Abeles v. Cochran

| Kan. | Jan 15, 1879

The opinion of the court was delivered by

Bjrewer, J.:

Prior to August 23, 1873, plaintiff was the owner of a large amount of stock in the German Savings Bank, of Leavenworth. On that day, he made a sale of it, and delivered the certificates thereof assigned in blank. The questions in this case are: To whom was such sale made? and, Are the defendants liable as purchasers or otherwise for the price of this stock? The district court sustained a demurrer to the evidence, and from this ruling the plaintiff brings error. The defendants were directors of the bank, and their claim is that the sale was made by plaintiff to the bank; and that whether that sale was a valid contract on the part of the bank or not, no personal liability was assumed by them. The plaintiff, on the other hand, contends that the sale was made to the defendants personally; and also that if made to the bank, that as such a purchase of its own stock without the consent of the stockholders was ultra vires, the directors who made the contract were bound, and not the bank. In other words, he insists that they in fact bought for themselves; and that if they attempted to buy for the bank, as the bank could not buy, they bound themselves instead of it. Involved in this are two questions — one of fact, and the other of law. What, as a matter of fact, was the contract? Between what parties was it attempted to be executed, and what responsibilities did the defendants assume thereby ?

Upon the first question there is little room to doubt. The transaction, as understood and intended by the parties at the time, was a sale to the bank. While the plaintiff in his direct testimony does not say so in so many words, yet he does not assert the contrary; and a paper is offered in evidence, signed by him, in which he recites the sale to the bank; and there is also offered the record of a suit brought by the bank to set aside certificates of deposit issued for this stock, in which suit the bank obtained' judgment. It were idle to say that, at the time, the parties did not understand and intend a transaction between the bank and Mr. Abeles.

We pass, therefore, to the second question. The parties who represented the bank, and made the purchase for it, were the defendants. They were its directors; yet as directors they had no power to bind the bank by a purchase of its stock, and the attempted sale was a nullity, and the bank properly recovered in an action to set aside the certificates of deposit issued on such attempted purchase. Now the contention is, that inasmuch as the defendants attempted to bind the bank and failed, they therefore bound themselves; that the case comes within the rule, that an agent who acts without authority, binds himself, and not his principal. This rule, however, is not of universal application. -There are exceptions to it, and this case comes within.one of those exceptions. It will be noticed that the failure of the directors to bind the bank arose from a lack of .power in them as directors, and not from any failure to pass the proper resolution as a board, or to take any other prerequisite step. The law under which the corporation was organized gives no such power to directors. (German Savings Bank v. Wulfekuhler, 19 Kan. 60" court="Kan." date_filed="1877-07-15" href="https://app.midpage.ai/document/german-savings-bank-v-wulfekuhler-7884448?utm_source=webapp" opinion_id="7884448">19 Kas. 60.) It is something the directors may not do. They cannot create the power. Their acts or omissions in no manner affect the question of its existence. And this want of power, growing out of the law, is a matter of law as open to the knowledge of the plaintiff as of the defendants. Further, there is no pretense of any false representations made by defendants, or of any concealment of facts — nothing to show any willful wrong on their part. Both parties, in fact, supposed the power existed in the directors to make the purchase, contracted upon that basis, and contracted in good faith. The power did not exist, and the bank repudiated the purchase. And the defendants can be held only upon the bare proposition, that because the principal was not bound, the agent must be. But this does not necessarily follow. It is familiar law, that where there is an express contract the law will not imply one. In other words, when parties have definitely put their intentions into the shape of an express agreement, the law accepts that agreement as the measure of their respective rights, and will not attempt to infer the existence of some other agreement which the parties ought to have made. Here the contract as made was in the name of the bank, and for the bank. That was the express agreement. Will the law imply another? Will not the contract actually made determine the rights of the respective parties ?

Where there is no wrong imputable to the agent, no action will be against him: not on the contract, for the contract was not his, nor for any wrong of act or omission, for he is guilty of none.

In Ogden v. Raymond, 22 Conn. 384, in which, as here, was an attempt to hold an agent- on a contract made for and in the name of his principal, the court says:

“If the form of the contract is such that the agent personally covenants, and then adds his representative character, which he does not in truth sustain, his covenant remains personal and in force, and binds him as an individual. But if the form of the contract is otherwise, and the language when fairly interpreted does not contain a personal undertaking or promise, he is not personally liable; for it is not his contract, and the law will not force it upon him. He may be liable, it is true, for tortious conduct, if he has knowingly or carelessly assumed to bind another without authority; or when making the contract has concealed the true state of his authority, and falsely led others to repose in his authority; but, as we have said, he is not of course liable ou the contract itself, nor in any form of action whatever.”

In Aspinwall v. Torrance, 1 Lans. 381" court="N.Y. Sup. Ct." date_filed="1870-01-15" href="https://app.midpage.ai/document/aspinwall-v-torrance-5474959?utm_source=webapp" opinion_id="5474959">1 Lans. 381, we find this language iu the opinion: “In no case that I have been referred to, has the agent been held liable as the principal where the extent of the agency was as well known to the one party as the other.”

In Smout v. Ilbery, 10 M. & W. 1, the facts were, that in the absence of her husband, and with his authority, the wife had been in the habit of purchasing meat from the plaintiff. The husband died while on his journey, and the wife, ignorant of the fact, continued her purchases in like manner. It was held that no action could be maintained against her upon these last purchases. The court says:

“On examination of the authorities, we are satisfied that all the cases in which the agent has been held personally responsible, will be found to arrange themselves under one or other of these three classes. In all of them it will be found that he has either been guilty of some fraud, has made some statement which he knew to be false, or has stated as true what he did not know to be true, omitting at the same time to give such information to the other contracting party as would enable him equally with himself to judge as to the authority under which he proposed to act.”

And again:

“ If, then, the true principle derivable from these cases is, that there must be some wrong or omission of right on the part of the agent in order to make him personally liable on a contract made in the name of his principal, it will follow that the agent is not responsible in such a case as the present.”

In Sandford v. McArthur, 18 B. Mon. 411, it appeared that the directors of a bank ordered the issue of notes in excess of the authority given by the law of the bank’s incorporation, and they were held not personally liable, and that a person dealing with the bank was bound to take knowledge of the powers granted by law to its agents. See also, Story on Agency, § 265; McCurdy v. Rogers, 21 Wis. 197" court="Wis." date_filed="1866-06-15" href="https://app.midpage.ai/document/mccurdy-v-rogers-6599659?utm_source=webapp" opinion_id="6599659">21 Wis. 197; Rashdall v. Ford, 2 L. R. (Eq. Cases) 750; Beattie v. Lord Ebury, 7 L. R. (Ch. Appeals) 777.

The doctrine of these last two cases is, that a misrepresentation as to a matter of law is not such a one as will cast a personal liability on the agent, and that on the ground that each party is bound to know the law.

It is unnecessary to pursue this examination of authorities further. The doctrine is clear, that where the' contract is made in the name of the principal, and without any personal covenant on the part of the agent, and without any wrong on his part, either in act, statement or omission, the latter is not responsible, even though the former be not bound.

The judgment will be affirmed.

"Valentine, J., concurring. Horton, C. J., not sitting, having been of counsel in the court below.