Cadillac State Bank v. Cadillac Stave & Heading Co.

• Decision Date: 03 December 1901
• Citation: 129 Mich. 15,88 N.W. 67
• Parties: CADILLAC STATE BANK v. CADILLAC STAVE & HEADING CO. et al.
• Court: Michigan Supreme Court

88 N.W. 67

129 Mich. 15

CADILLAC STATE BANK v. CADILLAC STAVE & HEADING CO. et al.

Supreme Court of Michigan

December 3, 1901

Error to circuit court, Wexford county; Clyde C. Chittenden, Judge.

Action by the Cadillac State Bank against the Cadillac Stave &amp Heading Company and another. From a judgment for the plaintiff, defendant the Cadillac Stave & Heading Company brings error. Affirmed.

Sawyer & Bishop, for appellant.

D. E McIntyre, for appellee.

LONG, J.

This action is brought on eight promissory notes purporting to be executed by the Cadillac Stave & Heading Company; six of them running to the plaintiff, and the other two purchased by plaintiff as, trade paper, and all guarantied by Nathan E Staples. One of the last two notes was given to Charles L Ballard as part purchase price of a sawmill bought by Nathan E. Staples and Charles A. Ridlon for their own use, and the other of the two notes was given to James E. Beckwith to enable him to purchase some land. Neither of these two notes was in any way connected with the corporate business, or of any direct or indirect benefit to the corporation. The note to Ballard was for $250, and the one to Beckwith was for $160. The other six notes were all given to Henry Knowlton cashier of the plaintiff bank, and, including the first two described, amount to the sum of $5,100. On the last of these notes are indorsements which reduce the total amount claimed on all the notes to $4,579.12, and for which amount the court directed a verdict in favor of plaintiff. Defendant corporation brings error. The defendant corporation pleaded the general issue, filing an affidavit made by its president, denying the execution of the notes. Defendant Staples did not appear, and his default was duly entered, though he was produced as a witness for the plaintiff during the trial. It appears that the corporate name to all these notes was impressed upon them with a rubber stamp. On three of them the signing of the corporate name was 'per N.E. Staples, Manager.' On others the corporate name was stamped on 'per Charles J. Staples,' a brother of N.E. Staples, who held no official position with the corporation, but who was a clerk in its office. The defendant corporation was organized under the laws of this state in January, 1894, with only three stockholders, to wit, Job A. Staples, of Elba, N. Y., and his two sons, George K., of Buffalo, N. Y., and the defendant Nathan E. Staples, who alone resided at Cadillac, this state, where the business of the corporation was carried on. Subsequently portions of the stock were transferred to others by the original owners, but the exact amount so transferred and held by others does not appear. The factory was burned in December, 1899. It also appears that during all but one year of this time N.E. Staples was the secretary, treasurer, and general manager of the business of the corporation, and conducted all the Michigan end of the business, with an occasional visit from his father and brother from New York. At the inception of the business there was an arrangement made with Tyndall & Jackson, a Buffalo jobbing house dealing in cooperage stock, to take the entire cut of the company, and to furnish a sufficient amount of money to operate the business. This money was furnished monthly; the corporation making a draft upon Tyndall & Jackson, who accepted the same, whereupon the drafts were deposited with the plaintiff bank, and constituted the fund upon which the checks were drawn by the corporation to pay operating expenses. These checks were signed with the same stamp with which the corporate name of the corporation was signed to the notes in controversy. These checks were mostly signed by the secretary and treasurer of the corporation, though the custom was not entirely uniform. These acceptances seem to have furnished all the funds used by N.E. Staples in the business of the corporation until the fall of 1897, when it appears he began discounting promissory notes at the plaintiff bank signed by the rubber stamp with which checks and drafts had previously been executed. There was no evidence offered to prove that the other members of the corporation had any knowledge of this practice, or that this fact was ever brought to the attention of the members of the board of directors, or passed upon by them in their official character or otherwise, until the factory had been destroyed by fire, and the...