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1st. The appellee is responsible to the appellant for the amount which he has lost through the act of its agent, whether the certificates of stock upon

which the loans were made have the genuine signature of the president, or whether they are forged, or whether the money went into the treasury of the appellee, or into the pockets of Crawford, if the certificates were issued in the course of, and within the scope of his employment as agent.

2d. That the appellee is estopped from denying the facts set out in the certificate issued by its agent, and authenticated by its seal, in the due course of his employment and within the scope of his authority.

That the corporation cannot set up the fraud of its own agent as a defence, because the act of the agent is its own act, and such defence would be relying on its own fraud.

3d. That the negligence of the appellee, in the management and conduct of its corporate affairs, contributed to the perpetration of the frauds upon the appellant, and concludes them from denying their responsibility for the acts of their agent.

The appellee's prayers negative these propositions, and are generally the converse of them.

The questions involved in them are thus epitomized in the appellee's brief:

1st. That no recovery can be had under any circumstances, on the certificates offered in evidence, without proof of the genuineness of the signatures of the president and treasurer, and of the seal of the company.

. 2d. That no recovery can be had, even if the certificates were genuine, as regards the seal and signatures, and in other respects, if they were issued by Crawford for his own benefit, without authority; and that there is nothing in the evidence to estop the defendants below from setting up a want of authority.

3d. That if the said certificates gave to Crawford no right which he could enforce against the company, the hypothecation of them to the plaintiff below, his bailee, could confer no rights which he did not possess himself.

The appellant's prayers are predicated on the theory of a general agency; the appellee's on a special or limited authority.

In the very excellent compendium of Mercantile Law, by Smith, the rights of third persons against principals are very clearly and forcibly defined, as follows:

" As far as the agent's authority extends, he has a right to bind the principal to third persons. Now his authority may, as we have seen, be either expressly given or inferred from the acts of his supposed principal. When it is expressly given, there can be no doubt as to its extent, except from the uncertainty of words employed in delegating it. When, however, it is to be inferred from the conduct of the principal, that conduct furnishes the only evidence of its extent as well as of its existence; and in solving all questions on this subject, the general rule is, that the extent of the agent's authority is (as between his principal and third parties) to be measured by the extent of his usual employment, for he who accredits another by employing him must abide by the effects of that credit, and will be bound by contracts made with innocent third persons, in the

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seeming course of that employment, and on the faith of that credit, whether the employer intended to authorize them or not; since where one of two innocent persons must suffer by the fraud of a third, he who enabled the third person to commit the fraud should be the sufferer.” · Smith's Mer. Law, 56, 57 (London edition, 1834).

This principle is applied to cases respecting notes or bills, which, if drawn, indorsed, or accepted by a clerk who has been previously allowed to do so, bind the master, though the money never came to his use; and to sales and guarantees; in a word to every species of mercantile transaction; and whether the agent have or have not been dismissed from his employer's service, provided that the third party had no reason to be aware of the determination of his employment. Vide Prescott v. Flinn, 9 Bing. 21; Boulter v. Arlesdon, 1 Sel. 234; Barber v. Gingell, 3 Esp. 60; Haughton v. Ewbank, 4 Camp. 88; 12 Mod. 346, cited by

; Smith.

The American doctrine on this subject is announced by Story, in terms equally emphatic and comprehensive, viz. :

" It is a general doctrine of law, that although the principal is not ordinarily liable (for he sometimes is), in a criminal suit, for the acts or misdeeds of his agent, unless, indeed, he has authorized or coöperated in those acts or misdeeds ; yet he is liable to third persons in a civil suit, for the frauds, deceits, concealments, misrepresentations, torts, negligences, and other malfeasances, or misfeasances, and omissions of duty, of his agent in the course of his employment, although the principal did not authorize, or justify, or participate in, or indeed know of such misconduct, or even if he forbade the acts or disapproved of them. In all such cases the rule applies respondeat superior, and it is founded upon public policy and convenience ; for in no other way could there be any safety to third persons in their dealings, either directly with the principal, or indirectly with him, through the instrumentality of agents. În every such case the principal holds out his agent as competent and fit to be trusted, and thereby in effect, he warrants his fidelity and good conduct in all matters within the scope of the agency.” Story on Agency, 7th edition, ch. 17, sec. 452; Penn., Del. f Md. Steam Nav. Co. v. Hungerford, 6 G. & J.

, v 291 ; Lord Holt's opinion in Lane v. Cotten, 12 Mod. 490; Paley on Agency, by Lloyd, 294, 301, 307; Bac. Abrid. Master & Ser. R. These principles apply as well to private corporations as to natural per

“ As natural persons are liable for the wrongful acts and neglects of their servants and agents, done in the course and within the scope

of their employment; so are corporations upon the same grounds, in the same manner, and to the same extent. Angell & Ames on Corps. ch. 9, sec. 310; Albert v. The Savings Bank of Balto. 1 Md. Ch. Dec. 407; Thacher v. Bank of N. Y. 5 Sand. 121 ; Thompson v. Bell, 10 Exch. 10 (26 Eng. L. & Eq. 536); Bargate v. Shortridge, 5 Ho. of Ld. Cases, 297 (31 Eng. L. & E. 44); Nat. Erch. Co. v. Drew, H. L. 1855 (32 Eng. L. & E. 1); Stevens v. Boston and Maine Railroad, 1 Gray, 277; Blackstock v. N. Y. & Erie R. R. Co. 1 Bosworth, 77.

These obligations spring, as we have said, from the dictates of natural justice, the policy of the law, and the necessities of society ; they are


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common to all civilized communities, ancient and modern, and derived mainly from the civil law. In commercial countries, where capital is centred in large corporations, whose stock is the subject of continual change by sale or hypothecation, operations which must be conducted by the agency of individuals whose powers can be ascertained only by the extent of their usual employment, the importance of maintaining these principles can scarcely be over-estimated.

It is conceded in this case that the appellees are a corporation, created by the State of West Virginia ; that immediately after the reorganization of the

company, it made an agreement with the Baltimore and Ohio Railroad Company, by which the latter undertook to work the Branch Road, and thereafter the management of the road became, on the part of the Parkersburg Company, simply a supervision of accounts between the companies.

“That at the first stockholders' meeting, held the 10th of May, 1865, the following directors were appointed, and continued in office by annual reëlection, until August, 1870, when Crawford's frauds were discovered :" P. G. VAN WINKLE,




Of Parkersburg,


Of Baltimore.

Two standing committees were appointed, viz. :

Messrs. McKim, Garrett, and Murdock, Committee of Finance; Messrs. De Ford, O'Donnell, and Cooke, Committee on the Road.

At this meeting, P. G. Van Winkle was appointed President, W. W. Van Winkle, Secretary, and John L. Crawford, Treasurer and Stock Transfer Agent.

The following by-laws or resolutions were adopted at this meeting:

Resolved, “ That the officers of this company, subordinate to the president, shall be a treasurer and secretary, who shall hold their respective offices during the pleasure of the board. The duty of the treasurer, in addition to the usual functions of such an officer, shall be to keep the ledger and other books, relating exclusively to the ownership and transfer of the capital stock of the company; to prepare and countersign all certificates of ownership of stock and scrip hereafter issued, and to receive and enter upon the proper books all transfers thereof. He shall affix an impression of the seal of the company to all certificates of ownership of stock and scrip properly issued by the company, and signed by the president, and also, to such other instruments and papers as are required by law, or the by-laws of the company, or may be directed by the board, to be under seal. He shall give bond, with security to be approved by the president, in the penal sum of ten thousand dollars, conditioned for the faithful performance of the duties of his office, during his continuance therein, and for accounting for, and paying over to his successor, all money, security, and other property, which may come to his hands by

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virtue thereof. Until the further order of the board, he shall keep his office in the city of Baltimore; and in case of absence or inability to act of the secretary, shall discharge such duties of the latter as may be required by the board or president. His salary shall be at the rate of two hundred and fifty dollars

per annum. Resolved, " That the president and treasurer are hereby authorized and directed to issue certificates of ownership of stock and scrip directly, to such parties as have heretofore assented to the terms of reorganization, whether they have or have not their respective certificates of allotment, and also to those who shall hereafter so assent, in the said terms on the surrender to be cancelled of the stock certificates, bonds, and other evidences of debt of the late Northwestern Virginia Railroad Company, owned or held by themʻrespectively.

Resolved, " That the capital stock of this company be increased by the addition of so many shares of the par value of fifty dollars each, to the amount of the capital stock of the late Northwestern Virginia Railroad Company, as may be necessary to cover the stock issued, and to be issued in redemption of the obligations, debts, and stock of the said late company,

the gross amount of the stock so issued to be deemed and taken to be the cost of the works and property in the hands of this company, agreeably to the resolutions of the stockholders, adopted at an adjourned meeting held on the 24th day of May last.

Resolved, “ That the seal prepared for the use of this company and now exhibited, having as a device a steamboat, locomotive, &c., with the legend, • Parkersburg Branch Railroad Company,' be, and the same is hereby, adopted as the common seal thereof, and shall remain in the custody of the president, and shall be affixed to all certificates of stock and scrip, and all other instruments requiring a seal executed on the part and by authority of this company."

But one meeting of the directors was held between that of September, 1865, and August, 1870, viz., on the 17th of September, 1867, at which no business of importance was transacted.

It has been argued on the part of the appellee, that these by-laws conferred a special authority only on the treasurer and transfer agent, which all persons dealing with him were bound at their peril to know. This, however, is not the doctrine of the text-writers or best adjudged cases, as to private corporations. By-laws of a private corporation are generally binding upon none but its members or officers.

These they obligate upon the ground of their express or implied assent to them. Angell & Ames on Corp. sec. 359, and authorities in note.

By-laws of a public municipal corporation are regarded as public acts. Vide Mayor, fc. of Baltimore v. Reynolds, 20 Md. 1.

These by-laws or resolutions prescribe and define the powers and duties of the treasurer and transfer agent, as between the corporation and himself, and all persons having knowledge of their method of doing business. Angell & Ames on Corp. ch. x. sec. 325, 359 — citing Cummings v.

Webster, 43 Me. 192; Bank of Wilmington v. Wollaston, 3 Harrington, Del. 90.

By these, “ the treasurer is made the custodian of the ledger and other books relating exclusively to the ownership and transfer of the capital

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stock of the company,” he is authorized “ to prepare and countersigu all certificates of ownership of stock and scrip thereafter issued,” and “ to receive and enter upon the proper books all transfers thereof;” “ to affix an impression of the seal of the company to all certificates of ownership of stock and scrip, properly issued by the company and signed by the president.” In a word, he is constituted the executive of the corporation, with large discretionary powers. But an agent's powers (as we have seen) do not depend solely on the express letter of his instructions. “ Their extent, as well as existence," as said by Paley, " are often determined by the conduct of the principal towards the agent, and measured by his usual employment.

There was no limit in this case as to the amount of stock to be issued.

It is conceded that no objection is made to the certificate on the ground that they were over-issues.

The seal of the corporation and signatures of the treasurer and transfer agent are admitted to be genuine.

The first of the appellant's and appellee's prayers are based on the hypothesis that the signatures of both president and treasurer are genuine. Yet the appellee insists, notwithstanding they may be genuine, if the jury shall find that the certificates were issued by the treasurer fraudulently and surreptitiously, for his own use and benefit and not for the use and benefit of the appellee, the appellant is not entitled to re


This theory denies all liability of the principal for the fraudulent act of the agent, unless that act inures to the benefit of the former; a proposition which cannot be adopted without abandoning all the principles previously cited from the text-books, supported by a long series of decisions.

Paley, in his chapter on the obligation of principals, for the neglect or fraud of their agents, after announcing the proposition, that "if a man employ an agent in the commission of a fraud, he is clearly liable for it himself,” adds, “ And employers are also civilly liable for frauds committed by their servants or agents, without their authority, if done in their employment,” for which he cites, 1 Str. 653; S. P., per Lord Ellenborough in Crockford v. Winter, 1 Campb. 127 ; Paley, ch. 3d, 302.

The ground of liability is not that the principal has been benefited by the act of the agent, but that an innocent third person has been damaged by confiding in the agent, who was accredited by the principal as worthy of trust in that particular business.

In the case of Jones v. Perchard, 3 Esp. Cases, 507, cited by Paley in note (0), p. 300, a sheriff was held liable for money wrongfully taken by his bailiff, under color of his office, in an action for money had and received; “ but the plaintiff (it was held) need not show that the money came to the sheriff's hands."

The modern case of the Bank of Kentucky v. The Schuylkill Bank, decided by the late president, Judge King, in the court of common pleas of the First Judicial District of Pa., and affirmed by the supreme court of that State, furnishes analogies and establishes principles which will aid us much in arriving at correct conclusions in the present case.

The Bank of Kentucky, in 1835, resolved to establish agencies in New


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