Coston-Riles Lumber Co. v. Alabama Machinery & Supply Co.

Decision Date08 February 1923
Docket Number3 Div. 582.
Citation95 So. 577,209 Ala. 151
CourtAlabama Supreme Court
PartiesCOSTON-RILES LUMBER CO. v. ALABAMA MACHINERY & SUPPLY CO.

Rehearing Denied Feb. 16, 1923.

Appeal from Circuit Court, Montgomery County; Leon McCord, Judge.

Action by the Alabama Machinery & Supply Company against the Coston-Riles Lumber Company. Judgment for plaintiff, and defendant appeals. Reversed and remanded.

Thomas J., dissenting.

Defendant specially pleaded in abatement, which plea is set out in the concurring opinion of McCLELLAN, J.

The defendant being indebted to plaintiff, on January 11, 1921 at a meeting of directors of the corporation "report of finance committee, and after discussion, a motion by C.J Donald and seconded by M. C. Thomas that the secretary-treasurer be authorized to execute to the Alabama Machinery & Supply Company, the company's note for four months for the amount we owe them. Carried." The record further shows that pursuant to this authority, said secretary-treasurer gave to plaintiff four promissory notes executed as that of the corporation by W. L. Coston secretary-treasurer, containing the provisions as to venue above set out. Said Coston testified as to his position and authority; that he was the secretary-treasurer of the corporation when the note was contracted, the authority given, and the notes were executed; that he had in his possession the minutes of the corporation; and that he "was authorized to sign the note." Witness having produced the minutes of the corporation testified that the same were "of the Board of Directors of that corporation"; that said directors were present when the resolution was passed; that the minutes were not signed, but that the witness duly "wrote them up"; that the minutes stated what took place at the meeting. The charter of the corporation, the minutes of the board of directors, and the notes declared on, were, respectively, offered in evidence, to which objection was duly assigned, overruled, and exception reserved, and the respective documents admitted in evidence.

The evidence further showed that the principal place of business of the corporation was in Jefferson county, the principal and only office being in Bessemer, in that county; that it had no other office in the state; and on cross-examination the witness testified that the corporation had no office or agent doing business in Montgomery county; that when he signed the notes he did not know they contained any waiver of venue or jurisdiction of action, nor did the directors know when they passed the resolution that the notes to be signed would contain provision that suit may be brought thereon in the courts of Montgomery county. The witness stated the resolution of the board of directors, that he understood "them to authorize the signing of an ordinary waive note," and did not know the note contained the provision in question when he signed it.

On the evidence adduced the trial judge instructed the jury at plaintiff's request to find for the plaintiff if they believed the evidence, and there were verdict and judgment for the plaintiff accordingly. From that judgment, the defendant appeals.

Huey & Welch, of Bessemer, and James J. Mayfield, of Montgomery, for appellant.

W. Marvin Scott, of Birmingham, and Ball & Beckwith, of Montgomery, for appellee.

SOMERVILLE, J.

As shown by the statement of facts above, the defendant corporation, domiciled and doing business in Jefferson county, and not doing business in Montgomery county, authorized its secretary-treasurer, by a resolution duly shown by its minutes, to execute to the plaintiff corporation "the company's note for four months for the amount we owe them."

Under that authority, thus expressed, defendant's secretary-treasurer closed up defendant's indebtedness to plaintiff by executing four several promissory notes, reciting that they were given for the purchase money for certain machinery, the title to which was reserved in the vendor-payee until the notes were paid, with the right to take possession thereof in case of default in payment; and each note contained this provision:

"All suits for the collection for said goods or of notes given, or for the recovery of said goods, or for damages growing out of this contract or the seizure of said goods, shall be prosecuted in Montgomery county, state of Alabama, and not elsewhere."

The printed forms used for these notes were furnished by the payee, and the presence of this venue clause in the notes was not known to the defendant corporation, and was not observed by its officer who executed the notes nor known to him until this suit was filed.

The question, therefore, is whether the express authority given to defendant's secretary-treasurer to execute notes for its indebtedness to plaintiff included or implied an authority to waive defendant's statutory right to be sued on the notes only in Jefferson county, and to stipulate that such suit should be brought only in Montgomery county-a venue not otherwise available to plaintiff.

We think that an application of the settled principles of the law of agency to this case requires a negative answer. "As a general rule of law every grant of power implies and carries with it, as an incident, authority to do whatever acts, or use whatever means are reasonably necessary and proper to the accomplishment of the purpose for which the agency was created. *** Such incidental authority includes all acts and things which are connected with and essential to the business in hand; it is measured by the nature and necessities of the purpose to be accomplished, and is prima facie coextensive with the business intrusted to the agent's care. The means adopted, however, should be such as are most usual, such means indeed as are ordinarily used by prudent persons in doing similar business." 2 Corp. Jur. 578, § 220; Hall, etc., Co. v. Harwell, 88 Ala. 441, 6 So. 750; Scales v. Mount, 93 Ala. 82, 9 So. 513.

"As a general rule, the authority of an agent will not be extended beyond that which is given in terms, or is necessary and proper to carry the authority given into full effect." Scales v. Mount, 93 Ala. 82, 83, 9 So. 513.

Authority to execute a promissory note to secure existing indebtedness necessarily implies the power to make and deliver a note containing everything necessary to create a valid and effective obligation to pay; and, perhaps, such an authority would ordinarily permit the inclusion in the note of such other stipulations, designed to strengthen the obligation and facilitate its enforcement, as, by general custom and common use, are incorporated with the promise to pay.

Very clearly, the venue provision here asserted was not necessary to the full exercise of the authority granted, and its inclusion in promissory notes is neither usual nor to be expected. In accord with this view, we have recently held that a note containing this very provision was, as a matter of law, not an ordinary promissory note. Stewart v. Capital Fert. Co., 207 Ala. 596, 93 So. 641. And in City Bank of Wheeling v. Bryan, 72 W.Va. 29, 78 S.E. 400, 404, the Supreme Court of West Virginia held that an agent's authority to execute promissory notes for the principal's debt did not include an implied authority to stipulate in the notes that any attorney could appear for the maker in a court of record, and waive process and confess judgment in favor of the payee; and that such a stipulation was therefore utterly void.

We think and hold that the venue provision here in question was in excess of the agent's authority to execute the notes, and that it is not binding on his principal, this defendant.

It results that the plea in abatement should have been sustained instead of denied, and the judgment of the circuit court was grounded in error.

Let the judgment be reversed and the cause remanded for another trial in accordance herewith.

Reversed and remanded.

All the Justices concur, except THOMAS, J., who dissents.

SAYRE, GARDNER, and MILLER, JJ., concur in the opinion.

ANDERSON, C.J., and McCLELLAN, J., concur on the ground that the stipulation in question was ultra vires of the defendant corporation.

McCLELLAN J. (concurring specially).

The writer concurs in the reversal of the judgment; but, upon the different ground to be stated.

The action is by the appellee against the appellant, seeking recovery upon promissory notes purported to have been executed by the latter to the former. In all of the counts of the complaint it is alleged: "The plaintiff further avers that in and by said note the defendant agreed that all suits for the collection thereof should be prosecuted in Montgomery county, state of Alabama."

No demurrer was interposed to the complaint.

The only response to the complaint filed by the defendant, denominated "a plea in abatement," reads:

"Comes the defendant, Coston-Riles Lumber Company, a corporation, and appears specially for the purpose and purpose only of pleading in abatement of this suit. Comes the defendant, and for its plea in abatement of this action says that the plaintiff ought not to be allowed to further prosecute this action brought against this defendant in this court or in this county for that the defendant is a domestic corporation organized under the laws of Alabama with its chief place of business in the city of Bessemer in Jefferson county, Ala. That the defendant corporation is not now and has not heretofore done business in the county of Montgomery by agents. That its principal place of business and the place where it does business in this state by agents is in the city of Bessemer in the county of Jefferson and in the state of Alabama; and that it is suible (suable) in the county of Jefferson and in the Bessemer division of
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