Court Opinion

ID: 6623925
Source: CourtListenerOpinion
Date Created: 2022-07-20 20:33:31.425169+00
Date Added: 2024-06-11T15:58:48.792881
License: Public Domain

BROADDUS, J. —
This is a suit to restrain defendants from disposing of a certain promissory note and asking for its cancellation.
On January 8, 1906, the plaintiffs applied to E. L. Hilbert to procure for them a loan of one thousand dollars, for the period of one year. For the purpose of obtaining the loan, they executed and delivered their promissory note for said sum of one thousand dollars, due in one year, payable to the order of said Hilbert. *414Hilbert with one of the plaintiffs applied to several persons to get them to advance the money on the note bnt failed to get such advance. The plaintiffs then went home. Afterwards communication by telephone was had between the plaintiffs and Hilbert as to whether the latter had succeeded in securing the loan. The matter was left in this condition until in April, when plaintiff, according to their statements, saw Hilbert for the purpose of taking up the, note, when he informed them that he had destroyed it. Thereafter on the 2d of October, 1906, several . months before the maturity of the note, Hilbert borrowed from defendants eight hundred and fourteen dollars and executed his note to them for that amount and turned over to them the note in suit, without indorsement, as collateral security. The defendants took the note in good faith in the belief that Hilbert was its owner. The judgment of the court was for the defendants, and plaintiffs appealed.
The note in question was a negotiable instrument as defined in section 1 of the Act of 1905, page 247, entitled “Negotiable Instruments;” and is such under the Law Merchant and being payable to order it did not pass by the mere act of delivery. Section 30 of the Act, pages 247, 248, is as follows: “An instrument is negotiated when it is transferred from one person to another in such manner as to constitute the transferee holder thereof. If payable to bearer it is negotiated by delivery; if payable to order it is negotiated by the indorsement of the holder completed by delivery.”
Sec. 31. “The indorsement must be written on the instrument itself or upon a paper attached thereto. The signature of the indorser, without additional words, is a sufficient indorsement.”
If the case is to be determined by the law governing the transfer of negotiable instruments payable to order the defendants are holders with notice of whatever equities plaintiff may have had.
The defendants’ defense is based upon the ground, *415that as Hilbert was the agent of plaintiffs the law merchant does not control, bnt the question is one of agency. With this view we coincide.
That Hilbert was the agent of plaintiffs to negotiate a loan by means of the note is undeniable. His duty was to obtain a loan upon the credit of plaintiffs’ note, which as a matter of course would necessarily become the property of whoever could be induced to advance the money on the security offered. His authority was complete. In effect he was empowered to dispose of the paper as freely as if it had been his own. The face of the paper in fact was a notice to strangers that it was his property; and it was not issued in due course of business.
There is no question better settled than that the acts of the agent within the scope or apparent scope of his authority is binding upon the principal. We cannot escape the conclusion that the case falls within the rule governing the relation of agent and principal and that the law merchant does not apply. Furthermore we are of the opinion that the plaintiffs have no equity as against defendants, and that the transfer to defendants was for a sufficient valuable consideration. It does not lie in the mouth of a party to plead want of consideration where his agent in the exercise of his authority as such deals with a stranger to his prejudice. We belieye the judgment of the court was for the right party and it is therefore affirmed.
All concur.