Austin, Nichols & Co., Inc. v. Gross
| Decision Date | 04 April 1923 |
| Citation | 98 Conn. 782,120 A. 596 |
| Parties | AUSTIN, NICHOLS & CO., INC., v. GROSS. |
| Court | Connecticut Supreme Court |
Appeal from Court of Common Pleas, Hartford County; Edwin C Dickerson, Judge.
Action by Austin, Nichols & Co., Inc., against Morris Gross. Judgment for plaintiff, and defendant appeals. Error, and new trial ordered.
The plaintiff is a corporation engaged in the wholesale grocery business. The defendant was engaged in the grocery business under the trade-name of State Street Grocery Company, from December 21, 1921, to April, 1922, when the business was incorporated under the name of the State Street Grocery Company, Inc., and the plaintiff was duly informed of the incorporation. The defendant was the principal stockholder in this corporation. The plaintiff from time to time sold goods to this corporation. About July 10, 1922, the plaintiff refused to sell goods to the State Street Grocery Company Inc., until the goods theretofore delivered to it were paid for. Thereupon defendant, who was the treasurer of State Street Grocery Company, Inc., gave to plaintiff a check in the following form:
" Pallotti, Andretta & Co., Bankers,
96 Windsor Street
Hartford Conn., July 15, 1922.
Pay to the order of Austin, Nichols & Co., Inc., $334 86/100, three hundred thirty-four 86/100 dollars.
M. Gross."
Across the left-hand end of the check were the following words:
" State Street Grocery Co., Inc., 161 State St Hartford, Conn."
The check was duly presented for payment and has not been paid nor has the account for which the check was given been paid. Between April, 1922, and the time this check was given the plaintiff had no account against the defendant personally.
The defendant assigns as error the rulings excluding these questions asked of the defendant:
" Q. Did you have an account, Mr. Gross, in the Pallotti & Andretta Co. in the name of the State Street Grocery, Inc.?
Q. And who signed the corporate checks?
Q. Did you, Mr. Gross, individually receive any consideration for this check?
Q. Mr. Gross, how did the corporation authorize its bank to pay out the checks on its account?
Q. Did you owe anything personally to Austin, Nichols & Co.?"
Mr. Gross testified that plaintiff's representative asked him for payment of the account for the previous month, and he told him, " We didn't have enough funds in the bank, but I will give you a check dated ahead a few days," etc. Thereafter defendant's counsel inquired of defendant:
" Q. You say, Mr. Gross, you didn't have enough funds, whose funds or what funds do you mean?"
Ralph M. Grant and Bernard J. Ackerman, both of Hartford, for appellant.
Ralph O. Wells and John P. Harbison, both of Hartford, for appellee.
WHEELER, C.J.(after stating the facts as above).
All of the questions set forth in the statement were asked by defendant's counsel, as the parties agree, either for the purpose of proving the defendant's claim that this check was the check of State Street Grocery Co., Inc., and not the defendant's personal check, or for the purpose of proving the defendant's authority to act for the company.
Other rulings complained of are either bad in form or immaterial. The plaintiff's objection was evidently based upon the ground that parol evidence was not admissible to prove these facts. If parol evidence was admissible, the rulings were erroneous. So that the single point for determination is whether parol evidence is admissible to prove that the signature, " M. Gross," was not an individual signature, as it purported to be, but was the signature of State Street Grocery Company, Inc.
The decision must be based upon the terms of G. S. § 4378, which is a part of and identical with section 20 of the Negotiable Instruments Law as drafted by the commissioners. We should give to the sections of this law a liberal construction so as to secure to them a reasonable meaning and to effectuate the intention of its framers and to make it workable and serviceable to the important business to which it relates. It is a codification of the law upon this subject and embraces all of the law upon this subject to which its terms expressly or by necessary implication may be held to relate. Its framers sought to adopt the best rule prevailing in this country. Occasionally they have departed from their primary purpose and sought the rule elsewhere. Section 20 (G. S. 4378) was copied from the German Exchange Act, and some of its provisions are a departure from the prevailing rule in this country. This section has been subjected to severe criticism, but it has outlived it, due to the fact that the business world approves of it because it increases the negotiability of commercial paper and simplifies the proof in the recovery. Article by Charles L. McKeehan, published in Brannan's Negotiable Instrument Law.
Cases arising under this law are to be decided without reference to the authority of prior decisions, either those of our own jurisdiction or elsewhere, except that in the construction of a given section of the act " consideration should be given to the authorities upon which the section is based," or to those which will aid in the construction of the section. The not infrequent practice of courts to decide cases within the act without reference to the Negotiable Instruments Law has tended to impair the prime purpose of the law--uniformity in decision--and also the tendency of courts to rest the case upon prior decisions and make this law an appendage of these has tended in some jurisdictions to confuse the profession and complicate the law of commercial paper instead of making it clear, simple, and certain as its framers intended. General Statutes, § 4378, part of our Negotiable Instruments Law, which we are to construe, reads as follows:
" Where the instrument contains, or a person adds to his signature, words indicating that he signs for or on behalf of a principal, or in a representative capacity, he is not liable on the instrument if he was duly authorized; but the mere addition of words describing him as an agent, or as filling a representative character, without disclosing his principal, does not exempt him from personal liability."
This section covers at least five classes of cases:
(1) Where one adds to his signature to a negotiable instrument words indicating that he signs for or on behalf of a principal, or in a representative capacity, he is not liable on the instrument if he was duly authorized.
(2) By necessary implication from this statute, as Mr. Crawford and Prof. Brannon have pointed out in their works on the Negotiable Instruments Law, it follows: Where one adds to his signature to a negotiable instrument words indicating that he signs for or on behalf of a principal or in a representative capacity, he is liable on the instrument if he was not duly authorized.
(3) Where one adds to his signature to a negotiable instrument words describing him as an agent, or as filling a representative character without disclosing his principal, he will be personally liable.
(4) By necessary implication it follows: Where one adds to his signature to a negotiable instrument words describing him as an agent or as filling a representative character and does disclose his principal, he will not be personally liable.
(5) Where the negotiable instrument contains words indicating that one has signed it for or on behalf of a principal, or in a representative capacity, he is not liable if he was duly authorized.
The questions involved in classes 1 and 2 are whether the signature indicates that the signer signs for a principal or in a representative capacity or not, and whether he was duly authorized.
These are facts to be ascertained from all the legitimate evidence in the case. If the instrument does not furnish the information from which a reasonable inference may be drawn it must be obtained outside of this. Such evidence will not vary the contract, it will merely determine or help to determine what in fact the contract was. The prevailing rule at the time of the drafting of the Negotiable Instruments Law accorded with the rule of Hovey v. Magill, 2 Conn. 680, 682, a case where Magill placed under his signature to a note the words " Agent for the Middletown Manufacturing Co." Magill claimed upon the trial that he was not personally liable, and evidence was received in support of his claim of a vote of the company by which he was appointed the agent for...
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...218 Mass. 324, 326, 105 N. E. 878; Consumers' Twine Co. v. Mount Pleasant Co., 196 Iowa, 64, 194 N. W. 290; Austin, Nichols & Co. v. Gross, 98 Conn. 782, 120 A. 596." See, also, American Trust Co. v. Canevin (C. C. A.) 184 F. 657; Gutelius v. Stanbon (D. C.) 39 F.(2d) 621; First Nat. Bank o......
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