Dispatch Printing Company v. National Bank of Commerce
| Decision Date | 14 January 1910 |
| Docket Number | 16,150 - (7) |
| Parties | DISPATCH PRINTING COMPANY v. NATIONAL BANK OF COMMERCE |
| Court | Minnesota Supreme Court |
Action in the district court for Hennepin county to recover $3,246.88, the total amount of twenty-two checks which were drawn on defendant to the order of the Dispatch Printing Company and were paid by defendant.
The complaint alleged that M. A. Sturm was a solicitor of advertising for plaintiff; that the drawer of each check made it payable to the plaintiff and delivered it to Sturm to be delivered to plaintiff; that Sturm wrongfully and without any authority so to do indorsed it as follows: "The Dispatch Ptg. Co." "St. Paul Dispatch, Minneapolis Dept., M A. Sturm, Mgr." "Pay to the order of Germania Bank Minneapolis, Minn., M. A. Sturm, Trustee;" that defendant paid the check for the sole benefit of Sturm charged the same to the account of the drawer and marked the check "Paid;" that each of such indorsements was made without the knowledge or consent of plaintiff, and the deposit of the check in bank to the credit of Sturm, whether individually or as trustee, was without the authority or consent of plaintiff. The answer alleged that Sturm, acting in his capacity as agent and manager of plaintiff corporation in Minneapolis, with full knowledge and consent of plaintiff was engaged in soliciting advertising and collecting moneys becoming due upon its accounts; that a part of the funds so collected was in the form of checks of advertisers in the St Paul Dispatch and a part was in cash; that it was the practice of Sturm to deposit the funds so collected in the Germania Bank in the name of M. A. Sturm, trustee, which fact was well known to plaintiff, and in carrying on the business it was his custom to indorse the checks payable to plaintiff, which fact was well known to plaintiff, its officers and business manager, who in divers ways approved and assented to his conduct; that by reason thereof defendant was induced to honor and pay the checks in the usual course of business, when so indorsed by Sturm, by the Germania Bank, and the clearing house of Minneapolis, and did this with full knowledge and consent of plaintiff, its officers and business manager.
The case was tried before Frederick V. Brown, J., and a jury which returned a verdict in favor of defendant. Plaintiff's motion for judgment notwithstanding the verdict or a new trial was denied. From the judgment entered pursuant to the verdict, plaintiff appealed. Reversed and new trial granted.
Payment of Check to Unauthorized Agent -- Estoppel of Principal -- Payment Through Clearing House.
Where a bank pays a check drawn upon another bank to an agent of the payee therein named, who is not authorized to receive the money, but as to the paying bank the agent's principal is estopped from denying the authority of the agent, by reason of which the paying bank acquires a valid bona fide title to the check, its title passes to the drawee bank upon its payment of the check through the clearing house, though the facts justifying the paying bank were not known to the officers of the drawee bank.
Express Authority of Agent.
Express authority of an agent is that which the principal directly grants to him, and this includes by implication, whether the agency be general or special, all such powers as are necessary and proper as a means of effectuating the purposes for which the agency was created.
Apparent Authority of Agent.
The apparent authority of an agent is that which, though not actually granted, the principal knowingly permits the agent to exercise, or which he holds him out as possessing.
Agency by Estoppel.
Agency or authority by estoppel arises in those cases where the principal by his culpable negligence permits his agent by an unquestioned course of dealing to exercise powers not granted to him, in consequence of which third persons dealing with the agent are in good faith justified in believing him to possess the powers exercised.
Authority of Agent -- Burden of Proof.
The burden of proving the extent of the authority of an agent is upon the person alleging the fact.
Lack of Authority -- Burden of Proof.
The trial court erred in charging the jury that the burden of proving want of authority was upon the principal.
Not a Question for Jury.
No evidence appearing in the record that plaintiff's agent had express authority to indorse its checks and receive the money thereon, it is held that the court erred in submitting to the jury the question of such authority.
Authority of Agent to Indorse Checks.
An agent for the purpose of soliciting advertising and collecting accounts due therefor has no implied authority to indorse checks payable to his principal, though delivered to him in payment of accounts in his hands for collection.
Durment & Moore, for appellant.
Chas. G. Laybourn, for respondent.
A general agency may be inferred from facts and circumstances; from habit and course of dealing. Lyell v. Sanbourn, 2 Mich. 109, 114; 2 Greenleaf, Ev. §§ 64, 65; Story, Agency, § 55; 2 Kent, Com., §§ 614, 615; Wilcox v. Chicago, M. & St. P.R. Co., 24 Minn. 269; Graves v. Horton, 38 Minn. 66; Gimon v. Terrell, 38 Ala. 208; Reynolds v. Collins, 78 Ala. 94; Bradford v. Barclay, 39 Ala. 33; Proctor v. Tows, 115 Ill. 139; Friedlander v. Cornell, 45 Tex. 585; Columbia Mill Co. v. National Bank of Commerce, 52 Minn. 224; Best v. Krey, 83 Minn. 32. In such cases agency may be presumed. Fowlds v. Evans, 52 Minn. 551; Neibles v. Minneapolis & St. L. Ry. Co., 37 Minn. 151. And the principal will be estopped from asserting to the contrary against one relying on the agent's authority. Tice v. Russell, 43 Minn. 66; American Graphic Co. v. Minneapolis, St. P. & S.S.M. Ry. Co., 44 Minn. 93; J.I. Case Threshing Machine Co. v. McKinnon, 82 Minn. 75; Scanlon-Gipson Lumber Co. v. Germania Bank, 90 Minn. 478.
The culpable negligence of the plaintiff in failing to so manage its business as to avoid the losses resulting from Sturm's acts constitutes an estoppel. Johnson v. Milwaukee, 46 Neb. 480; Wheeler v. Benton, 67 Minn. 293; Kasson v. Noltner, 43 Wis. 646; Lorton v. Russell, 27 Neb. 372; Johnson v. Donnell, 90 N.Y. 1; Webster v. Wray, 17 Neb. 579; Fowlds v. Evans, supra; Rockford v. Wilcox, 66 Ill. 417; Reynolds v. Collins, supra; Neibles v. Minneapolis & St. L. Ry. Co., supra; Columbia Mill Co. v. National Bank of Commerce, supra.
Plaintiff, Dispatch Printing Company, is a corporation organized under the laws of this state, doing business at St. Paul and publisher of the St. Paul Dispatch. In 1901 it employed one Sturm and placed him in charge of its advertising department at Minneapolis, with authority to solicit advertising from the merchants of that city and to collect and remit to plaintiff all accounts due therefor. He was paid for his services a commission of fifteen per cent. of all amounts received for advertising secured by him. From the date of his employment in 1901 until 1906, when he died, he made his headquarters at Minneapolis, and advertised as "M. A. Sturm, Minneapolis Manager, St. Paul Dispatch." He kept no books of account with advertisers, who became such at his solicitation, nor did he render bills to them. He transmitted to plaintiff by mail copies of all advertising secured, and all accounts in reference thereto were kept by clerks upon the books of the company at the St. Paul office. Statements of account were there made out and sent to Sturm for collection and remittance to the home office.
While he was given full authority in the matter of securing advertising and making collection of bills sent him, his authority did not extend beyond acts of that kind. Though he was permitted to advertise as manager of the Minneapolis department of plaintiff, he was not a general agent with unlimited power and authority, but was expressly confined within the limits stated.
Many of the accounts transmitted to him for collection were paid by the debtors with checks payable to plaintiff by name and drawn upon Minneapolis banks in which they carried a deposit. Most of these checks were forwarded direct to plaintiff by Sturm, but some of them he indorsed with plaintiff's name as manager, and deposited them in Minneapolis banks to his own credit. From October, 1902, until January 20, 1903, he kept an account with the Hennepin County Savings Bank under the name of "St. Paul Dispatch, Minneapolis Dept., M. A. Sturm, Manager." And he undoubtedly deposited therein moneys paid him on advertising accounts, and it appears that he drew upon this account at least one check payable to plaintiff for $1,546.50, and transmitted the same by mail to plaintiff at St. Paul, where it was received and applied in payment of advertising accounts. Just what proportion of accounts were paid Sturm by check does not appear, but it does appear that authority to indorse checks delivered to him and payable to plaintiff was expressly withheld from him.
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