Casco Nat. Bank of Portland v. Clark

• Decision Date: 03 October 1893
• Parties: CASCO NAT. BANK OF PORTLAND v. CLARK et al.
• Court: New York Court of Appeals Court of Appeals

139 N.Y. 307

34 N.E. 908

CASCO NAT. BANK OF PORTLAND

v.CLARK et al.

Court of Appeals of New York.

Oct. 3, 1893.

Appeal from supreme court, general term, second department.

Action by the Casco National Bank of Portland against John Clark and E. H. Close. From a judgment of the general term (18 N. Y. Supp. 887) affirming a judgment in favor of plaintiff, defendants appeal. Affirmed.

Henry Daily, Jr., for appellants.

Edward B. Merrill, for respondent.

GRAY, J.

The action is upon a promissory note, in the following form, viz.:

Ridgewood Ice Co.

Brooklyn, N. Y., Aug. 2, 1890.

$7,500. Three months after date we promise to pay to the order of Clark & Chaplin Ice Company seventy-five hundred dollaes at Mechanics' Bank; value received.

John Clark, Prest.

E. H. Close, Treas.

It was delivered in payment for ice sold by the payee company to the Ridgewood Ice Company under a contract between those companies, and was discounted by the plaintiff for the payee before its maturity. The appellants Clark and Close appearing as makers upon the note, the one describing himself as ‘Prest.’ and the other as ‘Treas.,’ were made individually defendants. They defended on the ground that they had made the note as officers of the Ridgewood Ice Company, and did not become personally liable thereby for the debt represented. Where a negotiable promissory note has been given for the payment of a debt contracted by a corporation, and the language of the promise does not disclose the corporate obligation, and the signatures to the paper are in the names of individuals, a holder taking bona fide and without notice of the circumstances of its making is entitled to hold the note as the personal undertaking of its signers, not withstanding they affix to their names the title of an office. Such an affix will be regarded as descriptive of the persons, and not of the character of the liability. Unless the promise purports to be by the corporation, it is that of the persons who subscribe 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. This must be regarded as the long and well settled rule. Byles, Bills, §§ 36, 37, 71; Pentz v. Stanton, 10 Wend. 271;Taft v. Brewster, 9 Johns. 334;Hills v. Bannister, 8 Cow. 31;Moss v. Livingston, 4 N. Y. 208;De Witt v. Walton, 9 N. Y. 571; Bottomley v. Fisher, 1 Hurl. & C. 211. It is founded in the general principle that in a contract every material thing must be definitely expressed, and not left to conjecture. Unless the language creates, or fairly implies, the undertaking of the corporation, if the purpose is equivocal, the obligation is that of its apparent makers.

It was said in Briggs v. Partridge, 64 N. Y. 357, 363, that persons taking negotiable instruments are presumed to take them on the credit of the parties whose names appear upon them, and a person not a party cannot be charged upon proof that the ostensible party signed or indorsed as his agent. It may be perfectly true, if there is proof that the holder of negotiable paper was a ware, when he received it, of the facts and circumstances connected with its making, and knew that it was intended and delivered as a corporate obligation only, that the persons signing it in this manner could not be held individually liable. Such knowledge might be imputable from the language of the paper, in connection with other circumstances, as in the case of Mott v. Hicks, 1 Cow. 513, where the note read, ‘the president and directors promise to pay,’ and was subscribed by the defendant as ‘president.’ The court held that that was sufficient to distinguish the case from Taft v. Brewster, supra, and made it evident that no personal engagement was entered into or intended. Much stress was placed in that case upon the proof that the plaintiff was intimately acquainted with the transaction out of which arose the giving of the corporate obligation. In the case of Bank of Genesee v. Patchin Bank, 19 N. Y. 312, referred to by the appellants' counsel, the action was against the defendant to hold it as the indorser of a bill of exchange drawn to the order of ‘S. B. Stokes, Cas.,’ and indorsed in the same words. The plaintiff bank was advised, at the time of discounting the bill by the president of the Patchin Bank, that Stokes was its cashier, and that he had been directed to send it in for discount, and Stokes forwarded it in an official way to the plaintiff. It was held that the Patchin Bank was liable, because the agency of the cashier in the matter was communicated to the knowledge of the plaintiff, as well as apparent. Incidentally it was said that the same strictness is not required in the execution of commercial paper as between banks; that is, in other respects, between individuals.

In the absence of competent evidence showing or charging knowledge in the holder of negotiable paper as to the character of the obligation, the established and...