ities have departed from this common law rule, and hold the master or principal subject to vindictive damages, especially in the case of corporations, where the act of the servant is willfully and maliciously committed, in the line of his employment, though the master may have neither ratified nor authorized the servant's act.10 These authorities utterly ignore the question of the authorization or ratification on the part of the master of the servant's act; either this, or they make the act itself supply these necessary elements to the assessment of vindictive damages. But the decisions of these courts give no indication that they make any such inferences, and they declare in plain terms that if the injurious act of the employee was willfully or maliciously committed in the line of his employment, the master is liable to punitive damages, without anything else being shown." On the other hand, there is a very able line of authorities, which hold that the master is not liable to exemplary damages for the malicious act of the servant, unless he authorized or ratified such act. There must be something done or forborne by the master showing a personal willingness that the act shall be done, to the extent of authorizing the act-or an approval and ratification of the act when done; and no mere act of the servant separate and alone, can supply these necessary elements. If the servant committed the act, of his own volition, without the master's consent or approval, however malicious and even injurious the act may be, the master is not liable to vindictive damages. 12 There may be circumstances under which the master will be liable for act of the servant to the extent of punitive damNoidstrom, 1 Taunton, 568. Chitty says, unless there be an actual consent to the trespass, either after or before it was committed, even a master is not liable in an action of trespass for the act of his servant, though case may be supported against him in some instances for injuries in respect of which the servant is liable in trespass. Chitty's Pld., vol. 1, p. 137.

10 Hachl v. Wabash R. Co., 24 S. W. Rep. 737; Vawter v. Hatz, 112 Mo. 633; Hopkins v. St. & St. L. R. Co., 36 N. H. 9. Fay v. Parker, 53 N. H. 342; Goddard v. Grand Trunk R. Co., 57 Me. 202.

11 Rouse v. R. Co., 41 Mo. App. 298; Smith v. R. Co., 92 Mo. 359; Dixby v. Dunlap, 56 N. H. 456.

12 Hogan v. P. & W. Ry. Co., 3 R. L. 88; Philadelphia R. Co. v. Quigley, 21 How. 202; Salt Lake City v. Hollister, 118 U. S. 256; Reed v. Home Savings Bank130 Mass. 443; Krulivitz v. Easter R. Co., 140, 573; Der' mott v. Evening Journal, 14 Vroom. 488; Bank of New South Wales v. Owston, 4 App. Cas. 270; Caldwell v. New Jersey Steamboat Co., 47 N. Y. 282.

ages though no authorization or ratification on the part of the master can be shown. Thus, if the master employ the servant about a business and the natural and proximate result of the performance of that work by the servant is great damage to a third person, the master will be liable to punitive damages, if the servant perform the work and do great damage thereby to a third person. The reason of this is obvious. The master knew when he set the servant about the work that the natural and proximate result of the performance of that work by the servant would be great injury to another. Knowing this he is responsible for punitive damages, although he may have had no knowledge of, and may not have approved, the particular act which caused the injury.18 No man should be punished for the act of another, for an act which he did not do. It shocks our sense of justice when any one is punished for an act which he did not authorize or approve. Turn to the criminal law-how stands the matter? Is not the intent the very essence of the offense. I know of no case wherein the law ignores the intent, except in some peculiar statutes, like those against the unlawful sale of liquor, and in the common law distinction between actions of trespass and actions on the case. In all other cases so far as my knowledge extends, the intent is the very gist of the offense. A criminal is not punished unless he intended to commit the offense. Intent includes personal knowledge—that is, the criminal authorized himself to commit the offense, if we may so speak.14 We have said that those courts which hold to the doctrine of imputed liability, so far as the same concerns exemplary damages, are especially prone to so hold in the case of corporations. They seem to go on Lord Coke's idea, that a corporation has no soul, has no personal sense that can be reached, and on account of what they call the "logical difficulty" of showing a personal authorization or ratification on the part of the corporation, they make such authorization and ratification a presumption of law, or else hold the same to be unnecessary. But there is no more difficulty of showing a personal authority or approval

13 Whittaker's Smith on Negligence, p. 137; Cooley on Torts, p. 212; Lothrop v. Adams, 133, Mass. 471; Denver, etc. R. Co. v. Harris, 122 U. S. 597.

14 Chitty on Pld., Vol. 1 p. 435; Blackstone's Comm. Vol. 4, p. 110.

on the part of a corporation, than there is in the case of a private individual. Because whenever an employees has other employees under his management and control, with power to hire and discharge and also has charge of the work being done, notice to such an employee, as it affects the conduct of the servants under his control is notice to the corporation. Such a servant stands in the shoes of and represents the corporation, so far as the acts of the men under his charge in the performance of their work, is concerned. Upon what grounds does the doctrine of exemplary damages rest. How do courts justify the awarding of damages beyond compensation for the act done? In the case of Haines v. Schultz the Supreme Court of New Jersey said speaking of punitive damages that the right to award such damages rests primarily on the single ground of wrongful motive. It is the wrongful personal intention to injure that calls for the penalty. To this wrongful intent knowledge is an essential prerequisite." It is generally said, that to justify the infliction of punitive damages there must be circumstances of willful oppression, malice or fraud. But there can be no willful oppression, malice or fraud, without the wrongful personal intent, and there can be no such intent without knowlenge, a man cannot intend a thing without knowing it. Compensation is one thing and exemplary damages is quite another and different thing. The right to compensation rests alone on the ground of injury; it is to compel the defendant to restore to the plaintiff that which he, the defendant, has deprived him, the plaintiff, of; the intent with which the act was done plays no part in the penalty. As said by Mr. Chitty "a person may become an immediate trespasser vi et armes, even in the performance of a lawful act, if in the course of such performance he be guilty of neglect."'16

But in the case of punitive damages the idea is that the defendant has not only injured the individual, but he has been guilty of an act, which for the public good, in order that other evil disposed persons may be de

terred from doing likewise needs punishment by the infliction of punitive damages on the defendant, and then, by a species of legal legerdemain, the plaintiff is subrogated to this public right and thereby recovers smart money of the defendant. It is contrary to the fundamental principles on which damages are allowed to hold the master for exemplary damages when he neither ratified or approved the servant's act. What is this fundamental principle on which damages are allowed? It is this, that the defendant is liable to such damages as may reasonably be presumed to have been in the minds of the parties, as the result of the transaction, or as the matter is sometimes put in reference to the defendant's liability to injuries resulting from negligence, "that is, the defendant is liable, if in view of all the facts and circumstances, at the time, such injuries might reasonably have been foreseen as likely to ensue from the alleged negligence," the other elements of liability being present.17 Now, how can the defendant be presumed or thought to have contemplated the result of an injury, when he had no knowledge of the act which caused the injury. How could the defendant intend that which he knew not of.18 Again, the injury which is the result of the servant's act, springs from a tort. Yet the courts which hold to the doctrine of the master's liability though he neither authorized or approved the servant's act, proceed on the principles of the contract of insurance, that is, they hold the master liable to punitive damages at all events, that is, they hold, that if the malicious and injurious act was done by the servant in the course of his employment, the master is liable, though the master neither authorized nor approved the servant's conduct. This doctrine makes the master an insurer of the servant's conduct, and a declaration might well be drawn for such damages, as if the pleader were declaring on a contract of insurance, that is, he would only be required to allege the malicious injury and that the same occurred or was done by the servant in the line of his employment, and the master's liability would follow as a legal consequence. But the better doctrine, as held by the best considered cases,

17 Texas & P. R. Co. v. Reed, 31 S. W. Rep. 1059; Sharp v. Powell, L. R. 7 C. P. 253; Railway Co. v. Williams, 75 Texas, 4.

18 Whittaker's Smith on Negligence, 471.

as I think, hold that a declaration so drawn would show no liability on the part of the master to exemplary damages; but to be good and proof against a demurrer, such a declaration would be required to go a step farther in its averments, and allege in an issuable form, either that the master authorized the servant's act, or ratified and approved the same afterwards.19 When we come to carefully consider the doctrine of the liability of the master for the malicious act of the servant, to the extent of the infliction of punitive damages on the master, though he may neither have ratified nor authorized such act, and especially when we consider how variant such a doctrine is from the common law, the source of our jurisprudence; and lastly, when we consider how violative this doctrine is of all right and justice, we can only feel deep regret and profound astonishment that such a principle ever found an advocate on the supreme bench of any State of this Union.

LINTON D. LANDRUM.

Supreme Court of Ohio, January, 26, 1897.

1. The indorsement of the maker's name on the back of a promissory note payable to his order, and its delivery in that form to another for value, are essential parts of the execution of the note, which then becomes, in legal effect, payable to the holder or bearer; but the maker does not thereby become an indorser in the legal sense of the term, nor contract any liability but that of a maker.

2. The undertaking of a third person who places his name in blank on the back of such a note before or at the time it is so delivered by the maker, rests upon the consideration which supports the note in the hands of the holder, and prima facie is that of a surety of the maker for the payment of the note; and he will be held accordingly, unless he can show a different understanding or agreement between the parties, which it is competent for him to do.

WILLIAMS, C. J.: The allegations of the answer, that the Brooks-Waterfield Company, by signing its name on the back of the note, assumed the position of an indorser, is an admission of the due execution of the note, and of the genuineness of the company's signature thereon; but the nature of the obligation the company

thus contracted must be determined from the facts attending the transaction, which, as shown by the record, are substantially that the name of the company was signed on the back of the note when it was delivered to the plaintiff, and it was purchased and received by her from the maker on the day of its date, without information of any agreement concerning the company's obligation, other than that derived from the note itself. The note, being payable to the order of the maker, was incomplete in its execution until indorsed by him, and delivered to another for value; and it was so indorsed when received by the plaintiff, who paid to the maker its full value. The execution of the note being thus completed, it then, for the first time, became a valid obligation, and, in legal effect, was payable to the plaintiff or bearer. At that time it bore the signature of the company written on its back. There is here no room for any inference that the note had been previously transferred by the maker to the company, and thereafter indorsed by it, in order to transfer the title. If the company had thus become the indorsee, the note, in due course of business, could only have found its way back into the hands of the maker upon its surrender on payment or other satisfactory discharge, and its indorsement by the company on such surrender would be so entirely out of the usual course of business as to raise a presumption against it. The note being found in the hands of Cox on the day of its date, with the company's name indorsed upon it, is inconsistent with the theory that it had been indorsed and transferred to the company as the owner of the note, or that it had been taken up by payment. A more reasonable inference would be, that the note was then in the maker's hands, with authority from the company to negotiate it for his accommodation. "If a holder produce a note having a blank indorsement of one not the payee, the presumption is that it was made at the inception of the instrument." Good v. Martin, 95 U. S. 90. So that, upon presentation of this note to the plaintiff, she was authorized to deal with it as belonging to Cox, with the signature of the company indorsed thereon at the time of its execution, in order to give it credit, and aid in its negotiation; she not having been informed of any different agreement or understanding between the parties.

Precisely what is the nature of the legal obligation contracted by a stranger who indorses his name in blank on the back of a negotiable promissory note before or at the time it takes effect is a question upon which the courts have widely differed; some holding that his obligation is that of a second indorser; others have held him liable as a guarantor; and still others as a maker with the rights of a surety. The rule established in this State is that, when the name of such third party appears upon the note at the time it takes effect, his undertaking rests upon the consideration which supports the note; and the presump

tion is he intended to be liable as a surety for its payment, and is held accordingly, unless he can show that there was a different agreement or understanding between the parties, which it is competent for him to do. Bright v. Carpenter, 9 Ohio, 139; Champion v. Griffith, 13 Ohio, 228; Robinson v. Abell, 17 Ohio, 36; Seymour v. Ley-man, 10 Ohio St. 284; Seymour v. Mickey, 15 Ohio St. 615; Castle v. Rickly, 44 Ohio St. 490, 9 N. E. Rep. 136. And it is said in Rand. Com. Paper, § 831, that "the view which finds most support is probably that which holds the indorsement of a negotiable note by a stranger before or at the time of its delivery to the payee to be prima facie an original undertaking as joint maker, with an implied liability as such to the payee and all holders for value." The present case must be governed by this rule, unless it is rendered inapplicable by the fact that the note in suit is payable to the order of the maker, and his name appears indorsed thereon above that of the defendant in error. There are cases in which that distinction is made. Bigelow v. Colton, 13 Gray, 309; Dubois v. Mason, 127 Mass. 37; Bank v. Payne, 111 Mo. 291, 20 S. W. Rep. 41; Bank v. Nordgren, 157 Ill. 663, 42 N. E. Rep. 148. These decisions are placed upon the grounds that the liability of the parties whose names appear on the back of a negotiable note is conclusively determined by the position of the signatures with reference to those of the other parties when the note takes effect, and that, as a note payable to the maker's order cannot take effect until indorsed by him, a third person, in placing his name on the back of the note previous to its indorsement by the maker, intends to become liable only as a second indorser. He understands that to be the nature of his liability, it is said, and a different intention or agreement cannot be shown by parol proof. In one of the cases (Bank v. Nordgren, supra), the reason of the decision is stated as follows: "Inasmuch as the note can never have validity until the name of the payee appears upon it as an indorser, the person writing his name in blank upon the note understands that, when the note takes effect, his name will appear upon it as a second indorser; and it is reasonable to conclude that such was the position which he intended to occupy."

The real foundation on which these decisions appear to rest is that the maker, by placing his name on the back of the note to give it effect, becomes the first indorser, and the third person who places his signature on it, though done before that of the maker is indorsed on it, contracts the obligation of a second indorser. It is undoubtedly true that such a note is without any validity so long as it remains in the hands of the maker, and Its indorsement and transfer by him to a holder for value is necessary to give it obligatory effect. But it is equally true that by indorsing his name on the back of the note, and delivering it in that form to the holder, the maker does not become an indorser, in the commercial acceptation of

that term. He is, nevertheless, the maker of the note, his signature on its back being an essential part of its execution, and his liability is that of a maker only. He does not thereby enter into the contract of an indorser, which is to pay the note if the maker, upon demand, fail to do so at maturity, and due notice thereof be given. It would be a useless ceremony, if not a palpable absurdity to require the holder to make demand of the maker, and give him notice of his own default in order to charge him with the payment of the note. He is liable as a maker, without demand and notice, and sustains no other legal relation to the paper, which, it must be presumed, is within the knowledge of third persons who place their names on the note while in the maker's hands. It is no less true that such third person, whose name appears on the back of a note of that kind before or at the time its execution is completed by the indorsement of the maker's name thereon, is not an indorser, in the proper and legal sense of the term. There is a popular sense in which the term is used, that is sufficiently comprehensive to include any person who lends his name in any form to another on commercial paper. But courts do not use it in that sense. In its well-understood legal and commercial meaning, the indorsement of a note in blank amounts to a contract on the part of the indorser, with and in favor of the indorsee and every subsequent holder to whom the note is transferred, that the indorser had a good title to the instrument at the time of its indorsement, and was competent to transfer that title, which he undertook to do by the indorsement and delivery of the instrument to his indorsee; so that, to give rise to the contract and relation of an indorser, it is necessary that he should have been the payee or indorsee of the paper. Beckwith v. Angell, 6 Conn. 317; Story, Prom. Notes, § 135. Hence neither the indorsement of the maker's name on the back of a note payable to his order to complete its execution, nor that of a third person in blank before or at the time of its execution and delivery, constitutes a regular indorsement of commercial paper, nor creates the contract arising from a regular indorsement in blank, the terms of which are distinctly defined by law, and are therefore not subject to be varied by parol. The indorsement of the third person in such case belongs to that class known as irregular or anomalous indorsements, whose obligation depends upon the agreement of the parties; and, being ambiguous in that respect, parol evidence becomes admissible to show the terms of the agreement as actually made by the parties, or other facts showing their intention at the time.

The assumption that the stranger who places his name in blank on the back of a negotiable note, payable to the order of the maker, intends to contract as a second indorser, is based upon the consideration that he knows the note cannot become effectual without the indorsement thereon of the maker's name. But he must also know the latter does not become the first indorser, nor

contract the liability of an indorser at all, and that his own signature placed on the note before or at the time of its delivery creates no such contract; and, since he does not thereby contract the liability of a regular indorser, the presumption that he did not intend to do so would be quite as reasonable and legitimate as that he intended to do what he knew his act would not accomplish. It is not doubted that such third person may, by proper stipulation, prescribe the extent of the liability he intends to incur by his indorsement, and make it that of a second indorser, or whatever else he chooses; but, in the absence of such stipulation, the nature of his undertaking, like that of other irregular indorsers, must be determined from the circumstances of the case. That neither the order in which the names appear on the back of the paper, nor the order in point of time in which they were placed there, is conclusive of the relation of the parties to the paper, or to each other, or the liability incurred where the paper is for the accommodation of the maker, was held in the early case of Douglas v. Waddle, 1 Ohio, 413, and in the late case of Castle v. Rickly, 44 Ohio St. 490, 9 N. E. Rep. 136. In the first case, a note drawn by Barnes, payable to the order of Waddle, was indorsed by Waddle, and afterwards by Douglass, and then discounted for the maker's benefit. Douglass paid half of the note after maturity, and sued Waddle for reimbursement, claiming that, as second indorser, he had recourse on Waddle, the first indorser, and that parol evidence was inadmissible to show any different relation between the parties. But the court sustained Waddle in his claim that, as the indorsements were made before the discount of the paper, to give it credit, for the maker's accommodation, the obligation of Waddle and Douglass was that of cosureties for the maker, and therefore Douglass, having paid no more than his share of the debt, was not entitled to recover against Waddle. The court say that: "When a note is indorsed and transferred by a payee, the indorsement is an actual contract between the indorser and indorsee of the note, that the latter received it for a consideration paid, and therefore the indorsement, like the making, is evidence of a debt due from the indorser to the indorsee, and the former is bound to pay if the maker, upon demand, fails to do so, and the requisite notice is given the indorser. But when the transaction between the parties is different, when it is a mere accommodation transaction, neither the reason of the rule nor the justice of the case admits of its application." And the court further say that "Douglass knew that Waddle did not in fact own the note, but had indorsed it for the accommodation of Barnes, as surety. He knew that he himself indorsed it for the same purpose, and not as owner. It was intended to pay a debt due from Barnes, who, and not Waddle, was the person benefited. Douglass himself never had a beneficial interest in the note, and the money paid by him was paid for Barnes." So, it may

be said in this case, the defendant in error must have known when it placed its name on the back of the note in suit, while in the hands of Cox, that its indorsement by him could have no other effect than to complete its execution, and that he would not thereby become a regular indorser of the paper, and that the defendant in error was not the owner of the note, nor had any beneficial interest in it, and therefore could not, and did not, become a regular indorser, but that the effect of its signature on the note was to give it credit, and enable Cox to negotiate it for his benefit. Speaking of irregular indorsements of this character, and of the understanding of parties to them, the court, in Douglass v. Waddle, supra. said: "In this country the parties to this description of paper have usually understood their relation to be that of principal and surety, and, upon this understanding, have generally acted both in creating the paper and adjusting their liabilities upon it." And in Rand. Com. Paper, § 888, that author says: "That in a great majority of instances the purpose of all the original parties to such irregular indorsements was to furnish additional security, by way of guarantor or surety, to the actual or nominal payee."

That the defendant in error intended and understood its liability to be that of a surety, and not of a second indorser, is manifest from its subsequent conduct. The payment of $500 on the note by the defendant in error was made long after the maturity of the note, and after the failure to make the demand and give the notice necessary to charge the company as an indorser. It then was aware that, if its liability originally was that of an indorser only, that liability had ceased; and it was under no obligation to make any payment to the plaintiff. It is not to be supposed that the check was given the plaintiff as a gratuity. The evidence shows it was a payment on the note, which is a recognition of the validity of the demand. The payment, therefore, is at variance with the claim that the liability of the company was conditional, dependent upon proper demand and notice, and amounts to an unequiv ocal acknowledgment of an absolute and unconditional liability at the time of payment. And this construction by the defendant in error of its obligation is in harmony with what we have considered it to be, both on principle and in view of the former adjudications of the court-that of a surety for the payment of the note. This conclusion has not been reached without a careful consideration of the cases which hold otherwise. But we have found ourselves unable to concur in their holdings, reluctant as we are to differ with the courts by which they were decided, and desirable as it is that there should be uniformity of decision on so important a question of commer cial law. Judgment reversed.

NOTE.-It is generally held that a person who indorses a bill or note payable to order at a time when he is not the payee or holder, is not strictly an indorser. He is generally called a quasi-indorser and