79 States v. Dandridge:78 "If officers of a corporation openly exercise a power which presupposes a delegated authority for the purpose, and other corporate acts show that the corporation must have contemplated the legal existence of such authority, the acts of such officers shall be deemed rightful, and the delegated authority will be presumed." And it has been said in a recent Wisconsin case that: "The idea that every time a person deals with an officer of a corporation, or a person assuming to act in its behalf, he must, under all circumstances, take his chances on whether such person or officer has been specially authorized in regard to the matter, has no place in the law of our day. Proof of apparent authority of a corporate officer to contract in its behalf, prima facie establishes actual authority so to do, and evidence of want of such authority will not relieve the corporation from the burden of a contract made with reasonable reliance upon such apparent authority, if such corporation is responsible for such appearance." Where the officers of a corporation, who customarily are empowered to act in its behalf, execute a note in its name and cause such execution to be authenticated by the corporate seal, the it appeared that the president of a again resumed the discharge of their railroad corporation was allowed for appropriate duties, they took possesthree years to purchase locomotives, sion of the road and of all the propgiving bills for them purporting to erty thus procured by the president, bind the company, and to run them and continued to use such property upon the road which he managed in for several years, without question as his discretion. Afterward the direct- to the manner in which it had been ors resumed the charge of the road obtained. Under such circumstances, and of the property thus obtained, the acts of the assumed agent canand for some years, though they did not be repudiated. The powers of the not settle, did not question, the ac- agent of a corporation are such as counts rendered by the president of he is allowed by the directors or manthese transactions. The court said: agers of the corporation to exercise "The board of managers, designedly, within the limits of the charter; and as it must be presumed, relinquished the silent acquiescence of the directto the president, for a period of three ors or managers may be as effectual years (embracing the time of all the to clothe the agent with power as an transactions involved in the present express letter of attorney." action), the exclusive management of 78. 12 Wheat. (U. S.) 64. This docthe business of the corporation; allow- trine has been confirmed in the following him, at his own discretion, to ing cases: Melledge v. Boston Iron employ and pay the workmen con- Co., 5 Cush. (Mass.) 175; Perstructing the road; to purchase and kins v. Washington Ins. Co., 4 Cow. lay the iron constituting the track; (N. Y.) 645, 659; Bridenbecker v. to borrow money in large and small Lowell, 32 Barb. (N. Y.) 9; Hoyt sums, giving the notes or bills of v. Thompson's Executors, 19 N. Y. the corporation therefor, as well as 208, 219. other securities; to purchase locomo- 79. Bullen v. Milwaukee Trading tives and cars, and to put them in use Co., 109 Wis. 41, 85 N. W. 115, citing on the road, paying for them in like Ford v. Hill, 92 Wis. 188, 66 N. W. bills and notes; and when, at the end 115; McElroy v. Horse Co., 96 Wis. of the three years, the managers 317, 71 N. W. 652. presence of such seal on the instrument carries with it prima facie proof of the authority of the officers to execute the note.80 Where an officer of a corporation issues a note or bill or signs a check in the name of the corporation, for the payment of his individual debt, without any actual or apparent authority, the payee is charged with notice of such officer's incapacity to issue such paper, and cannot recover from the corporation on such bill or note; and in the case of a check, if he accepts it without question and draws the money thereon, he is liable in an action by the corporation to recover the amount paid as money received by him to its use. 81 f. Power of officers to transfer commercial paper. A corporation having the power to contract must necessarily have the power to receive in conformity with the terms of a contract, or as evidence of indebtedness to it, the negotiable paper of other persons or corporations. The power to receive such paper, in payment or settlement of debts contracted within the general scope of the powers of the corporation, may be regarded as one of the implied or inherent powers of all corporations.82 The power to receive negotiable paper must necessarily be accompanied by a power to transfer it to a third person, in the ordinary course of its business.83 80. Bullen v. Milwaukee Trading Co., 109 Wis. 41, 85 N. W. 115. 81. Bill, check, or note issued by officer for his own use.- - Rochester, etc., Turnpike Co. v. Paviour, 164 N. Y. 281, 58 N. E. 114. See quiry so as to render him chargeable with knowledge of all the facts that such inquiry would have revealed, and hence does not deprive him, as matter of law, of the character of a bona fide purchaser, so as to prevent The president of a corporation, au- him, on becoming absolute owner of thorized to make corporate notes for the note after its maturity, from ena corporate purpose, made a note regu- forcing the note against the corporalar in form and attested by the sec- tion. Cheever v. Pittsburgh, etc., R. retary, payable to the order of a third Co., 150 N. Y. 59, 44 N. E. 701. party, who in fact had no interest also Hanover Bank v. American Dock therein. Such note was indorsed by & T. Co., 148 N. Y. 612, 43 N. E. 72; the nominal payee to a mercantile Bank of New York, etc. v. American firm of which the president was a Dock & T. Co., 143 N. Y. 559, 38 member; it was thereupon indorsed N. E. 713. by the firm, and wrongfully delivered by the president, before maturity, to a stranger having no actual knowledge or notice of a defect in the title, as collateral security for a cash advance of more than its amount, upon a note of the firm and for its benefit. It was held that the fact that the corporate note bears upon its face the signature, as president, of the party dealing with it, is not sufficient to put the transferee upon in 82. Mitchell v. Rome R. Co., 17 Ga. 574; Goodrich v. Reynolds, 31 Ill. 390, 83 Am. Dec. 240; Hardy v. Merriweather, 14 Ind. 203; Bank of Missouri v. Price, 1 Mo. 54; Strauss v. Eagle Ins. Co., 5 Ohio St. 59; White's Bank v. Toledo Fire, etc., Co., 12 Ohio St. 601; Blunt v. Walker, 11 Wis. 334, 78 Am. Dec. 709; Wayland Univ. v. Boorman, 56 Wis. 657, 14 N. W. 819. 83. Savage v. Walshe, 26 Ala. 619; Frye v. Tucker, 24 Ill. 180; Goodrich 84 Many of the same rules which control the indorsement and transfer of negotiable paper by agents are also applicable to officers and agents of a corporation. As in the case of the power of a corporate officer to bind the corporation by issuing bills and notes, the power of such officer to transfer negotiable paper received by the corporation may be implied from the circumstances or from the customs of the corporation.85 A uniform practice by an insurance company, for a period of several months prior to the transfer of the note in suit, of raising money on its notes, upon the indorsement of its president for the purpose of passing title, may be given in evidence to the jury, and will warrant the jury in finding that the indorsement of the note in suit was upon sufficient authority to make it binding upon the company. There can be no general or prima facie authority vested in a corporate officer to transfer paper of the corporation by indorsement, any more than such officer can have prima facie authority to bind the company by a note or bill issued by him. But a cashier of a bank is, virtute officii, generally intrusted with the notes, securities, and other funds of the bank; and is held out to the world by the bank as its general agent in the negotiation, management, and disposal of them. Prima facie, therefore, he must be deemed to have authority to transfer and indorse negotiable securities, held by the bank, for its use and in its behalf. No special authority for their purpose is necessary to be proved.87 86 v. Wilder, 31 Ill. 490; Morris v. his acts in the same manner as if the Cheney, 51 Ill. 451; Carne v. Brigham, 39 Me. 35; Lucas v. Putney, 27 N. J. L. 221; Buckley v. Briggs, 30 Mo. 452; Marvine v. Hymers, 12 N. Y. 223; Bank of Genesee v. Patchin, 19 N. Y. 312; Farmers' Bank v. Maxwell, 32 N. Y. 579; Holbrook v. Basset, 5 Bosw. (N. Y.) 147; Ogden v. Andre, 4 Bosw. (N. Y.) 583. 84. See § 29, ante, p. 99. authority were expressly granted." See also Union Gold Mining Co. v. Rocky Mt. Nat. Bank, 2 Colo. 248, 257; Phillips v. Campbell, 43 N. Y. 271; Chicago Bldg. Soc. v. Crowell, 65 Ill. 453; Ardesco Oil Co. v. Gilson, 63 Pa. St. 146; Dougherty v. Hunter, 54 Pa. St. 380. If an officer of a corporation openly exercises a power which presupposes 85. The rule as applied to agents and officers of a corporation in the a delegated authority for the purpose, performance of representative acts has and the corporate acts show that the been stated by Mr. Thompson (on Cor- corporation must have contemplated porations, § 4883) as follows: "In the legal existence of such authority, general, it may be stated to be well the acts of such officer will be deemed settled that if an officer of a corpo- rightful, and the delegated authority ration is allowed to exercise a particu- will be presumed. Fayles v. National lar authority in respect to the busi- Ins. Co., 49 Mo. 380. ness of a 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 86. Marine Bank of New York v. Clements, 31 N. Y. 33. 87. Wild V. Bank of Passamaquoddy, 3 Mason (U. S.), 505, per Story, J. g. Form of notes and bills by corporations; form of indorsement. We have already referred to the forms of negotiable instruments executed by agents and others acting in a representative capacity, and have discussed at length the liabilities of agents arising from an irregular signature of such instruments.88 Many cases have been there cited where the courts have held the officers of corporations liable personally upon the notes and bills of such corporations, because such instruments did not show upon their faces that they were made to bind such corporations. It will 89 Indiana.- State Bank v. Wheeler, 21 Ind. 90; Jones v. Hawkins, 17 Ind. 550; Allison v. Hubbell, 17 Ind. 559. Louisiana.- Merchants' Ins. Co. v. Chauvin, 8 Rob. 49; Haynes v. Beckman, 6 La. Ann. 224. Maine.- Burnham v. Webster, 19 Me. 232; Farrar v. Gilman, 19 Me. 440, 36 Am. Dec. 766. V. First Nat. Maryland-Ecker Michigan.- Kimball v. Cleveland, 4 Indorsement by bank cashier.— In the case of Fleckner v. U. S. Bank, 8 Wheat. (U. S.) 338, 360, Story, J., also said: "We are very much inclined to think that the indorsement of notes, like the present, for the use of the bank, falls within the ordinary duties and rights belonging to the cashier of the bank, at least if his office be like that of similar institutions, and his rights and duties are not otherwise restricted. The cashier is usually intrusted with all the funds of the bank, in cash, notes, bills, etc., to be used, from time to time, for the ordinary exigencies of the bank. He receives directly, or through the subordinate officers, all moneys and notes. He delivers up all discounted notes and other property, when payments have been duly made. He draws New Hampshire.- Elliot v. Abbot, checks, from time to time, for moneys, 12 N. H. 549, 37 Am. Dec. 227; Corwherever the bank has deposits. In ser v. Paul, 41 N. H. 24, 77 Am. Dec. short, he is considered the executive 753; Preston v. Cutter, 64 N. H. 461, officer, through whom and by whom the whole moneyed operations of the bank, in paying or receiving debts, or discharging or transferring securities, are to be conducted. It does not seem too much, then, to infer, in the absence of all positive restrictions, that it is his duty as well to apply the negotiable funds as the moneyed capital of the bank to discharge its debts and obligations." See also the following cases: United States.- La Fayette Bank v. State Bank, Fed. Cas. No. 7,987, 4 McLean, 208; Lanning v. Lockett, 10 Fed. 451. Alabama-Everett v. United States, 6 Port. 166, 30 Am. Dec. 584. Georgia.-Carey v. Giles, 10 Ga. 9; Collins v. Johnson, 16 Ga. 458. Illinois.- Owens v. Stapp, 32 Ill. 653. Mississippi.- Harper v. Calhoun, 8 Miss. 203. Missouri.-Young v. Hudson, 99 Mo. 102, 12 S. W. 632. 13 Atl. 874. New York.- Barrick v. Austin, 21 Barb. 241; Bridenbecker v. Lowell, 32 Barb. 9; City Bank v. Perkins, 29 N. Y. 554, 86 Am. Dec. 332. ville, 11 Ohio St. 153, 78 Am. Dec. Ohio. Sturges v. Bank of Circle Bank, 45 Ohio St. 236, 13 N. E. 884. Tennessee. Maxwell V. Planters' West Virginia.- Smith v. Lawson, 18 W. Va. 212, 41 Am. Rep. 688. Wisconsin.-Houghton v. First Nat. Bank, 26 Wis. 663, 7 Am. Rep. 107. 88. See § 29, note 17, ante, p. 84, as to effect of affixing corporate seal, and notes 23 and 24, ante, pp. 87, 88, as to signatures generally. 89. See § 29, c, (3), and notes on pp. 86-93, ante. not be necessary, therefore, in this connection to treat of the liabilities of officers and agents of corporations in making, drawing, accepting, and indorsing commercial paper. The body of a negotiable instrument which seeks to bind a corporation should contain the correct name of the corporation, without the name of the officer or agent who issues it. Such instrument should be signed by writing the name of the corporation, and by adding thereto the name of the officer or agent making the signature. A note in the following form would comply with all the requirements: $1,000. ALBANY, N. Y., January 1, 1903. The James B. Lyon Company promises to pay to Matthew Bender or order, six months after date, one thousand dollars. THE JAMES B. LYON COMPANY, By JAMES B. LYON, President. There are other forms and methods of signing which have been held sufficient to bind the corporation. A note running "I, A. B., treasurer of the D. F. Company, promise," etc., and signed by "A. B., Treasurer of D. F. Company," might be held to be that of the company, and not of the individual.90 But there is conflict among the authorities as to the sufficiency of such a signature, and there are cases holding that similar signatures only bind the officer, individually, and not the corporation.91 A signature "A. B., for the D. F. Company," or "A. B., Treasurer, for the D. F. Company," would probably be a proper signature, especially if the promise, as stated in the body of the instrument, was in the name of the company.92 But questions have sometimes arisen as to the force of such a signature,93 and it would, therefore, be much better to name the corporation first, and add "by A. B., Treasurer," or president, as the case may be. There are no reported cases where instruments signed in such a manner have been the subject of controversy. By such a signature the intention to bind the company is clear and unequivocal and no question can arise as to its effect. 6 Am. Dec. 160; Rice v. Grove, 22 90. Mann v. Chandler, 9 Mass. 335. 92. Long v. Colburn, 11 Mass. 97, 91. Barker v. Mechanic Fire Ins. Co., 3 Wend. (N. Y.) 94; Brockway v. Allen, 17 Wend. (N. Y.) 40; Hills v. Bannister, 8 Cow. (N. Y.) 31; Cleveland v. Stewart, 3 Ga. 283; Dennison v. Austin, 15 Wis. 334; Sturdivant v. Hall, 59 Me. 172. 93. Rice v. Grove, 22 Pick. (Mass.) 758, 33 Pac. 724. |