39 Mich. 644 (Mich. 1878), New York Iron Mine v. First National Bank of Negaunee

• Citation: 39 Mich. 644
• Opinion Judge: Cooley, J.
• Party Name: The New York Iron Mine v. The First National Bank of Negaunee
• Attorney: W. P. Healy and G. V. N. Lothrop for plaintiff in error. Ball & Owen and Ashley Pond for defendant in error.
• Case Date: November 21, 1878
• Court: Supreme Court of Michigan

Page 644

39 Mich. 644 (Mich. 1878)

The New York Iron Mine

v.

The First National Bank of Negaunee

Supreme Court of Michigan

November 21, 1878

Submitted October 18, 1878; October 22, 1878

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Page 647

Error to Marquette.

Assumpsit. Defendant brings error.

Judgment reversed with costs, and a new trial ordered.

W. P. Healy and G. V. N. Lothrop for plaintiff in error. An agent's power to make drafts does not include authority to issue notes, Tripp v. Swanzey Mfg. Co., 13 Pick. 293; Dickinson v. Valpy, 21 E. C. L., 41; Wood v. Goodridge, 6 Cush. 123; Rossiter v. Rossiter, 8 Wend. 494; Robinson v. Yarrow, 7 Taunt. 455; Attwood v. Munnings, 7 B. & C., 278; Prescott v. Flinn, 9 Bing. 19; Stainback v. Read, 11 Gratt. 281; Nichols v. State Bank, 3 Yerg. 107; 1 Pars. N. & B., 107 (2d ed.); Wallace v. Branch Bank, 1 Ala. 565; Union Bank v. Mott, 39 Barb. 180; Mechanic's Bank v. Schaumburg, 38 Mo. 236; Batty v. Carswell, 2 Johns. 48; North River Bank v. Aymer, 3 Hill 262; Floyd's Acceptances, 7 Wall 666; a mining superintendent or agent has no power by virtue of his office to borrow money or execute notes on behalf of the corporation, Union Gold Mining Co. v. Rocky Mountain National Bank, 1 Col. 531: 2 Col. 570; In re German Mining Co., 19 E. L. & E., 599; Hawtayne v. Bourne, 7 M. & W., 595; Carpenter v. Biggs, 46 Cal. 91; Lawrence v. Gebhard, 41 Barb. 575; Sewanee Mining Co. v. McCall, 3 Head 619; Benedict v. Lansing, 5 Den. 283; Silliman v. F. O. & C. R. R., 27 Gratt. 120; a general power of attorney to conduct a man's business does not authorize the issue of negotiable paper in the principal's name, Murray v. E. Ind. Co., 5 B. & Ald., 204; Esdaile v. LaNauze, 1 Y. & C., Exch., 394; Hogg v. Snaith, 1 Taunt. 347; Kilgour v. Finlyson, 1 H. Bl., 155; Gardner v. Baillie, 6 T. R., 541; Emerson v. Prov. Hat Co., 12 Mass. 237; for Michigan decisions as to the powers of agents of corporations to bind their principals, Hammond v. Mich. State Bank, Walk. Ch., 214; Grover & Baker S. M. Co. v. Polhemus, 34 Mich. 249; Reynolds v. Cont. Ins. Co., 36 Mich. 131; Lyell v. Sanbourn, 2 Mich. 109; M., H. & O. R. R. Co. v. Taft, 28 Mich. 289; Kal. Nov. Mfg. Co. v. McAlister, 36 Mich. 327; an agent cannot deal with himself, Claflin v. F. & C. Bank, 25 N. Y., 293; Clute v. Barron, 2 Mich. 192; Ames v. Pt. Huron Booming Co., 11 Mich. 144; F. & P M. Ry. v. Dewey, 14 Mich. 487; paper made by one purporting to act as agent, in his principal's name, to his own order, carries with it notice that it is for his own use, West St. Louis Sav. Bank v. Shawnee County Bank, 95 U.S. 558; wide latitude should be allowed in cross-examining a party charged with fraud in the transaction at issue, Jacobson v. Metzger, 35 Mich. 103.

Ball & Owen and Ashley Pond for defendant in error. A mining corporation must have power to contract debts and give notes to pay them, 1 Pars. N. & B., 164; Ang. & Am. Corporations, § 271; Green's Brice's Ultra Vires, 115-122; Edwards on Bills, 77-8; Rockwell v. Elkhorn Bank, 13 Wis. 653; Lucas v. Pitney, 27 N. J. Law, 221; and to endorse notes, Olcott v. Tioga R. R., 40 Barb. 179; and it can authorize its agent to exercise these powers, Melledge v. Bost. Iron Co., 5 Cush. 158; White v. Westport Cotton Mfg Co., 1 Pick. 219; Odiorne v. Maxcy, 13 Mass. 178; Kelly v. Fall Brook Coal Co., 4 Hun 261; Sedgwick v. Lewis, 70 Penn. St., 217; Pahlman v. Taylor, 75 Ill. 629; Ketchum v. Buffalo, 14 N. Y., 875; a corporation is bound by the acts of its agent, within the scope of his apparent authority, in the use of powers which he has assumed to exercise for a long time without interference, N. Y. & N.H. R. R. Co. v. Schuyler, 34 N. Y., 57; Bank v. Putnam, 3 Keyes 343; Davenport v. Peoria F. & M. Ins. Co., 17 Ia. 279; and if the corporation, by reasonable diligence, might have known of the unauthorized action, it will be held to have assented to it, Beers v. Phoenix Glass Co., 14 Barb. 358; where the agent has power to borrow money and to give the note of the corporation for it, the latter is bound by the note in the hands of a bona fide holder even though it was issued for a purpose outside of the legitimate business of the corporation, Bird v. Daggett, 97 Mass. 494; Monument Nat. Bank v. Globe Works, 101 Mass. 57; Mechanic's Banking Ass'n v. White Lead Co., 35 N. Y., 505; Bridgeport City Bank v. Empire Stone etc. Co., 30 Barb. 421; Central Bank v. Empire Stone Co., 26 Barb. 23; Lexington v. Butler, 14 Wall 282; the right to present for negotiation company paper, signed and endorsed by its agent and made payable to him, is a question of fact to be submitted with proper instructions, Chemung Bank v. Bradner, 44 N. Y., 680; Trader's Bank v. Bradner, 43 Barb. 379; Rich v. Davis, 6 Cal. 141; Wait v. Thayer, 118 Mass. 473; Smith v. Lusher, 5 Cow. 688; Ihmsen v. Negley, 25 Penn. St., 297; Ridley v. Taylor, 13 East, 175; Haldeman v. Bank of Middletown, 28 Penn. St., 440; Phelan v. Moss, 67 Penn. St., 59; Moore v. Foote, 34 Mich. 444; Hamilton v. Vought, 34 N. J. L., 187; Moorehead v. Gilmore, 77 Penn. St., 118; Miller v. Consolidation Bank, 48 Penn. St., 514; Lindley on Partnership, 265; 1 Pars. N. & B., 258. Cross-examination must be confined to matters bearing on the direct testimony of the witness, D. & M. R. R. v. VanSteinburg, 17 Mich. 110.

OPINION

Page 648

Cooley, J.

The plaintiff in error is sued as maker of three promissory notes and endorser of a fourth, all of which are copied in the margin. ^[*] By reference to these notes it will be seen that the name of plaintiff in error is subscribed or endorsed by W. L. Wetmore,

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and the contest has been made over his authority to make use of the name of plaintiff in error as he has done. The New York Mine is a corporation, having its place of operations at Ishpeming in this State. It was organized some fourteen years ago, with Samuel J. Tilden and William L. Wetmore as corporators. Mr. Tilden has had the principal interest from the first, and has always acted as president and treasurer, keeping his office in New York city. Mr. Wetmore has always until this controversy arose acted as general agent with his office at Ishpeming. The board of direction has been made up of these gentlemen with some nominal holders of stock in New York city as associates. Meetings of the board appear to have been held very seldom, and the whole business of the company has been done by Mr. Wetmore and Mr. Tilden, the latter looking after the finances, and visiting Ishpeming only twice or three times during the whole period of the corporate existence. Mr. Wetmore hired and paid all the miners and other laborers, and transacted such other business as is usually taken charge of by a general agent whose principal is at a distance. As such agent he has paid out in all upwards of $ 3,000,000; the payments being generally made in drafts on Mr. Tilden, or in the proceeds of such drafts. For a while the drafts were on time, but latterly the financial condition of the corporation has been easy, and only sight drafts have been drawn. The firm of Wetmore & Bro. named in the three notes purporting

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to be made by the New York Mine, was composed of William L. and F. P. Wetmore, and there was evidence that the New York Mine had had business transactions with that firm to the amount in all of $ 125,000. The Munising Iron Co. was a corporation of which W. L. Wetmore, as its note shows, was the president.

It was not claimed on the trial that there had ever been any corporate action expressly empowering Wetmore as general agent to make promissory notes, nor did it appear that he had ever executed any in its name except a few, as hereinafter stated. Some evidence was put in which it was claimed had a tendency to show the existence of a general custom in the mining region for the general agents of mining companies to make promissory notes in the names of their principals without special authorization, but as there was no showing that authority was not generally given, the attempt was a manifest failure. It was also insisted on the part of the plaintiff that as matter of law, the general agent of a mining corporation by virtue of his appointment as such had authority to bind it by commercial paper, and that the court must take notice of his authority, as they must of the authority of the cashier of a bank, the master of a vessel, or other known agents. Adams Mining Co. v. Senter, 26 Mich. 73, 76. On the other hand the defense contended that the authority to issue commercial paper was not implied in any general agency, and when conferred must be strictly construed, and in its exercise strictly limited to its exact terms; and that an authority to draw bills would not authorize the making of notes. And it was further contended that even if authority to make notes was implied, the particular notes in suit were presumptively not within the authority; three of them being drawn by Wetmore as agent, payable to the order of a partnership of which he was one of the members, and prima facie for the benefit of that partnership, while the other like these was made by Wetmore in one capacity and endorsed by him in another,

Page 651

so that apparently he was dealing with himself in making and negotiating all of them.

It was not disputed by the defence that the corporation as such had power to make the notes in suit. The question was whether it had in any manner delegated that power to Wetmore. We cannot agree with the plaintiff that the mere appointment of general agent confers any such power. White v. Westport Cotton Manf'g Co., 1 Pick. 215, is not an authority for that position, nor is any other case to which our attention has been invited. In McCullough v. Moss, 5 Denio 567, the subject received careful attention, and it was held that...