City of Newburyport v. Fidelity Mut. Life Ins. Co.
| Decision Date | 29 February 1908 |
| Parties | CITY OF NEWBURYPORT v. FIDELITY MUT. LIFE INS. CO. |
| Court | United States State Supreme Judicial Court of Massachusetts Supreme Court |
Robert G. Dodge, George H. O'Connell, City Sol., and Charles W Blood, for plaintiff.
Walter I. Badger and Wm. Harold Hitchcock, for defendant.
The checks were on their face the checks of the plaintiff, a municipal corporation. Carpenter v. Farnsworth, 106 Mass. 561, 8 Am. Rep. 360. The defendant therefore must be held to have known this; and it knew further that they were delivered to the defendant in payment of the individual debt of the treasurer. In short, the defendant knew that it was receiving in payment of the individual debt of the treasurer checks of the municipal corporation, and therefore that upon the face of the transaction the treasurer was using the funds of the city of pay his own debt. No citation of authorities is needed in support of the proposition that in the absence of proof of authority on the part of the treasurer such a check is invalid. The payee is charged with notice of a possible want of authority on the part of the agent or officer to bind the principal, and cannot recover upon the check or retain the proceeds without showing that the execution of the paper was duly authorized. And this would be so irrespective of the question whether or not there was as ordinance prohibiting such an act. If there has been no such ordinance the principal would have been applicable. Prima facie and on its face the check is issued without authority.
Although it was not made payable to the defendant, yet it was received by a duly authorized agent of the defendant, in payment of a debt due to it, and the proceeds were duly credited to its account; and its right to hold the proceeds is based only upon the ratification of the act of its agent. Under these circumstances the knowledge of its agent is the knowledge of the defendant, and no help for the defendant is found in Rev Laws, c. 73, § 73. There is nothing in Fillebrown v. Hayward, 190 Mass. 472, 77 N.E. 45, relied upon by the defendant, which is inconsistent with this view of the law. Not to mention other material distinctions between that case and this, it is to be remembered that here we are dealing with the acts of a treasurer of a city, who under our law has no authority as such to issue commercial paper. Abbott v. North Andover, 145 Mass. 484, 14 N.E. 754. Compare also Merchants' National Bank v. Citizens' Gaslight Co., 159 Mass. 505, 34 N.E. 1083, 38 Am. St. Rep. 453.
There does not appear to have been any ratification on the part of the plaintiff. The facts were not known. The negligence of the auditing officers of the plaintiff, if any there were, is not available as a defense to the defendant.
It is strongly argued by the defendant that before the suit was brought it had distributed the money among its policy holders, so that it has no fund on hand to meet this demand. But the answer is that it took the money with full knowledge of the very infirmity in its title to it upon which the plaintiff bases the right to recover. It must be held to have paid over at its own risk. In law it held the money for the plaintiff, and it cannot relieve itself from responsibility by a division of it among its policy holders.
From the above considerations it follows that as to all the requests for ruling, so far as they respect the question of liability,...
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