Bank of Deer Lodge v. Hope Mining Co.

• Citation: 3 Mont. 146
• Parties: BANK OF DEER LODGE, appellant, v. HOPE MINING COMPANY, respondent.
• Decision Date: 31 January 1878
• Court: United States State Supreme Court of Montana

3 Mont. 146

BANK OF DEER LODGE, appellant,

v.HOPE MINING COMPANY, respondent.

Supreme Court of the Territory of Montana.

January Term, 1878.

Appeal from Second District, Deer Lodge County.

THIS action was tried by the court, KNOWLES, J., without a jury.

SHARP & NAPTON, for appellant.

The telegram constituted Alger an agent of the respondent and authorized him to draw the draft in suit. If respondent authorized the drawing of the draft by Alger, or authorized appellant, as a fair and reasonable party, to believe that the authority had been given, it is bound by the acts of the party acting as agent. 1 Pars. on Notes and Bills, 100, 101; Chitty on Bills, * 30, * 31.

The drawing of one draft, directed and signed like the one in suit, which was accepted and paid by respondent, coupled with the fact that Alger was authorized to check and did check against the funds of respondent in Deer Lodge and Helena, was sufficient to authorize appellant, as a reasonable party, to believe he had authority to draw the draft in suit, and to show the manner of exercising this authority. Under certain circumstances, authority to bind the principal in one form might be evidence throwing light on the question of authority to bind him in another. 1 Dan. on Neg. Inst. 218, 219.

It is not necessary that appellant should have seen the authority before the money was paid on the draft. If the agent had the authority, that is sufficient. Bateman on Com. Law, §§ 498, 500.

The evidence shows that Alger drew the draft by virtue of his agency for respondent and the telegram. There is no evidence that Alger had any private funds in respondent's hands.W. W. DIXON, for respondent.

A party dealing with an agent is bound at his peril to know what the power of the agent is, and if the agent exceeds his power the principal is not bound. 1 Pars. on Notes and Bills, 119; Blum v. Robertson, 24 Cal. 140;Herbert v. King. 1 Mon. 475; Story on Agency, §§ 165, 169.

The acts of an agent in making negotiable paper for his principal are restrained. 1 Pars. on Notes and Bills, 107; Story on Agency, § 59. An authority to make such paper cannot be inferred from one or two instances of recognition. 1 Pars. on Notes and Bills, 100.

The telegram was the only authority for Alger to act. This was not addressed to him as agent and did not make him such. Alger was authorized in a certain contingency to draw in his own name on respondent, but he could not draw in the name of respondent.

The instrument that Alger drew was a promissory note in law. 2 Greenl. Ev., § 160; 1 Pars. on Notes and Bills, 62. The drawing in this case was an acceptance and no presentment for acceptance or notice of non-payment is necessary. 1 Pars. on Notes and Bills, 281, 521.

Alger departed from his authority in a substantial particular and respondent is not bound.

BLAKE, J.

The appellant brings this action to recover upon the following bill of exchange:

At sight, pay to the order of the First National Bank, Deer Lodge, one thousand dollars. Value received, and charge the same to account of

HOPE MINING CO.

Indorsement--“Pay the Security Bank, or order, for collection, account of First National Bank, Deer Lodge, Montana.

W. A. CLARK, President.”

The appellant has been incorporated under the laws of the United States and is engaged in a general banking business. It discounted the bill upon its date and paid the proceeds to Alger. The respondent has been incorporated under the laws of the State of Missouri and is mining some quartz lodes at Philipsburg and has an office in St. Louis, Missouri. The appellant demanded payment of the bill at the office in St. Louis, May 27, 1874, and the respondent refused to accept or pay the same. Notice of its presentment and non-payment was properly given.

The respondent denied that Alger was its agent and claimed that he had no authority to draw the bill. The court below rendered judgment for the respondent upon these grounds, and also found that it was the custom of the respondent in drawing drafts upon itself to direct them to Chas. C. Whittlesey, president of the Hope Mining Company. The only authority of Alger to draw the bill is contained in the following telegram, which was transmitted by the Western Union Telegraph Company.

“Dated ST. LOUIS, Feb. 23 d, 1874.

Received at ________.

TO JOSEPH ALGER, Philipsburg:

Care for company's property. See that McArdle has what he needs. If funds needed, draw on company.

CHAS. C. WHITTLESEY.”

This telegram was received by Alger about February 25, 1874, after the death of McArdle. One bill of exchange for $500 was drawn by Alger, March 26, 1874, which was discounted by the appellant, and afterward accepted and paid by the respondent. The proceeds were expended for the benefit of the respondent. This bill was signed in the same manner as that involved in this action, and all the parties were the same. No other bills were drawn on the respondent by Alger, but during the months of February, March and April, 1874, Alger checked against some funds of the respondent in Deer Lodge and Helena. Alger was not in the employ of the respondent when the second bill was drawn, and the proceeds were used in defraying the expenses of Mrs. McArdle and her family from Philipsburg to St. Louis. The officers of the appellant did not make any inquiries respecting the authority of Alger to sign these bills, or the purposes for which they were drawn, and never saw the telegram.

We must consider the relations of Alger and the respondent which affect the rights of the appellant. It is evident that the telegram authorized Alger to draw upon the respondent for money for certain objects. Did it constitute Alger the agent of the respondent, and empower him to sign the bill in that capacity? Did the officers of the respondent authorize those of the appellant, with whom Alger dealt, to believe as fair and reasonable men that this authority had been actually given to Alger? An examination of the law of Agency will enable us to determine these questions, and if we find that either of them should be answered in the affirmative, we must decide that the respondent was bound by the acts of Alger. 1 Pars. on Notes and Bills, 100, 101, and cases there cited.

Some of the principles, which are applicable to these questions, have been announced by this court in the case of Herbert v. King, 1 Mon. 475. It was held that the principal is responsible for the acts of his agent, when they have been done within the scope of his authority, and that “courts will not tolerate any enlargement of this liability.” The bill shows that Alger claimed to be the agent of the respondent, and it was the duty of the officers of the appellant to ascertain the extent of his power before they discounted it. In Mechanics' Bank v. N. Y. & N. H. R. R. Co., 3 N. Y. 631, Mr. Justice COMSTOCK says: “Whoever proposes to deal with a security of any kind, appearing on its face to be given by one man for another, is bound to inquire whether it has been given by due authority, and if he omits that inquiry, he deals at his peril.” Blum v. Robertson, 24 Cal. 140 and cases there cited. In this action, the burden of proving that Alger was the agent of the respondent in drawing the bill is on the appellant. Add. on Cont., § 57. The power of an...