PRACTICE REPORTS. COURT OF APPEALS. THE FARMERS' & MECHANICS' BANK OF KENT COUNTY, MARYLAND agt. THE BUTCHERS' & DROVERS' BANK.* The party making and uttering a certificate of "good," written upon the face of a bank check or other negotiable paper designed for circulation, stands in the relation of an acceptor, with all the responsibilities incident to that relation. The certificate means nothing less than this, but it means something more. It imports that the drawer has funds, or means convertible into funds, in the hands of the drawee at the time, which shall be retained and devoted to the payment of the paper on presentation. A general and correct definition of the term "agency" implies the power to do just what the principal has authorized, and no more. If the power to act is conferred by writing, then the instrument will define what the power is, and the extent of it; and if by parol instructions to do a particular act or series of acts relating to a particular business or subject, then the authority must be ascertained from the express instructions given, and such implied authority as may be necessary to give them effect. If the agency arises, as it must in many cases, where there is no written authority, and no express parol instructions, from the relation which the agent maintains towards his principal, and the nature of the employment, it is obvious that the extent of the powers to bind the principal must depend upon other elementssuch as the character of the relation; the nature of the employment; the custom and usage of the business; and the recognition and acquiescence; which must each of them, enter largely into the consideration of the extent of the agent's authority. And this principle is peculiarly applicable to the class of agencies represented by the officers of corporate companies. NOTE. The doctrines of agency have recently been much discussed in our court of appeals, and one of the most instructive cases upon the duties of agents and the liabilities of principals for their acts, is that above entitled. It is reported in 16 N. Y. R. 125, where Judge SELDEN'S opinion alone is given; but it appears by that report that Chief Judge DENIO and Judge BROWN also delivered opinions. That of the Chief Judge will be found in 4 Kern. (14 N. Y.) R. 623; and as it seems desirable that the profession should be made acquainted with the views of the whole court in so leading a case, we here publish the opinion of Judge BROWN, which has been obtained from the reporter of the court of appeals, and is authentic, VOL. XXVI. 1 Farmers' & Mechanics' Bank of Kent Co. agt. Butchers' & Drovers' Bank. In determining the nature and extent of the authority which this latter class of agents may rightfully exercise, the courts may take judicial notice and recognize the general course of the banking business as it is now conducted, and the universal practice of those employed to conduct it. They may know that the circulating notes are signed by the presidents and cashiers; that the deposits are received and paid out by the clerks, tellers and cashiers; and the certificates of deposits, and the certificates upon the face of checks drawn by the dealers and depositors, are signed by the same class of officers, or by one of them. The authority of this class of agents to do these acts within the walls of the banking institutions and at their counters, is never the subject of inquiry or examination. It is never doubted or questioned, but is presumed from the nature of the employment and the necessities of the business. The rule that he who deals with the agent of another is bound to look into the agent's commission for the measure of his authority, must have a qualified application to an agent with a general power, coupled with a limitation not patent or open to common observation. Therefore, where the teller or other proper officer of a banking corporation, representing it and doing its business at the counter, certifies checks of its dealers and depositors drawn upon it in the usual form under a general power to certify, such banking corporation is responsible to holders in good faith and for value, notwithstanding private directions not to certify in the absence of funds without special permission. APPEAL from a judgment of the superior court of the city of New York. The action was to recover the amount of five checks drawn upon the defendant by one Green, and certified by the defendant's paying teller on their face to be good. The checks were not drawn against funds, and the teller, in fact, had no authority to certify such checks. The jury found that the plaintiffs were bona fide holders for value of the checks, and they had judgment for their amount. The defendants appealed to this court. JOHN H. REYNOLDS, for the appellants. BROWN J. The judge charged the jury, upon the trial of this action, that there was no doubt of the authority of Peck, the teller of the defendant, to certify checks in the manner in which the checks in question were certified, so as to bind the defendant to pay them to holders taking them bona fide and for value, in the usual course of business. The defendant thereupon excepted. The proposition involves Farmers' & Mechanics' Bank of Kent Co. agt. Butchers' & Drovers' Bank. the main question in the action, and I will return to it presently. He also charged, that if the jury found that the plaintiff had previously held similar checks certified by Peck, the teller, in the same manner as the checks in controversy, which had been paid by the bank on presentation and without objection, and if they also found that the plaintiff took them in good faith for value and without notice of the agreement between Green, the drawer, and Peck, the teller, that they were to be returned to and not paid by the bank, and without notice that Peck in certifying them had exceeded his authority, the plaintiff was entitled to recover. To this also the defendant excepted. The instruction was in effect that the jury might infer Peck's authority from previous transactions and acts of the same kind, which had been accepted and approved by the defendant without objection. In this I see no error, because the agent's authority might have been proved by an express direction, or by the usual and customary course of business at the bank. The residue of the proposition, that they must also be satisfied the plaintiff had no notice of the agreement between Peck and Green, or that the former accepted, in violation of his duty, before they could give the plaintiff a verdict, was certainly unexceptionable and needs no further notice. The jury were also told, and I think correctly, that the plaintiff was a holder for value, if it took the checks in payment and satisfaction of the installments of stock sold to or subscribed for by Green and others, and not as collateral security for the payment of such stock subscriptions. The verdict for the plaintiff must therefore be deemed to establish the facts, that the plaintiff took the checks in good faith, in the usual course of business, for value, and without notice of any want of authority by Peck, or of the agreement between him and Green, that the checks were not to be paid by the defendThere is no conflict of evidence and no dispute about ant. We are therefore left to consider whether Peck Farmers' & Mechanics' Bank of Kent Co. agt. Butchers' & Drovers' Bank. had authority under the proof to certify the checks for the bank, and if so what was the duty and obligation which it incurred thereby. Checks upon banks have most of the qualities of inland. bills of exchange. They are drawn for a sum certain upon a person or corporation usually having funds of the drawer sufficient for their payment, and are payable on presentation. If payable to bearer they pass by delivery, and if to the order of the payee by indorsement, in the usual form. They are not payable on time, and are therefore not presented for or subject to acceptance, and in this particular they differ from bills of exchange. The drawer may be made liable as the drawer of a bill of exchange upon presentation within a reasonable time and notice of non-payment. Most of the rules respecting bills of exchange and promissory notes affect checks on bankers. (Chitty on Bills, 515; Harker agt. Anderson, 21 Wend. 372). I assume that the practice of having the drawee mark and certify upon the face of the check, that it is good for the sum therein expressed, is of recent origin, for I find nothing said of it by the early writers, and but few reported cases where the practice is referred to. It is, however, at the present day a prevalent custom. Checks drawn upon banks or bankers thus marked and certified enter largely into the commercial and financial transactions of the country. They pass from hand to hand in the payment of debts, the purchase of property, and in the transfer of balances from one house and one bank to another. In the great commercial centers they make up no inconsiderable portion of the circulation, and thus perform a useful, valuable, nay, an almost indispensable office. They are enabled to perform these important functions, mainly upon the faith and credit given. to the certificate of the drawee that they are good. It is this that gives them credit and currency with commercial men. The object of the drawer who obtains the certificate, and the purpose of the drawee in giving it, is to impart |