Baird v. Lorenz
| Decision Date | 23 January 1929 |
| Citation | 224 N.W. 206,57 N.D. 804 |
| Court | North Dakota Supreme Court |
Rehearing Denied April 5, 1929.
Appeal from the District Court of Ramsey County, Grimson J.
Reversed and judgment ordered for the plaintiff.
T W. Morrissey and McGee & Goss, for appellant.
"Unless the promise purports to be by the corporation, it is that of persons who are subscribing to it; and the fact of adding to their names an abbreviation of some official title has no legal signification as qualifying their obligation, and imposes no obligation upon the corporation whose officers they may be." Crawford's Anno. Neg. Inst. Law, 3d ed. pp. 33, 34.
"If a note payable to an individual, with the mere suffix of his official character, such suffix will be regarded as descriptio personae, and the individual is the payee." 1 Daniels, Neg. Inst. § 415.
Sinness & Duffy, for respondents.
"The expression of a holder's or transferor's fiduciary capacity on the face of a negotiable instrument is notice to the purchaser of a probable limited or restricted authority to negotiate the same." 8 C.J. 515.
If a note is made payable to L.H.K., attorney, and is indorsed by him in like style, the purchaser is put upon his inquiry." Hazeltine v. Keenan, 192 Am. St. Rep. 953.
"In the absence of a very clear showing of such authority, the agent has no power under the broadest terms in the letter of appointment to make or indorse negotiable paper for his own interests, in the name of his principal or for his own interests and that of the principal." 2 C.J. 641.
This is an action on a promissory note. The case was tried to a jury and at the close of the case both sides moved for a directed verdict. The court dismissed the jury, took the case under advisement and then ordered judgment for the defendants for the dismissal of the action. Judgment was accordingly entered and the plaintiff appeals.
The defendants made, executed and delivered their certain promissory note in the sum of $ 150 to "A. B. Dill, agent," as payee. Before maturity the payee gave the note to the Scandinavian-American Bank of Minot as collateral to his own personal indebtedness. As stated by the learned trial court in his memorandum opinion:
This gives us the crux of the case. There is no claim of any fraud on the part of the bank. It is conceded that this transaction between the bank and Dill was a bona fide transaction. He put the note up as collateral, he secured money thereon, and the debt was not paid. The bank became insolvent and the plaintiff Baird was appointed receiver.
The defendants allege that the note was given as evidence of the agreement on their part to purchase stock in the Home Lumber Company, that the stock "was being sold for the said company by the said A. B. Dill as agent," and that the said Dill induced them to purchase the stock and give the note under certain representations with reference to the establishment of this Home Lumber Company in their home town which representations were wholly untrue; that they received no consideration whatever for the note. All of these facts are conceded by the plaintiff and the defendants do not dispute the testimony with reference to the transactions between the bank and Dill.
It is said that the fact the note was made payable to A. B. Dill agent, and was indorsed "A. B. Dill, agent," was sufficient to "put the bank on notice and inquiry as to who else was interested in the note, what it was meant for and what authority Dill had to indorse it and apply the proceeds to his own personal use." In support of this contention respondents cite the rule as laid down in 8 C.J. 515, to the effect that paper made payable to one as agent and indorsed by him as agent is notice of the rights of other parties. Doubtless this is the correct rule. If there were no other parties the term agent could be treated as surplusage. In the case at bar there were other parties -- that is, parties suggested by the word agent -- the Home Lumber Company. As said in Hazeltine v. Keenan, 54 W.Va. 600, 102 Am. St. Rep. 953, 46 S.W. 609, a note made payable to one as agent and indorsed by him as agent "when owned by the payee and other parties indicates an interest in such other parties and puts the purchaser upon inquiry as to their rights and the rights of the payee to sue the note." The respondents rely upon this case as authority for their position. The court bases his memorandum opinion upon the rule laid down in Corpus Juris and as supported by this and similar cases. A subsequent case from West Virginia, Dollar Sav. & T. Co. v. Crawford, 69 W.Va. 109, 33 L.R.A.(N.S.) 587, 70 S.E. 1089, says that the term attached to the payee's name does not destroy the negotiability of the note but puts the purchaser on inquiry as to his right to sell the note. See also Long v. City Nat. Bank (Tex. Civ. App.) 256 S.W. 1006. All these cases show that a term attached to the payee's name whether agent, attorney, trustee or receiver, especially when the payee so indorses the note in such capacity, is notice to the bank of the rights of some one else in that note, giving notice to the purchaser of the rights of the persons interested in the negotiation of the note or for whom the payee was acting. In Zielian v. Baltimore Plate Ice Co. 115 Md. 658, 81 A. 22, it was held that the word "receiver" was notice of limitation of authority as against the rights of the corporation for which the indorser was receiver. And to the same effect is Ford v. Brown, 114 Tenn. 467, 1 L.R.A.(N.S.) 188, 88 S.W. 1036. In Wisconsin Yearly Meeting v. Babler, 115 Wis. 289, 91 N.W. 678 where a note was made payable to and by S. negotiated, it was held that the descriptive term put the purchaser on his inquiry as to the rights of those for whom S. was treasurer. It is not notice regarding any claim which the maker may have against the payee or his principal. It must be conceded that if the note had been made directly to the Home Lumber Company and by the Home Lumber Company negotiated to the bank under the condition under which this note was negotiated then the bank would have a valid claim against the makers. The fact that the note was made payable to Dill as agent and indorsed by him as agent does not alter the liabilities...
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