69 F. 912 | 8th Cir. | 1895
Lead Opinion
after stating the case as above, delivered the opinion of the court.
Waiving the technical objections to the sufficiency in form of the exceptions taken at the trial and of the assignments of error in the brief, we will proceed to dispose of the case on its merits.
For some reason, which we are unable to comprehend, objections were taken all through the trial to the introduction of all evidence tending to show that it was the Ohio, and not the Missouri, corporation that was doing business at Kansas City after January, 1891. Objection was also taken to all evidence tending to show that Dudley had authority, as manager of the Ohio company’s Kansas City branch, to borrow money and execute negotiable notes therefor. One ground of this objection was that Dudley’s authority, as manager, to execute notes for borrowed money, could only be shown by some formal order or resolution of the stockholders or board of directors of the defendant company. A further ground of this objection was the erroneous assumption of fact that the notes sued upon were not executed in the name of the defendant company. This assertion is made all through the brief of the counsel for the plaintiff in error, but it is an error of fact. The charter name of the Missouri company was the “(Hidden & Joy Varnish Company of Kansas City, Missouri.” The charter name of the Ohio company was the “Glidden & Joy Varnish Company,” and the notes sued on are executed in this name.
The alleged error discussed at greatest length, and the one apparently chiefly relied upon, is that the court refused, at the close of all the evidence, to give the jury a peremptory instruction to return a verdict for the defendant. The contention of the plaintiff in error is (1) that it was the Missouri, and not the Ohio, company that was doing business at Kansas City; and (2) that, even if the Ohio company was carrying on the business at Kansas City, its manager, Dudley, had uo authority to borrow money and execute negotiable notes therefor, in the name of that company. These questions of fact were properly submitted to the jury, under instructions to which, as a whole, no just exceptions can be taken. Upon a careful reading of all the evidence on these issues, it is obvious that the court below did not err in refusing, to instruct the jury to return a verdict for the defendant. There w;as abundant evidence, we think, which necessitated the submission of the case to the jury. It is indisputable, from the evidence, that aftei* the sale of its property to the Ohio company, and the cancellation of all ils stock, except a nominal sum, “to keep alive” its charter, the Missouri company did no business in Kansas City or elsewhere. It had no property, no capital, no credit, and no manager. The business at Kansas City, from and after the date of this transaction, was the business of the Ohio company, and was conducted by Dudley, as its manager. After that time, Dudley was the manager of the Ohio company. That company fixed and paid his salary as manager, and it was to that company that he made his reports and returns. After the sale of its property and the cancellation of its stock, the Missouri company was nothing more
The remaining controverted question of fact, namely, whether Dudley, as manager of the Kansas City business for the Ohio company, had authority to borrow money, and execute the negotiable promissory notes of the defendant company therefor, is equally clear, upon the evidence. From the time the defendant company established a branch house in Kansas City, in 1885, down to the time the business was closed out, in 1893, Dudley was the sole manager of that business. His relation, as sole manager and director of the business, was the same, whether the business was carried on for the Ohio company or for the Missouri company. He had all the time the entire and absolute control and management of the business. The officers of the company who resided at Cleveland, Ohio, never exercised any control or supervision over the business, and only visited Kansas Oitv at long intervals. Dudley borrowed money, discounted paper, executed all contracts, hired and discharged all employes, attended to the banking business, and signed all notes and checks. No one was over him. None of the officers of either company, who resided in Cleveland, Ohio, ever paid any attention to tbe business at Kansas City. A more absolute and exclusive management and control of a business cannot be conceived of than that exercised by Dudley. The business was important and extensive. It involved the purchase and manufacture of raw materials, and the sale, of the manufactured product. There were four traveling salesmen, who were employed by Dudley, and received their orders and instructions from and reported to In'm. These traveling salesmen knew of no other person having authority
“The rulings of the court to the contrary, and, presumably, the sworn denial of the execution ot the contract, proceeded upon tlie theory that, in order to bind tiie corporation, a contract must be shown to have been executed or authorized by a formal corporate act, such as an order or resolution of a board of directors. But the business of modem mercantile and manufacturing corporations is not always, or even generally, conducted in that way, but is com-milted to agents and managers, whose powers are limited, practically, only to the lines of business for the prosecution of which the corporations were formed.”
And in the case of Merchants’ Nat. Bank of Gardiner v. Citizens’ Gaslight Co., 159 Mass. 505, 34 N. E. 1083, the court said:
“Upon consideration of the decisions cited, we think it fair to say that the 'Making and indorsing of negotiable paper is to be presumed to be within the power of the treasurer of a manufacturing and trading corporation, whenever, from the nature of its ordinary business, as usually conducted, the corporation is naturally to be expected to use its credit in carrying on commercial transactions. Such paper is the usual and ordinary instrument of utilizing; credit in commercial dealings, and it is for the interest of the corporation and of the community that the best instrument should be employed. It is no less for tlte interest of all that, il' negotiable paper is to be employed, its validity should not bo open to objections which would impair its usefulness by requiring at every step an inquiry into the authority by which it is issued. * * -s Although such companies [gas companies] manufacture only as they ddiver, and so have no occasion to hold large quantities of manufactured goods for a market, there are features of their business which make it necessary for them to have control of large amounts of money at certain seasons. Coai—their chief raw material—is uniformly at its lowest price in the summer, and, away from the seaboard, is usually taken in large quantities at that season. Gas is uniformly sold upon time, and the bills collected monthly or quarterly. The work of extending and repairing street mains, and other work upon the manufacturing plant, can be done to the best advantage during only a portion of the year. A business so conducted affords abundant scope- for the advantageous use of the credit of the corporations engaged in it, and they would naturally be expected to use their credit in the transaction, of their ordinary business.”
In the case of Moore v. Manufacturing Co., 113 Mo. 106, 20 S. W. 975, the court said:
“The power of an agent or officer of a corporation to bind his principal is governed by the law of agency; and, where an officer has been permitted to manage all the business of a corporation, his authority to bind it will be implied from the apparent power thus conferred upon him.”
We have carefully examined each error assigned, and are satisfied none of them has any merit, in the light of the facts of the case. The judgment of the circuit court is therefore affirmed, with costs, and with interest thereon from the date of its rendition by the circuit court at the rate of 10 per cent, per annum.
Concurrence Opinion
(concurring). I. concur in the result in this case on the ground that the course of business at Kansas City shown in this record, the reports made by Dudley to the plaintiff in error of the existence of bills payable he had made as its agent, and the testimony of its president that, if Dudley needed money to pay a coal bill, he thought he was expected to and would go to the bank, and have the money advanced to pay it, constituted sufficient evidence to warrant a jury in drawing the inference that the corporation knew that Dudley was making promissory notes on its behalf, and impliedly authorized him to do so. But I cannot concur in the view, which I understand to be expressed in the opinion of the court, that the general manager of the business, or of a local branch of the business, of a manufacturing and trading corporation, who is authorized to buy and sell goods, to carry on the manufacturing business, and to take and discount promissory notes for his principal, is thereby vested with the implied power to borrow money on its behalf, and to execute its notes therefor. I do not understand the rule of law to be that such a general agent is presumed to have the same authority to borrow money on and to execute notes in behalf of his principal that a reasonably prudent merchant or manufacturer has to make notes and borrow money for himself. I think the true rule is laid down in section 398 of Mechem on Agency, in these words:
“An agent having general authority to manage his principal’s business has, by virtue of his employment, no implied authority to bind his principal by making,_ accepting, or indorsing negotiable paper.”
Tiedeman, in his work on Commercial Paper, at section 77, says that the presumption of law is more strongly opposed to an implied authority to execute and negotiate commercial paper than to do anything else, and that even where there is a general authority “to transact all-business,” or “to do all lawful acts concerning all the principal’s business, of what nature or kind soever,” it is very generally held that the power to execute bills and notes is not included.
In New York Iron Mine v. First Nat. Bank, 39 Mich. 644, 651,—a case in which the stock of the mining corporation was held by Samuel J. Tilden and W. L. Wetmore, and the latter had had the entire management and control of the mining business which was carried on by the company in the state of Michigan, had expended more than three million dollars, and had lawfully discounted the bills receivable of the corporation,—the supreme court of Michigan held that all of this
“The issuing of promissory notes is not a power necessarily incident to the conduct of the business of mining, and it is so susceptible of abuse, to_ the injury, and, indeed, to tlio utter destruction, of a corporation, that it is wisely left by tlio law to be conferred, or not, as the prudence of the board of directors may determine.”
In my opinion the same rule, and for the same reason, governs the agencies of commercial and trading corporations. McCullough v. Moss, 5 Denio, 567; Murray v. East India Co., 5 Barn. & Ald. 204; Benedict v. Lansing, 5 Denio, 283; The Floyd Acceptances, 7 Wall. 666; Perkins v. Boothby, 71 Me. 91.