Pluto Powder Co. v. Cuba City State Bank

153 Wis. 324 | Wis. | 1913

Kerwin, J.

The only serious question in this case is whether the agent, Robinson, had authority, implied or otherwise, to indorse checks made in favor of plaintiff given in payment of goods sold or to draw drafts in the name of plaintiff. It is clear that the agent had no express authority. The court below found that Robinson had implied authority, and the question arises whether such finding is supported by the evidence. The appellant deals in explosives, with headquarters in New York. In the summer of 1908 one Robinson was employed as representative of plaintiff at Cuba City, Wisconsin, to make sales of goods. The goods were shipped by plaintiff to Robinson, usually in carload lots, freight prepaid, addressed to Pluto Powder Company. The bills of lading were sent to Robinson and he received the goods from the railroad company, placed them in plaintiff’s magazine at Cuba City, sold to mining companies and others, and reported sales to-the office of plaintiff in New York, and invoices were sent to the purchasers by plaintiff from its office. It was understood that the purchasers, generally, should remit to the office of the plaintiff, although some small sales were made for cash and the money collected in such instances by Kobinson. He also had authority to collect from two mining companies, who for certain reasons desired to deal directly with him. It was his duty in all cases to remit checks and drafts received in payment of goods to the plaintiff, and if he received cash to remit that by draft, but he had no authority to sign the name of the plaintiff to commercial paper in any case unless such authority can be implied from the acts and dealings of Kob-inson with the defendant and purchasers of goods. We find no evidence in the record sufficient to charge the plaintiff with notice that Kobinson ever signed its name to negotiable paper until about the 30th of April, 1909, when due investigation was made, the defalcation discovered, and Kobinson discharged. So that all checks and drafts, the proceeds of which are claimed in this action, were negotiated and the name of plaintiff signed thereon before the plaintiff had knowledge that Kobinson signed its name to commercial paper.

The question, therefore, is presented whether the fact that Kobinson acted as salesman of plaintiff, had possession of its goods, and received checks payable to plaintiff, receipted for goods in the name of plaintiff, collected some money on sales when checks were not given payable to plaintiff, receipted for money collected in plaintiff’s name, had authority to employ help, incur expense for livery, and to include livery bills in his account, clothed Kobinson with implied or apparent authority to sign the name of plaintiff to commercial paper. We think the great weight of authority is to the effect that upon the undisputed evidence in this case Kobin-son had no authority, express or implied, to sign the name of plaintiff to negotiable paper.' In tbe instant case the defendant cashed the checks drawn payable to plaintiff upon the unauthorized signature by Robinson of the name of plaintiff. Robinson also drew a draft in the name of plaintiff and obtained the money thereon without authority. The bank therefore became liable to the plaintiff, the funds having been misappropriated by Robinson. Robinson v. Chemical Nat. Bank, 86 N. Y. 404; Schmidt v. Garfield Nat. Bank, 64 Hun, 298, 19 N. Y. Supp. 252, affirmed 138 N. Y. 631, 33 N. E. 1084; Hogg v. Snaith, 1 Taunt. 347.

Since no express authority was given Robinson to indorse or sign negotiable paper on behalf of plaintiff, such power must be shown to be necessary to the exercise of the power conferred, and the burden was upon the defendant to show implied authority. Ames v. D. J. Murray Mfg. Co. 114 Wis. 85, 89 N. W. 836; Parr v. Northern E. M. Co. 117 Wis. 278, 93 N. W. 1099; McDermott v. Jackson, 97 Wis. 64, 71, 72 N. W. 375; Heath v. Paul, 81 Wis. 532, 51 N. W. 876; Jackson P. Co. v. Commercial Nat. Bank, 199 Ill. 151, 65 N. E. 136. Third persons having notice that they are dealing with an agent are bound to inform themselves of the extent and limitations of his authority. 31 Cyc. 1336, 1341; Sawyer v. C. & N. W. R. Co. 22 Wis. 403; Hurley v. Watson, 68 Mich. 531, 36 N. W. 726; Bohart v. Oberne, 36 Kan. 284, 13 Pac. 388. Tiedeman on Commercial Paper, § 77, states the rule thus:

“We have this general rule that applies to all cases of implied agencies, that no authority will be implied from an express authority, unless it is positively needful for the performance of the main duties contemplated by the express authority. . . . And the execution and negotiation of commercial paper are considered by the' commercial world so liable to the infliction of injury on the principals, if this authority is given to agents, — the general custom being to reserve this power for personal exercise, — that the presumption of the law is more strongly opposed to an implied authority to execute and negotiate commercial paper than to do anything else. Hence, in this connection, the rule is strictly enforced, that the authority to execute and indorse bills and notes as agent-will not be implied from an express authority to transact some other business, unless it is absolutely necessary to the exercise of the express authority.”

The authorities very generally hold that an agent with general authority to manage the business of his principal has not, by reason thereof, implied power to indorse or execute negotiable paper. Tiedeman, Comm. Paper, § 77; Mechem, Agency, §§ 398, 382; 1 Clark & Skyles, Agency, 619, 652; 1 Am. & Eng. Ency. of Law (2d ed.) 1030; 31 Cyc. 1382, 1383, and cases cited; Jackson P. Co. v. Commercial Nat. Bank, 199 Ill. 151, 65 N. E. 136; 1 Daniels, Neg. Inst. (5th ed.) § 297.

The mere fact that Robinson had authority to receive negotiable paper in payment for goods sold carried with it no power to indorse it. William Deering & Co. v. Kelso, 74 Minn. 41, 76 N. W. 792; Jackson v. Bank, 92 Tenn. 154, 20 S. W. 802; Graham v. U. S. Sav. Inst. 46 Mo. 186.

We also desire in passing to briefly refer to the manner in which business was transacted between Robinson and the bank. Robinson opened a personal account with the defendant. He had but very little money of his own to his credit, and indorsed checks payable to plaintiff for large sums and placed the money to his own credit in his personal account. There can he no douht under the evidence but that the defendant knew that he was mingling the plaintiff’s funds with his own when he cashed checks through the defendant hank hy aiVnrng the name of the plaintiff thereon and leaving the funds to his own credit in defendant bank. It is clear from the evidence that there was no necessity for him, in the discharge of his duties as agent, to indorse the checks or make the sight draft as he did through the defendant hank.

We shall briefly consider the principal authorities cited to our attention hy counsel for respondent.

31 Cyc. 1373, states the rule that where an agent is employed to make collections he is presumed to be clothed with such powers as are usual and necessary to insure success in collecting. And it is further said: “The authority of an agent employed to make collections, however, carries, no implied power to transfer or sell negotiable paper, or other interest-bearing debt, nor to collect such paper before maturity.”

In Ballston Spa Bank v. Marine Bank, 16 Wis. 120, a cashier of a bank executed a promissory note to borrow money in the business of the bank and 'the money was actually used by the bank in its business and the loan acquiesced in by the board of directors. Held, that the bank ratified the act of the cashier in giving the note, which ratification was equivalent to previous express authority and the bank was liable.

Kasson v. Noltner, 43 Wis. 646, holds that a principal is responsible for the acts of his agent when he has either given the authority to do the act or justified the party dealing with the agent to believe that the latter had such authority. To the same effect are Bouck v. Enos, 61 Wis. 660, 21 N. W. 825; Bentley v. Doggett, 51 Wis. 224, 8 N. W. 155; and Andrews v. Robertson, 111 Wis. 334, 87 N. W. 190.

Lorton v. Russell, 27 Neb. 372, 43 N. W. 112, is relied upon as being specially in point. But in that case as in others relied upon the rule of apparent authority and ratification governed the case. In the instant case there is not sufficient evidence to support the findings to the effect that Robinson had apparent authority to make or indorse negotiable paper in the name of plaintiff or that there was ratification as regards any of the paper which is the basis of this action.

Some claim is made by counsel for respondent that plaintiff ratified the drawing of the draft and indorsement of checks. Brit there is no evidence in the record sufficient to support a finding of ratification. The plaintiff had no knowledge that Robinson made the sight draft or indorsed the checks until its manager arrived at Cuba City on or about April 30, 1909, and the fact that plaintiff’s manager succeeded in obtaining from Robinson on May 1st some of the money unlawfully obtained by him was no evidence of ratification.

It is also insisted that the fourth finding, denominated a finding of fact, not having been excepted to, must be treated as a verity, and that it controls the case against the appellant because it establishes that the agent, Robinson, had authority to make the sight draft and indorse the checks in the name of the plaintiff. Even conceding for the purpose of this case that this finding is a finding of fact, we think it was sufficiently excepted to.

The question of implied authority was directly raised, as appears from the record, by the exception to the refusal of the requests of the plaintiff that the court make certain findings, one of which was that “The defendant had no reason to believe that the said R. M. Robinson had any authority to indorse the name of the plaintiff on any of the checks mentioned in the said complaint or to draw the sight draft therein.” This amounted to a sufficient exception to the contrary finding made to entitle plaintiff to review it here. We hold that the fourth and fifth findings of fact are against the clear preponderance of the evidence.

Counsel for plaintiff requested the court below to find that Robinson had no express authority to indorse the- name of the plaintiff upon checks, and that until the 29th day of April, 1909, and until after the last of such checks had been indorsed by Robinson in the name of the plaintiff, no officer of the plaintiff had any knowledge that Robinson had indorsed the name of the plaintiff to any check or instrument for the payment of money, and that Robinson as agent of the plaintiff had no express authority to draw the sight draft set-forth in the complaint, and that the defendant had no reason to believe that Robinson had any authority to indorse the name of tbe plaintiff upon any of the cheeks mentioned in the complaint or to draw the sight draft. Under the evidence produced these findings should have been made and judgment ordered for the plaintiff.

By the Court. — The judgment of the court below is reversed, and the cause remanded with direction to enter judgment for the plaintiff.