Sparks v. Dispatch Transfer Co.

Gantt, P. J.

— The notes sued on in this case were all executed by Stewart Jackson, who was at the time of their execution the president of the defendant below, appellant here. The first two were signed in the name of the Dispatch Transfer Company, by Jackson as president; the other three by Jackson, without any reference to the corporation, or any words indicating that he intended to bind anyone but himself. The appellant seeks to avoid liability for any of these notes, but its defense differs, as to the first two, from its defense to the remaining three. Counsel for appellant argues that the evidence did not justify the instructions given for respondents, by which appellant was held liable on the two notes signed with the corporate name. Those instructions, in substance, declared the law to be that, if the jury should find that Jackson was the president of the defendant, and that defendant allowed him to act as their purchasing agent in buying stock in the name of the company, and recognized his act as such by paying his orders given on the company, or by paying his notes given by him for stock so purchased by him of plaintiffs, then defendant was bound by his acts in purchasing the mules of plaintiffs, and for the notes sued on in the first two counts, unless plaintiffs knew, or had reasonable means of knowing, that Jackson was buying these mules on his individual account.

The power of Jackson to bind the defendant is governed by the law of agency. The principle underlying is the same whether the principal be a corporation or an individual. It is now well settled that, when, in the usual course of the business of a corporation, an officer has been allowed to manage its affairs, his authority to represent the corporation may be implied from the manner in which he has been permitted by the directors to transact its business. This is only the application of the principle that usual employment is evidence of the powers of an agent, and the principal is held responsible for the acts of his agent within the apparent authority conferred on the agent. First National Bank v. North Missouri, etc., Co., 86 Mo. 125; Washington Mut. Fire Ins. Co. v. Seminary, 52 Mo. 480; Kiley v. Forsee, 57 Mo. 390; Martin v. Webb, 110 U. S. 7; Mining Co. v. Bank, 104 U. S. 192. The president of a business corporation is its chief executive officer. He may, without any special authority from the board of directors, perform all acts of an ordinary nature, which, by usage or necessity, are incident to his office, and may bind the corporation by contracts in matters arising in the usual course of business. Boone on Corp., sec. 144; Stokes v. Pottery Co., 46 N. J. L. 237.

In the case at bar Stewart Jackson was president of defendant. He purchased every mule that defendant owned from its organization until after the execution of the notes sued on in this case. He had repeatedly signed notes in the name of the corporation, and the corporation had honored his orders and paid his notes so drawn. Plaintiffs had thirteen different transactions with him as the president and purchasing agent of the defendant prior to the giving of the notes herein, and his acts had always been ratified. The defendant was engaged in a transfer business in which the motive power was mules, and it was its written charter privilege to buy mules and execute its notes therefor. Jackson had purchased mules for the defendant of the plaintiffs; and on this occasion he informed them he was purchasing the mules, for which these two notes were given, for the defendant. His transaction, under the evidence, was within both his actual and apparent authority to bind the defendant. The evidence is amply sufficient to bind defendant on those two notes ; and there was no error in the instructions given for plaintiffs on these two notes, and certainly defendant ought not be to heard to complain.

The action of the court, in admitting parol evidence to show that the defendant was liable on the three notes sued on in third, fourth and fifth counts, notwithstanding its name nowhere appeared on the notes, and in instructing the jury as it did in the eighth instruction for the plaintiffs, presents for our consideration a question of great practical importance, and much depends upon its right decision. The exact question here presented has not been passed on by this court in any case that we have been able to find, but it has been long settled in many of our sister states. In Massachusetts as early as 1814, in the case of Stackpole v. Arnold, 11 Mass. 26, it was held that “where one makes a written contract, intending to act therein as the agent of another, and to bind his principal, it is necessary that it should appear in the contract itself that he acts as such agent;” and oral testimony was held inadmissible to contradict, vary or materially affect the written contract. The same question came before the same court again in 1863, in Brown v. Parker, 7 Allen, 337. In that case one N. H. Streeter had signed two negotiable notes, and it was sought to hold defendant Parker, on the ground that Streeter was his agent, and intended to bind defendant. The court says : ‘ ‘ But, in suits on promissory notes or bills of exchange, no evidence is admissible to charge any person as principal whose name is not in some way disclosed on the face of the note or draft. This point has been often decided in this commonwealth, and the reasons on which the rule rests have been fully stated in very recent decisions,” citing Blawson v. Looring, 5 Allen, 340, and cases cited, in which it was said by Chief Justice Bigelow : “Being negotiable paper, all evidence dehors the draft is to be excluded. It is wholly immaterial, therefore, that the defendant was in fact the agent of the company named on the face of the draft; that the plaintiff knew that he was so, and that the defendant had no personal interest in the company.”

In New York, in Pentz v. Stanton, 10 Wend. 271, the cases, both in England and in the different states of the Union, were reviewed, and the conclusion reached “that no person can be considered a party to a bill, unless his name, or the name of the firm of which he is a partner, appear on some part of it, ” citing Chitty on Bills, 22 ; Penn v. Harrison, 3 T. R. 757 ; Emly v. Lye, 15 East. 6. And this rule is universally accepted as the law by the recent text-writers on commercial paper. Tiedeman on Commercial Paper, sec. 87 ; Randolph on Commercial Paper, sec. 131. “ The reason of this rule is, that each party who takes a negotiable instrument makes his contracts with the parties who appear on its face to be bound for its payment. It is ‘a courier without luggage,’ whose countenance is its passport; and, in suits upon negotiable instruments, no evidence is admissible to charge any person as a principal thereto, unless his name in some way is disclosed upon the instrument itself.” 1 Daniel on Negotiable Instruments, sec. 303 ; Mechem on Agency, pp. 285-287; Heaton v. Myers, 4 Colo. 59. And another good reason for the rule is, that every part of commercial paper must be definite and certain and contained in the body of the paper itself, so that every taker and holder understands exactly what his rights in and to it are, and with whom he is contracting.

Counsel for respondents claim that this doctrine has been repudiated by this court in a number of decisions, and the importance of the question, and the earnestness with which this is urged, demand that we should state our reasons for declining to take that view of the case. The leading case relied upon by respondents is Washington, etc., Ins. Co. v. Seminary, 52 Mo. 480. The note which was the basis of the action in that case was as follows:

“ $750.

“ For value received in policy number 2,969, dated the fourteenth day of March, 1866, issued by the Washington Mutual Fire Insurance Company, of St. Louis, I promise to pay said company (or their secretary for the time being) the sum of $750, in such portions and at such time or times as the directors of said company may, agreeably to their acts of incorporation, require.

“Daniel McCarthy,

“President.

“ Per Thomas Burke.”

This court held that it was competent to explain the ambiguity on the face of the note itself. Speaking for the court, Judge Sherwood said in that case: “ In the present case, the note sued on is signed ‘ Daniel McCarthy, President.’ But president of what Í Just here, under the rules laid down in the above cases, parol evidence steps in and affords a ready and satisfactory explanation. The word ‘ president,’ attached to the name of Daniel McCarthy, is an earmark of the official capacity in which the note was signed, — not evidence, it is true, that the note was signed in that capacity, but a sufficient basis for the introduction of testimony tending to establish that fact.”

Moreover, in that case the note on its face referred to policy number 2,969, which insured the seminary building and church building belonging to St. Mary’s Seminary. It will be observed, first, that the above note is not negotiable, and, secondly, that the ambiguity appears on its face, growing out of the word “president,” affixed to McCarthy’s name. In the case at bar, the notes are, by .their terms, negotiable, and contain nothing but Jackson’s name as maker ; so that this case is not authority, because the facts are entirely different. It is true, however, that, in this case, Judge Sherwood quotes from the decision in Mechanics’ Bank of Alexandria v. Bank, 5 Wheaton, 327, in which the supreme court of the United States says : “ It is by no means true, as was contended in argument, that the acts of agents derive their validity from professing on the face of them to have been done in the exercise of their agency.” If this were all, it must be conceded that respondents are justified in claiming that this decision is broad enough to permit parol evidence in any case to explain who was the principal, notwithstanding there is no intimation on the face of the paper that any one but the agent is a party to it. But the supreme court of the United States did not put their decision on that ground ; but, on the contrary, Justice Johnson, who delivered the opinion, expressly says : “But the fact that this appeared on its face to be a private check is by no means to be conceded; on the contrary, the appearance of the corporate name of the institution on the face of the paper at once leads to the belief that it is a corporate, and not an individual, transaction ; to which must be added that the cashier is the drawer, and the teller the payee, and the form of ordinary checks deviated from by the substitution of ‘ to order’ for ‘ to bearer.’ The evidence, therefore, on the face of the bill predominates in favor of its being a bank transaction. But it is enough for the purposes of a defendant to establish that there existed on the face of the paper circumstances from which it might reasonably be inferred that it was either one or the other, and, in such a case, to resort to extrinsic evidence to remove the doubt.” So that it seems clear that the supreme court placed its decision upon the fact that, upon the face of the paper the ambiguity appeared. That court would never have held that there was any ambiguity on the face of the notes sued on in the third, fourth and fifth counts in the case at bar. Falk v. Moebs, 127 U. S. 597.

In 31 Mo. 193 (Smith v. Alexander) the action was on the following note :

Ҥ500. St. Louis, Mo., July 22, 1855.

“Ninety days after date I promise to pay to the-order of Messrs. Smith & Co. $500 for value received, negotiable and payable without defalcation or discount.

“J. EL Alexander,

“Treasurer Ohio & Miss. R. R. Co.”

In that case Alexander, having' been sued on this note, was allowed to show that he was treasurer of the said railroad, and that he gave the note simply as agent-of said company, Judge Ewing saying : “A mere addition to the name of the party signing the contact cannot be regarded as a certain indicium that it was made on behalf of another. When, however, it is doubtful from the face of the contract whether it was intended to operate as a personal engagement of the party signing it or to impose an obligation on some third person as principal, evidence is admissible to show the character of the transaction.” So we see that Judge Ewing places his ruling on the doubt appearing on the face of the note, whether it was the obligation of Alexander or the railroad company.

Shuetze v. Bailey, 40 Mo. 69, was an action on a contract for half the value of a partition wall. It was not a negotiable instrument at all, and in that case the contact was signed, “Kenneth McKenzie, Agent for Volney Stevenson, on the first partso that case is not similar in any legal feature to the one at bar. In Musser v. Johnson, 42 Mo. 74, action was brought on a-written assignment of a certain claim against Johnson and others by Isaac EL Sturgeon, President North Missouri Railroad Company, “ attested with the seal of the company, and countersigned by Geo. EL Blood, Secretary North Missouri Railroad Company.” It was held to-be the act of the company. The instrument was not negotiable, and the paper on its face clearly showed it was the intention to assign the railroad company’s right.

The next case we are cited to is Ferris v. Thaw, 72 Mo. 446. In that case the no1e or instrument read :

“$4,000. ' ' St. Louis, Mo., October 3, 1870.

“ Twelve months alter date I promise to pay to the order of John W. Luke, treasui’er,. $4,000, without defalcation or discount, for value received, negotiable and payable at the Third National Bank of St. Louis, with ten-per-cent, interest from date, payable semiannually. Charlie Tiiaw,

“ W. M. Polar Star Lodge. Number 79.

“Indorsed: John W. Luke,

“ Treasurer.”

In that case the defendants were sued as members of Polar Star Lodge number 79 of Ancient Free and Accepted Masons. Defendant Thaw was its chief officer, with the title of worshipful master. In that case it was ■shown that the lodge was an unincorporated body; that it had borrowed this $4,000 for lodge purposes. The loan was reported to the lodge and was approved at its meeting, all the defendants voting therefor. It will be observed that in this case the ambiguity appears on the face of the paper, and the court properly permitted evidence to show who were the real principals, and the members of the lodge which received the money were held on it. It is true the learned judge quotes from Story on Agency and uses language that might be construed to include any undisclosed principal; but it is not practicable in every case to go over the entire law, and point out all the qualifications that might be mentioned, and, when .the law, as quoted, applies to the controlling facts in the •case, it must be understood as referring to those facts. It is clear to us that the learned judge who delivered •that opinion had no intention of discussing the proposition now under consideration. The case was placed upon the ground that, the lodge having failed to become a corporation, its members were liable as copartners ; and they were all shown to have ratified the act of the worshipful master, and his agency appeared on the paper itself, so that it was unnecessary to discuss the •question as to the liability of a person on an instrument to which he was not a party. Martin v. Fewell, 79 Mo. 401; Richardson v. Pitts, 71 Mo. 128.

It remains only to notice Franklin Avenue German Saving Institution v. Board of Education, 75 Mo. 408. That was an action on a school bond, as follows :

“ It is hereby certified that the special school district' of the town of Roscoe, county of St. Clair, state of Missouri, is indebted to-, or bearer, in the sum of $500, payable * * *. This bond is issued under and by virtue of an act of the legislature of Missouri entitled ‘ An act to authorize cities, towns and villages to organize for schools with special privileges.

“Jas. Smanger,

“Henry Swann, President.

“ Secretary.”

Of course, on the face of this bond, it was the bond of the school-district, and no such question as the one at bar was before the court.

In Snider v. Adams Express Co., 77 Mo. 525, Snider was the consignor of the lost package, and this court held that, although the package vras the property of hie sister Louisa, that Snider was the trustee of an express trust, and authorized to sue. No question of negotiable paper was involved in the case, so that it will appear from an examination of each of the cases relied on by respondents as sustaining the action of the court in-admitting parol evidence to show that Jackson was in -fact the president and purchasing agent of appellant, and executed the three notes described in third, fourth and fifth counts in behalf of said company, they are all unlike this case, in that in each of them there was some' addition, such as “president,” “ worshipful master,” “treasurer,” or some title designating an agency on the face of the paper itself, and in such cases the law permits the ambiguity to be explained ; and, indeed in all other contracts except bills of exchange and negotiable promissory notes it is always permissible to show by parol evidence who is the real principal. Tiedeman on Commercial Paper, sec. 87, and authorities cited. But, wherever the cases have been reviewed, we think, it will be found that, although the rule has been relaxed in those cases where the maker or drawer adds the word “agent,” or “president” or the like after his name, yet in negotiable instruments, when the principal’s name does not appear, he is not liable on the MU or note as a party to the instrument. Devendorf v. Oil Co., 17 W. Va. 135; Fuller v. Hooper, 3 Gray, 341; Williams v. Robbins, 16 Gray, 77; Pease v. Pease, 35 Conn. 131; Keck v. Brewing Co., 22 Mo. App. 187; Bartlett v. Tucker, 104 Mass. 339.

What we have here said is not in conflict with another equally well-settled rule, that a party may bind himself by another than his true name, where he signs any instrument with intent to bind himself, or signs any name under which he is shown to have held himself out to the world and carried on business. In these cases he is as much liable as if he had signed his true name. Bartlett v. Tucker, 104 Mass. 339.

With this view of the law, then, we hold the court erred in the admission of parol evidence to show that Jackson executed the three notes sued on in third, fourth and fifth counts, and in giving instruction, numbered 8, as prayed by plaintiffs. In regard to the refusal to give the twenty-third instruction asked by defendant we think the court committed no error. We do not think any such issue was properly tendered the plaintiffs, nor do we think there was sufficient evidence to justify it, if properly pleaded. We are driven by our views of the law to affirm the judgment of the circuit court on the first and second counts, and reverse the judgment on the third, fourth and fifth counts. Hunt v. Railroad, 89 Mo. 607, and cases cited.

All the judges of division number 2 concur.

Case Details

Case Name: Sparks v. Dispatch Transfer Co.

Court Name: Supreme Court of Missouri

Date Published: Apr 15, 1891

Citation: 104 Mo. 531

Court Abbreviation: Mo.