Breed v. First National Bank

4 Colo. 481 | Colo. | 1878

Thatcher, C. J.

Evidence was introduced by plaintiff tending to show that Dawley during and after the spring of 1873 acted as agent or superintendent of Breed; that he continued so to act until and at the time he borrowed money from ¡the bank, for the recovery of which this suit was brought. The contract between Dawley and Breed, if introduced in evidence, would have tended to show that at the time it was entered into, and so long as it remained in force, Dawley was a contractor, and not a superintendent or agent. If the terms of the contract were by verbal agreement, as Breed testifies, made also to apply to the construction of the tunnel south of the Caribou lode, except so far as related to the price per foot to be paid by Breed, the agreement itself furnishes the best evidence of the relation that existed between him and Dawley,- and tends to show that the southern extension of the tunnel was constructed by Dawley as a contractor. There is also evidence that in the spring of 1873, the written contract between Dawley and Breed was, by mutual consent, rescinded, and that thereafter Dawley acted as superintendent. These controverted questions of fact touching the nature of the agreement between Breed and Dawley, during and after the spring of 1873, until the autumn of 1874, and the nature of the agreement thereafter under which the tunnel was extended south, were properly questions for the jury, in the resolution of which they might be aided by reference to the original contract which should have been admitted in evidence. The course of Dawley’s dealing with Breed from which Dawley’s agency might be inferred, was before the jury. As tending to repel such an inference, at least, so far' as relates to the tunnel north of the lode, the August contract was admissible. Nor is it entirely clear from the evidence whether the amount of the overdraft was paid out on account of work in the tunnel north or south of the lode. If paid out on work north of the lode, and under the August contract, the question as to whether it inured to the ultimate benefit and use of Breed would not ordinarily be material; for in such case Breed, if he had learned of the loan and expenditure, could not, by silence, be construed to have ratified Dawley’s act in securing it. His only duty would have'been to respond to Dawley for work on the tunnel at so much per foot according to the contract. It could not properly be said in such case that the money was expended for Breed’s use, but for the use of Dawley. There is some evidence tending to show that .the contract between Mining Company Nederland and Breed was entered into with the knowledge and consent of Dawley, and that he (Dawley) did work in pursuance of its provisions.

This contract tended, in connection with other evidence, to impeach Dawley’s testimony concerning the annulment of the former agreement. The court, we think, erroneously excluded it. With a view to determine Dawley’s status, both written contracts should have been considered in the light of all the evidence.

If Dawley was by Breed appointed mining superintendent, to oversee and direct the construction of the Caribou tunnel, either north or south of the lode, with authority to employ men to work in the tunnel and operate the mines that might be found therein; if further, from time to time Breed furnished money to Dawley to pay the employees, and Dawley placed such money to his individual credit at the bank, checking out the same as it was needed to pay the laborers, was he, by virtue of his employment as such mining superintendent, in the absence of any special authority in that behalf, authorized to borrow money to enable him to prosecute the work in the tunnel, or to pay for work already done therein, and bind his principal to its payment?

If it be' conceded that although the bank account stood in the name of Dawley it was in fact Breed’s account, kept in Dawley’s name, by agreement of parties, and that Dawley had authority to draw thereon, it does not follow that he was authorized to borrow money from the bank on account of his principal. Even if he had been acting under a general power of attorney to draw checks or drafts in the- name of his principal, he would have no authority, under such power, to make an overdraft, which is one form of borrowing money from the. bank. The Union Bank v. Mott, 39 Barb. 180.

The giving of the following instruction is assigned for error:

“ The court instructs the jury that if they believe, from the evidence, that Dawley was the agent of Breed, in the work of employing and superintending men at work upon the lodes and the tunnel, and that Dawley was not running the tunnel south of the Caribou lode at so much per foot, but that he was employing the men and incurring the expense incident thereto, with Breed’s knowledge and consent, and that the men were at work for Breed, and that Breed requested Dawley to keep the bank account in Dawley’s name instead of Breed’s, and that that was the reason that Dawley kept the account in his own name, that really belonged to Breed, then you may, under the law, find that Dawley had implied power to overdraw, to pay those men and other necessary expenses.”

That a mining superintendent, by virtue of his employment as such, has the power to borrow money in the name of his principal, in the absence of express authority or authority which must necessarily be inferred to exist from the course of dealing between-himself .and his principal, is a doctrine which we cannot sanction.

• All the hypotheses enumerated in the instruction may co-exist, and still the principal not be liable. The power of an agent to draw on a principal’s funds is entirely different from the more comprehensive power to draw on his credit. The former does not include the latter. The superintendent may have the authority' to employ men to prosecute the work; if so, and funds be not furnished, the principal, and not the superintendent, is liable to the work-. men. The superintendent is not authorized to exércise a power not conferred, by entering into a contract with third persons for the loan of money with which to discharge even the lawful debts of his principal. Had there been previous overdrafts to the knowledge of his principal which he had subsequently paid, a just deduction might be drawn as to Bawley’s authority to borrow by way of overdraft. But this view of the case is .not presented by the instruction, nor do we think the evidence would justify it. Neither by note nor overdraft on a bank, can a mining superintendent, as such’, bind his principal.

In the case of New York Iron Mine v. First National Bank of Negaunnee, Albany Law Journal of 1878, p. 489 (not yet reported in the published opinions), the supreme court of Michigan very fully considered the question as to whether a general mining agent, without being specially empowered so to do, has authority to make a promissory note in the name of his principal. The court denied the authority, holding that the owner of the note ■ could not rest its case on the implied power of the general agent; that the issuing of promissory notes is hot a power necessarily incident to the conduct of the business of mining, and that it is so susceptible of abuse to the injury, and indeed to the utter destruction of the principal, that it is wisely left by the law to be conferred or not as the prudence of the principal may determine.

In McCullough v. Moss, 5 Benio, 567, it was held that the president and secretary of a mining corporation could not bind the corporation by a note made in its name, without proof of their authority to execute it.

In Union Cold Mining Co. v. Rocky Mountain National Bank, 2 Col. 248 and 565, the court held that the superintendent of a mining company has no authority, by virtue of his office merely, to borrow money on the credit of the corporation by note, overdraft or otherwise. We discover no • sufficient reason' for departing from what may be consid-: ered as the settled doctrine in this State on this subject. We must conclude that the instruction under consideration, as it is not in harmony with the views here expressed, was liable to mislead the jury as to the law of the case, and, therefore, was erroneously given. This instruction is inconsistent with instruction numbered thirteen.

Whether Breed, by his course of dealing with Dawley, held him out to the world as an agent, authorized to borrow money to carry on mining operations, is a question which, upon all the facts, is for the jury, and upon which we now express no opinion.

If Dawley was without original authority to borrow money on behalf of his principal, but did in fact so borrow, and used it in a manner advantageous to the party to be charged, the ratification of his unauthorized act may be inferred from the silence of the principal after knowledge of the facts. It is his duty, if he does not acquiesce in the unauthorized act; to repudiate it. If he fail to do so within a reasonable time after notice, the jury may draw an inference of ratification, but no estoppel is created if the unauthorized transaction is complete before knowledge of it reaches the alleged principal, and the status of the parties would not be changed by his failure to approve or disapprove within a reasonable time. Union Gold Mining Co. v. Rocky Mountain National Bank, 2 Col. 248. Judgment

• Reversed.