Kean v. Davis

20 N.J.L. 425 | N.J. | 1845

Lead Opinion

The opinion of the court, Neviub, J., dissenting, was delivered by

Carpenter, J.

This case was submitted to us, on written arguments of counsel, at the last term. The question may be stated to be, whether the plaintiff in error and defendant below is personally liable as drawer of the two bills or drafts, both of which are precisely similar; and whether that question is to be settled by the court, on the construction of the instruments, as a matter of law; or by the jury, with or without parol testimony, as a question of fact. Is the defendant personally liable on these bills as drawer, in consequence of his signature — “John Kean; President, the Elizabethtown and Somerville Rail Road Company;” and if so prima facie, can he discharge himself, on an issue of non assumpsit, by proving that the agreement was really made by him, by the authority, and as an officer or agent of, an incorporated company; and that the plaintiffs below knew these facts, at the time when these bills were received ?

In regard to the liability of agents, it is true that the question is generally settled by the answer to the same general inquiry— To whom is the credit knowingly given, according to the understanding of both parties ? This inquiry is sometimes a matter of fact, as when the contract is verbal and unwritten, and sometimes a matter of law, as when it depends upon the true construction of the terms of a particular written instrument. Bell v. Bruen, 1 How. 183; Story on Agency, § 63, note. In regard to these written instruments, while the greater strictness of construction is ordinarily applicable to the mode of executing sealed instruments by agents, a more liberal exposition is allowed in cases of less solemn instruments and especially of commercial and maritime contracts, which are usually drawn up in a loose and informal manner. In such cases, if it can, upon the whole instrument, be collected, that its true object and intent are to bind the principal, and not the agent, courts will adopt such construction however informally expressed. Story on Agency, § 154, 160, and 288.

I adopt the opinion of the court below, that the construction of these bills, in order to ascertain the liability or otherwise of the defendant, is matter of law; and of consequence, the further decision of the court, that parol evidence was inadmissible to discharge such liability.

The cases cannot be entirely reconciled, but the weight of authority and the true principle appears to be, that parol testimony is not admissible for the purpose of exonerating an agent, who has entered into a written contract, in which he appears as principal; even though he should propose to show, if allowed, that he mentioned his principal; though such evidence may be admitted for the purpose of charging the principal. Higgins v. Senior, 8 Mees, and Welsby 440; Jones v. Littledale, 6 Adolphus and Ellis, 486. S. C. 33, Eng. C. L. Rep. 122. In the last case, Denman, C. J., in delivering the judgment of the court^ says, “ that if an agent contracts in such a form as to make himself personally responsible, he cannot afterwards, whether his principal were or were not known at the time of the contract, relieve himself from that responsibility.” Thus, in the analogous case of remedy against a dormant partner, he is liable on a contract relating to the firm, made in the ostensible partner’s name alone, because he is taken to have adopted the name of the ostensible partner as his own, for the purpose of such contracts; so that when the ostensible partner signs his name to such contracts, he signs a word, the meaning of which comprehends not himself alone, but his partner also. It is in fact a question of signification ; and here parol evidence is admissible for the purpose of charging the dormant partner, but not for the purpose of discharging the ostensible partner, whose name is on the instrument-.1

The true rule appears to be, that parol testimony is admissible for the purpose of introducing a new party, but not for that of discharging an apparent party to the contract. The admission in the one case does not contradict the written instrument. It does not deny, that it is binding on those, whom, on the face of it, it purports to bind but it shows, that it also binds another, by reason that the act of the agent, in signing the agreement, is also the act of the principal. On the other hand, to allow evidence to be given that the party, who appears on the face of the instrument to be personally a contracting party, is not such, would be to allow parol evidence to contradict the written agreement. 2 Smith Lead, cases 224 et seq. Story on Agency, § 270 and note.

The case of the Mechanics Bank v. Bank of Columbia, 5 Wheaton, 326, cited and principally relied upon by the counsel of the plaintiff in error, is so far as regards the ease itself, consistent with these rales. The object of the evidence admitted in that case was not to discharge the agent, but to charge the principal ; not to discharge the cashier, but to show that the bank of which he was the cashier was liable. But I apprehend that the evidence as to the mode and effect of the cashier’s signature, was admissible, under another point of view, not applicable to the present case. In relation to commercial customs, as for example, the usage of banking institutions, 9 Wheaton, 581, extrinsic evidence of such usage is admissible to annex incidents to written contracts, in matters in respect to which they are silent; and this rule applies to commercial contracts, and only when consistent with the terms of the written contract. Under this rule, although such evidence is sometimes admissible to add to or explain, it is never so, to vary or to contradict, either expressly or by implication, the terms of a written instrument. 2 Stephen’s N. P. 1547. 1 Smith’s Lead. Cs. 305, 309. Story on Agency, § 77. § 114. 1 Greenleaf Ev. § 294. 1 Mees, and Weis R. 474.

The main point in the present case will then recur; by the construction of these instruments is the defendant below personally liable as the drawer thereof ? I have come to the conclusion that, upon the face of these bills, he is personally liable.

The rule unquestionably is, that an agent may be bound by express understanding, though in the contract or covenant he give himself the description of agent. 2 Kent Com. 402. On sealed contracts the following cases are well known authorities. Appleton v. Binks, 5 East. 148. Taft v. Brewster, et al. 9 John 334. Sheldon v. Dunlap, 1 Har. Rep. 245.

-Under the liberal exposition allowable in informal instruments not under seal, if it can on the whole instrument be collected, that the intent is to bind the principal and not the agent, that construction will be adopted, however informally expressed. Doubtless, if the instrument appears to be executed in the name of the principal, the form of the words is not material. Spittle v. Lavender, 2 Brod. and Bing. 452. S. C. 6 Eng. C. L. Rep. 196. Long v. Colburn, 11 Mass. 97. Emerson v. Providence Hat Co., 12 Mass. 237.

So, when a note purported to be a promise by the “ Patent cloth manufacturing Company,” and was signed “ William Shot-well, agent,” the agent was held not to be answerable in his individual capacity. Shotwell v. MaKown, South. Rep. 828 But a note drawn thus, “ I, A. B., President of the corporation, (naming it), promise to pay,” signed “A. B., President,” would be deemed the personal note of A. B. and not of the corporation. Story on Agency, § 154; Hills v. Bannister, 8 Cow. 31.

The same principles of construction will apply to cases, where bills are drawn or accepted or endorsed by agents. If, from the nature and the terms of the instrument, it clearly appears, not only, that the party is an agent but that he means to bind his principal, and to act for him, and not to draw, accept or endorse the bill on his own account, that construction will be adopted, however inartificial the language may be, in furtherance of the intention. But if the terms of the instrument are not thus explicit, although it may appear that the party is an agent, he will be deemed to have contracted in his personal capacity. Without, intending to sanction the extent to which the doctrine has been pressed in a case cited, Thomas v. Bishop, Str. 955 ; where a bill, drawn by the principal upon the agent, with the description of his office or agency annexed and directed to be placed to the account of the principal, was, on a general acceptance held to bind him personally; still I take it, that a bill signed by an individual though with his title of office annexed, will be so held binding; and the description treated as a mere designation of the person, and not as a qualification of his personal liability. In such case the question may be put: who is it that undertakes to pay ? Here clearly, “ John Kean, President,” &c. He styles himself President of the Somerville Rail Road Company ; but, he alone promises to pay. The bill is drawn payable to the order of the Rail Road Company, and signed “ John Kean, President,” &c. Compare the signature of the drawer, with the endorsement on the part of the company; the endorsement, in the latter case, being “ The Elizabethtown and Somerville Rail Road Co., by John Kean, President.” In the one case, it is the act of the company by its officer, in the other, the act of the individual officer. I am of opinion that the judgment should be affirmed.

Judgment affirmed.

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Dissenting Opinion

Nevitts, J.

dissenting. The first question for consideration in this case is, was the evidence offered by the defendant below lawfully rejected ?' It is not necessary to enter into an argument or cite authority to prove, that by a settled rule of construction, these bills upon their face exhibit Kean as their drawer in his individual capacity. The words annexed to his name, “President of the Elizabethtown and Somerville Rail Road Company,” have often been adjudged, under like circumstances, as a mere description the person. 3 Strange, 955; 9 John. R. 334; 6 Mass. 58; 5 Ib., 299; 3 Wend. 94; 8 Cow. 31; Byles on Bills 17. These cases however do not settle the question before us. They merely establish a rule of construction, for the safety and protection of the holder of paper signed in this way, who may not have it in his power, to show any legal authority, from a responsible principal, for such signing. The Courts say and with great justice and propriety, that the signature of A. to a bond or to negotiable paper, as President, Cashier, Trustee, Agent, or in any other capacity, shall be esteemed as his individual contract; and for this reason, that the authority for such contract does not appear upon its face and the holder may not have it in his power to prove the authority. In White v. Skinner 13 John. R. 311, “ The court say, if the bond does not bind the directors for whom the defendant represented himself as agent, then it is his own obligation alone, and it is incumbent on him to aver and prove his authority, and not on the plaintiffs. Whether he had authority is a fact for which he is responsible, and he cannot call upon the plaintiffs to prove either a negative or affirmative.” This was an action upon a contract under seal and signed, “ for the directors, Reuben Skinner;” and the court never intimated, that he could not have avoided his personal responsibility, by proving a legal authority fqr the execution of the contract, in behalf of his principals. In Randall v. Van Vechten, et al., 19 John. R. 60, the contract was made by the defendants, calling themselves a committee of the corporation of Albany, and was signed by them individually. -They pleaded the general issue, with notice that they would prove the agreement was executed by them, as agents. The court say “ That private agents, who assume to contract for an individual or corporation, must see that their principal is legally bound; for, if they do not give a right of action against their principal, the law will hold them personally responsible.” And in this case, the defendants were permitted to prove their agency, and the verdict, which had been rendered for the plaintiff, was set aside and a non-suit ordered. In Brockway v. Allan, et al., 17 Wend. 40, the suit was upon-a promissory note for $260, signed by the defendants, “ Trustees, &g.” They pleaded, that they were trustees, and that the promises were made by them “ as trustees;” to which the plaintiff demurred. In this case the court say, “where individuals sign their proper name to a note, prima facie, they are personally liable, although they add a description of the character in which the note was given; but such presumption of liability may be rebutted, by proof, that the note was in fact given by them as the agents of a corporation, and for a debt of a corporation, and that they were duly authorized to make it; and such facts may be pleaded in bar to an action against them personally, averring knowledge on the part of the payee.” In the Mechanics’ Bank v. Bank of Columbia, 5 Wheat. 326, the action was upon a check for $10,000, signed “ Wm. Eaton, Jr.” The Bank of Columbia, the plaintiff below, offered the check in evidence, and offered to prove that Eaton was cashier of the Mechanics’ Bank and drew the check in his capacity of cashier ; and that it was so understood by the plaintiffs. This evidence was admitted, and upon error the court unanimously affirmed the judgment. It is said however that where the plaintiff claims against the principal as in the case last cited, he may prove it to be the contract of the latter, by showing an express or implied authority from him to the agent to make it; whilst in an action against the agent, the latter cannot exempt himself from liability by the same proof. This may be true, where the action is brought by a person, who was ignorant of the circumstances under which the contract was made, at the time he acquired his interest in it, but I do not see the force of the distinction, where all the facts touching the execution of the contract, were made known to the plaintiff, at the time that he took it. If in the one case the plaintiff may prove it to be the contract of the principal, he at the same time and by the same evidence proves that it is not the personal contract of the agent as it purports to be on its face; and I can conceive of no reason why the agent, when the action is against him, is not entitled to the benefit of the same truth, when the plaintiff had due notice of it, at the time he had acquired his interest in the contract.

Upon the authority of the cases cited, as well as upon the reason and justice of the case, I think the defendant was entitled under the general issue, to the benefit of the evidence offered. Upon the face of the bills, without the aid of the rule of construction above .mentioned, there was an ambiguity, which the defendant offered to explain by extrinsic testimony. He offered to show that the bills were drawn under the authority and by the express direction of the company, of which he was President; that they were signed by him as the agent of the company and in that capacity and for the benefit of the company; that the plaintiffs had due notice of these facts at the time they took the transfer of the bills; and that they took such transfer not upon the credit of the defendant, but upon the credit of the acceptor. Had the action been brought against the defendant by the company, can any one doubt, but that it would have been competent for him to prove not only, that there was no consideration for the bills, but that they were the bills of the company itself? And do not the plaintiffs, with due notice, stand in the same situation, at least so far as regards the question who are the drawers of the bills? Under the circumstances offered to be proved, the plaintiffs were not entitled to the benefit of the presumption of the defendant’s personal liability, arising upon the face of the paper, for they knew the fact to be otherwise. But it has been urged, that this evidence was properly overruled, because it contradicted the written contract of the defendant. To this it may be answered, that it does not directly contradict the clear and distinct terms of the contract, but only tends to explain an ambiguity. Parol evidence is admissible to explain a written agreement, which, on its face is equivocal, 8 Term R. 379. In Barker v. Prentiss, 6 Mass. 434, Chief Justice Parsons said, “it was every day’s practice to admit the promisor to prove, in an action by the promisee, on a note expressed to be for value received, that it was without consideration, and to explain and add to a written contract.” The evidence, here offered, was to explain what was meant by the words, attached to the defendant’s signature.

JBut another answer to the objection is, that the evidence offered was a part of the res gestae; a part of the same identical transaction, as known and understood by the parties at the time; not designed to effectuate a fraud, and fully explained to the plaintiffs, when they took an assignment of the bills.

Upon the whole case, I am of opinion, that the Circuit Court was wrong in overruling the evidence, and that the judgment ought to be reversed.

Judgment affirmed.

Hornblower, C. J. and Whitehead and Randolph, J. J. concurred in the opinion delivered by Carpenter, J.

Reversed, Kean v. Davis, 1 Zab. 683.