. It seems, however, that the president of the company was fully informed of the extent to which such mining was carried, and indeed upon his own claim it was done by his express permission. As the president was directing the operations at the mine, I do not see that there was any very wide departure from duty in following his directions. But if this were not so, the failure of the president to communicate the facts to his company cannot affect the rights of appellee; and again, the business of appellant was that of mining ore for the purpose of obtaining gold therefrom, and all the ore taken out by Sabin was crushed by him or left in the possession of the president of the company. If the company obtained the ore or the proceeds thereof, there would appear to be no one who could complain of the taking except the parties who were deprived of it. Whether the agent has a remedy for a trespass committed by himself, or the president of the company may have redress for an entry made under his direction, we are not now required to consider or determine. Under the circumstances disclosed by the evidence, it is obvious that the mining done upon the property of the president and agent of the company was quite as much the act of the company as that which was done upon its property, and -the circumstance that a portion of the money obtained from the bank was there expended, does not affect the question of ratification. Further comment upon the testimony is believed to be unnecessary, and we pass to the instruc*262tions to the jury, which will be considered with reference to one question only.
Numerous cases are found in the books which illustrate the distinction between the cases in which the principal must repudiate the acts of his agent who has overstepped his authority, within a reasonable time after notice thereof, and those in which his failure to do so will be regarded as evidence of acquiescence, for the consideration of the jury. Of the first class, the case of Law v. Cross, 1 Black, 533, is an example. Under instructions to purchase coal at Valparaiso, an agent made the purchase at Coquimbo, a day’s sail from the former place, and the coal was subsequently shipped to San Francisco. The principal being informed of this transaction, failed to notify the agent of his disapproval. The court say: “As the coal was purchased for the principal, it belonged to him if he chose to accept it. If the price had risen and Cross had sold it, .Law might justly have claimed the profits ; and when informed by his agent of what he had done, if the principal did not choose to affirm the act, it was his duty to give immediate information of his repudiation. He cannot, by holding his peace and apparent acquiescence, have the benefit of the contract if it should afterward turn out to be profitable, and retain a right to repudiate, if otherwise.” It will be observed, that the reason here assigned for requiring the principal to disavow the agency promptly after notice, operates as an estoppel upon him ; that is to say, he cannot repudiate the transaction without wrong to the agent, and therefore, he shall not be permitted to repudiate it at all. The principle is believed to be applicable to all cases in which the parties acting in the belief that the agency is valid, have suffered a change of circumstances, and cannot be restored to the position in which they would have been, if the agency had been repudiated immediately upon notice of the unauthorized act. But it cannot be extended to cases in which no such change of circumstances has taken place, no injury having resulted to any one from the neglect of the principal, and where he could have gained nothing by delay. Note to Culver v. *263Ashley, 1 Am. L. C. (5th ed.) 719. For example, one who had no authority whatever from the defendant, subscribed in his name to the stock of a railroad company, and immediately notified him of the fact. After some time, suit was brought by the company to recover the amount of the subscription, and the circumstances were submitted to the jury as evidence of ratification, but it was not contended that the defendant was in any manner estopped from denying the validity of the subscription. Philadelphia, Wilmington & Baltimore R. R. Co. v. Cowell, 28 Penn. St. 329. No change had taken place in the position of the parties from the date of the subscription until the suit was brought; nor was there any thing unconscionable in the defendant’s refusal to pay the demand. Therefore, the case was not one in which the defendant was estopped to deny the authority of the agent; but the question was, whether by his silence when informed of what had been done in his name, he had shown a purpose to adopt the act. In this class of cases, the evidence of silence, and acquiescence on the part of the principal, is valuable only as indicating the intention of the principal with reference to the act of his agent; while in the first-mentioned cases, the facts being proved, the conclusion follows as matter of law. ' In cases where the principal is estopped to deny the agency, the jury are told that if he has failed to repudiate the agency within a reasonable time after receiving notice of the unauthorized act, they should find the fact of ratification, and such was the instruction in Law v. Cross. This would not, however, be a proper instruction in a case where the silence of the principal is merely evidence of his assent, for the obvious reason that the effect of such evidence is to be determined by the jury. Bates' Ex’rs, v. Best's Ex'rs, 13 B. Monr. 215.
At the last term we ascertained that the case at bar is of the class in which the principle of estoppel cannot be applied, inasmuch as the position of the parties remains unchanged, and the failure to disavow the agency has not worked injury to the appellee or influenced its conduct, nor has appellant derived any advantage therefrom. Hence the charge that *264appellant must have repudiated the debt within a reasonable time after notice thereof, was not warranted by the circumstances of the case, the failure to disavow the agency, if there was such failure, being evidence of acquiescence and assent, for the consideration of the jury, and the effect of it to be determined by them. The most important features of this case have been twice considered by this court, and so far as we are concerned, definitely determined. Numerous points urged upon our attention have not been discussed, for the reason that they are not regarded as affecting materially the rights of the parties.
The judgment of the district court is reversed, and the cause is remanded for a new trial.
Wells, J.
I agree, that for the errors in the charge of the court, the judgment of the district court must be reversed, but upon two questions which are considered in the opinion of the chief-justice, I do not assent to all that is there said.
1. I agree that the letters of the president of the corporation, Mr. Becker, to Sabin, in some of which Sabin is addressed as superintendent of the company, and in others of which he is directed touching its business, were properly received. It is fair to presume, that the president of the corporation knew who was in immediate charge of its affairs at the scene of its operations, and the fact that the president of the corporation addresses Mr. Sabin as its superintendent affords, at least, some evidence of the existence of this relation. But it is said, that if an officer of a corporation is allowed to exercise general authority for a considerable time, and so held out to the world as having authority in the premises, the corporation will be thereafter bound by his acts, in the same manner as if authority had been expressly granted. It cannot be doubted, that acquiescence by a corporation, for a considerable time, in the acts of one, who, without original authority, assumes to act for it, will, as to third persons, having knowledge of the previous assumptions of authority and the acquiescence therein, and dealing with the pretended agent on the faith thereof, create *265an agency by an implication of law. In the present case, however, this is asserted of a non-resident corporation whose principal office was in a foreign state, in respect to the acts of their officer done here. So far as shown by the evidence, no officer of the corporation, except Becker, and no stockholder ever resided here or ever was here, even temporarily during the time of Becker’s transactions in question, and no officer or stockholder is shown to have ever had any intimation of these transactions. How, then, can the corporation be said to have acquiesced in them, or to have held Becker out to the world as having the authority which he assumed ? I grant, that if by the exercise of such attention to its affairs as a man of ordinary prudence in the like case would have exercised, the corporation might have informed itself of Becker’s doings; it is the same as if they had actual knowledge. The corporation ought not to be heard to say that it did not know that which, by the ordinary diligence which the law exacts of them, they might have known, and it may be that, as to the particular matter in question, this corporation is shown to have been derelict. The opinion of the chief-justice, however, proceeds upon the ground, that under all circumstances the long exercise of authority on behalf of a corporation raises the presumption of an original appointment which I am not prepared to admit.
2. While I doubt whether it appears by the evidence that any portion of the money for which the action is brought, was expended in the improvements made upon the property of Mr. Becker, I incline to the opinion that if such be the fact, it is 'prima facie a circumstance material to be communicated to the mining company, in order to warrant the inference of ratification.
The burden of proving such communication or the existence of attending circumstances, rendering the omission of such communication immaterial, rested upon the plaintiff, and there being no proof on either point, ratification could not be inferred from the company’s silence.
The judgment must, therefore, if we concede that some *266part of the money was expended as here supposed, be reversed on this ground also.