174 P. 597 | Mont. | 1918
delivered the opinion of the court.
In March, 1908, Chas. W. Smith and H. H. Lang executed and delivered to the First State Bank of Kendall their promissory note for $1,900, and, as additional security for the loan, Smith delivered to the bank 1,000 shares of the capital stock of the North Moccasin Mining Company. Although the note was not due until January, 1909, as early as April, 1908 — the month following its execution — Lang importuned Smith to make payment on it, which Smith declined to do, and the like requests were repeated by Lang thereafter but unsuccessfully. On November 8, 1908, Smith executed and delivered to the bank a new note for $2,695, due in one year, in renewal of the Smith-Lang note and a balance due on another note of Smith’s, and the original nóte was stamped “Paid” and delivered to Smith. This renewal note was not signed' by Lang but the collateral which secured the two notes was left with the bank as the only security for the new note. On April 2, 1909, this renewal note was taken up and a third note for $3,612.87, signed by Smith and wife, was given in renewal of that note and for other advancements, and the second note was stamped “Paid” and delivered to Smith. In addition to the collateral which secured
From the organization of the bank until November, 1912, Henderson was cashier and Lang was president of the bank, and each of them was a director. Plaintiff is the successor of the First State Bank of Kendall. This action was commenced against Lang to enforce payment of the Smith-Lang note for $1,900 and accumulated interest. The defendant pleaded: (1) That he signed the note as accommodation for Smith, and that the bank extended the time of payment without his knowledge or consent; (2) that the bank was guilty of laches in prosecuting its claim against Smith; and (3)' that the note was fully paid and discharged. Upon the trial and at the close of the testimony the court directed a verdict for the plaintiff, and defendant has appealed from an order denying him a new trial. There is not any conflict in the evidence except as to matters to which reference will be made hereafter.
Lang was general manager of the North Moccasin Mining . Company, and owned considerable of its stock. The expenses of the company far exceeded its income, but notwithstanding this fact the stock had a market value of from $1.90 to $2 per share. Lang1 sold to Smith the 1,000 shares heretofore mentioned at $1.90 per share. The money with which to pay for the stock was borrowed from the bank and the Smith-Lang note executed and delivered, the money received and immediately passed to Lang’s credit, and the certificate of stock delivered to the bank as collateral. On November 1, 1908, the mining company defaulted in the payment of interest on its bonded indebtedness. In April, 1909, mining- operations ceased. In September, 1909, a suit to foreclose was brought and prosecuted to decree and sale, and the stock became worthless.
1. Appellant contends that, having signed the Smith-Lang note as an accommodation party, he was liable only as a surety,
“Jan. 10th, 1909, after date we or either of us promise to pay to the order of First State Bank of Kendall, nineteen hundred and no-100 dollars for value received,” etc., and was signed,
“Chas. W. Smith,
“ H. H. Lang.”
Section 5844, Revised Codes, provides: “The person ‘primarily’ liable on an instrument is the person who by the terms of the instrument is absolutely required to pay the same. All other parties are ‘secondarily’ liable.” By virtue of this statute Lang was primarily liable, and his primary liability was not affected by the fact that he signed the note for the accommodation of Smith, and that this fact was known to the bank, a holder for value. Section 5877, Revised Codes, defines an accommodation party, and then proceeds: “Such a person is liable on the instrument to a holder for valué, notwithstanding such holder at the time of taking the instrument knew him to
2. A promissory note legally imports a promise to pay in
3. If the evidence is open to the inference that it was the
The cashier of a bank is its agent, and his conduct is governed by the general rule of agency. (1 Michie on Banks and Banking, p. 712.) It is elementary that, in the absence of special authority, an agent cannot accept payment in anything but
If the directors in disregard of their duties permit the cashier to conduct the affairs of the bank for a period sufficiently long to establish a settled course of business, his authority to do anything which the board might have authorized him to do
In effect, appellant's position is this: For three years prior to November 8, 1908, the directors, including the cashier and myself, flagrantly disregarded the duties imposed upon us by law, and permitted the cashier to run the bank without let or hindrance. We held him out to the world as having authority to do anything and all things which the board of directors might have authorized him to do; and since the board might have authorized him to release security, it should be presumed from my misconduct and the misconduct of my associates that he had authority to release me from liability on the Smith-Lang note. Such a contention offends against every principle of law and morals. (Campbell, Receiver, v. Watson, 62 N. J. Eq. 396,
If appellant should prevail in this instance, the result would be that the bank of which he was president and a director, would lose $1,900 and the interest thereon as the result of his transaction with it. Whatever ostensible authority the cashier had in dealing with strangers, he had only such authority in
4. But it is insisted that the board ratified the act of the
The suit upon the renewal note was commenced on March 12, 1912,' while Henderson was still cashier and Lang was president. The action of the board in ratifying the Smith loan for $3,612.87 was taken in November, 1912. On neither date did any member of the board, other than Henderson and Lang, know that Lang had ever been liable for the payment of any portion of that debt. By the terms of section 5429, Revised Codes, it is essential, in order that the ratification of an unauthorized act of an agent be valid, that the principal have full knowledge of all material facts relative to the transaction, at the time of the ratification. (31 Cyc. 1253.) “While knowledge
5. There is no merit in the defense of laches. Appellant
6. Finally, it is contended that the trial court erred in
The determination that Lang, was primarily liable upon the Smith-Lang- note disposes of the other contentions urged by appellant.
The order is affirmed.
'Affirmed.