215 F. 973 | D.N.J. | 1914
The claim in question was originally filed by one Joseph M. Myers. It is based on three promissory notes, aggregating in amount $10,000, alleged to have been made by the bankrupt company and dated May 6, 1912. Each note was payable to the claimant. The petition for adjudication was filed on May 8, 1912. The claim was filed on July 16, 1912. The trustee was elected on the same date. By an instrument dated August 28, 1912,'and filed with the referee on November 7, 1912, Myers assigned the claim to Edgar C. Van Dyke, who had acted as his attorney in preparing and filing the proof of claims. On October 7, 1912, the trustee filed objections to the allowance of the claim. The referee allowed the claim to the extent of $500, and directed that the costs be paid in the same proportion as the amount of recovery bore to the amount of the original claim. It is on the claimant’s petition to review this order of the referee that the matter is now before the court.
An examination of tbe facts is therefore necessary. The bankrupt company was engaged in the lumber business. In August, 1911, Mr. Partridge, 'president of the bankrupt company, employed a‘Mr. Cohic to sell certain stock, which Partridge owned, of the bankrupt company. He worked under that arrangement until December of that year, when he was elected secretary of the company, which position lie held until the 26th of April, 1912. He then resigned and continued under the “original agreement” from that time until the petition in bankruptcy was filed against the company. Pie also appears to have been employed by Partridge in negotiating promissoiy notes of the company, and for that purpose was permitted on one or more occasions to carry atound with him blank promissory notes of the company,-signed by the president. On May 6, 1912, two days before the petition in bankruptcy was filed against the company, he claims to have delivered two of the notes, upon which the present claim is based, together with another note, to Myers in exchange for 15 $1,000 bonds of the Gates Coal & Coke Company, and agreed to deliver additional notes aggregating $7,500 the following day; that he then offered to deliver the note for $7,500 (being the remaining note upon which the claim is based), but that Myers
Although the evidence is very persuasive that the transaction was fraudulent, I. do not find it necessary to determine whether there was sufficient evidence (as counsel for claimant contend there was not) to justify the referee’s conclusion in that respect, as the claim must be disallowed on another ground. The minutes of the company were not offered in evidence. There is no evidence to show that the president of the company was ever authorized by the board of directors to sign notes of the company, or to purchase these bonds-or like property, or for that matter to negotiate the company’s commercial paper. It is urged on behalf of the trustee that the failure to show this authority on the part of Mr. Partridge is fatal to the allowance of the claim. I will assume, however, without deciding, that the filing of the proof of claim, in the absence of proof to the contrary, has relieved the claimant of the necessity of proving that Partridge was duly authorized to negotiate and sign the company’s negotiable paper, and that he had the requisite authority’to authorize Cohic to purchase the bonds. Whitney v. Dresser, 200 U. S. 532, 26 Sup. Ct. 316, 50 L. Ed. 584. It is clear that the only instructions which Cohic received regarding what he was to do ’were given to him by Partridge. Mr. Partridge testified that he had never authorized Cohic to use the notes of the company for the purpose of obtaining the bonds in question, and never knew that Cohic was doing so, or had done so, until after the bankruptcy proceedings had been instituted, and that he gave the notes to Mr. Cohic in trust, to be discounted for cash “without paying an exorbitant rate of interest or discount.” In this respect he is contradicted by Cohic, who testified that he had express authority from Mr. Partridge to use the notes for the purchase of these bonds.
The extent of the principal’s liability for acts of an agent in matters of contract is thus clearly stated by Mr. Justice Depue in Law v. Stokes, 32 N. J. Law, 249, 251 (90 Am. Rep. 655):
“A principal is bound by the acts of his agent within the authority he has actually given him, which includes not only the precise act which ho expressly authorizes him to do, but also whatever usually belongs to the doing of it, or is necessary to its performance. Beyond that, he is liable for the acts of the agent within the appearance of authority which the principal himself knowingly permits the agent to assume, or which he holds the agent out to the public as possessing. For the acts of his agent within his express authority the principal is liable because the act of the agent is the act of principal. For the acts of the agent within the scope of the authority he holds the agent out as having or knowingly permits him to assume the principal is made responsible because to permit him to dispute the authority of the agent in sucii cases would be to enable him to commit a fraud upon innocent persons. In whichever way the liability of the principal is established, it must flow from the act of the principal. And when established it cannot, on the one hand, be qualified by the secret instructions of the principal, nor, on the other hand, be enlarged by the unauthorized representations of the agent.”
The order of the referee will be overruled and the claim totally disallowed. The claimant will be required to pay the costs of the proceeding before the referee. The trustee will be directed to return the bonds to the proper person.within 10 days from the signing of an order, or, in the event of his inability to do so, the claimant or the assignee, as may be proper, will be permitted to file with the referee an amended claim for the value of the bonds, within 10 days, after being notified that the trustee is unable to make delivery of the bonds. The referee will be permitted to extend either time, in his discretion.