Eberlein v. Stockyards Mortgage & Trust Company
| Decision Date | 21 August 1925 |
| Docket Number | 24,626 |
| Citation | 204 N.W. 961,164 Minn. 323 |
| Parties | EARL H. EBERLEIN v. STOCKYARDS MORTGAGE & TRUST COMPANY |
| Court | Minnesota Supreme Court |
Action in the district court for Dakota county. The case was tried before Johnson, J., who made findings, pursuant to the verdict of the jury as to issues of facts, in favor of plaintiff. Defendant's motion for judgment notwithstanding the verdict or for a new trial was denied. Defendant appealed from the judgment. Reversed.
Officer of trust company without implied power to bind it to repurchase securities sold.
1. An officer of a trust company, having express authority to buy and sell securities, has no implied power in selling securities to bind the corporation by a contract to repurchase them on demand at "face value and accrued interest."
Apparent authority of officer not provable by his transactions unknown to person dealing with him.
2. One dealing with a corporation cannot prove an apparent authority of one of its officers by transactions between that officer and third persons which were unknown to him at the time of his own.
When statements of former officer are inadmissible as admissions by his former employer.
3. Statements by a former officer, made after the termination of his employment, are not admissible against a corporation as admissions, although they may become competent as impeachment of the testimony, if offered, of the person who made them.
1. See Banks and Banking, 7 C.J. p. 885, § 977.
2. See Agency, 2 C.J. p. 575, § 215.
3. See Evidence, 22 C.J. p. 381, § 444; Witnesses, 40 Cyc. p 2740 (Anno).
D. L Grannis, for appellant.
F. W. Foote, for respondent.
In 1919 defendant was operating as a trust company and in June of that year sold to plaintiff a note and certain bonds of the aggregate face value of $3,000. Plaintiff claims that, as a part of the contract of sale, defendant agreed that, if at any time thereafter while plaintiff was the owner of the paper he should so request, the defendant would repurchase it at "full face value and accrued interest." It is upon the alleged contract of repurchase that this action is brought. After a verdict for plaintiff, and an order denying its motion for judgment notwithstanding or a new trial, defendant appeals from the judgment.
1. Defendant's first point is that Mr. Schlesselman, then secretary of defendant, had no authority, in selling the securities, to bind defendant by a contract to repurchase them, at their face value and on demand of plaintiff. There was no proof of express authority. Proof of any actual authority is equally lacking unless by implication from the secretary's power, whatever it was, to buy and sell securities for defendant. Authority to sell certainly does not include authority to repurchase, but the precise argument is that an officer's authority to buy bonds for a corporation implies that he may repurchase those sold by it. But that is not the question now. That an officer has general power to buy for the corporation does not signify that he has the power to sell securities and contract to repurchase them at any time on demand.
If the officers of a trust company have the implied authority, solely because they may buy securities for it, to agree for it to repurchase on demand and at face value those they sell, they have the power to subject it to a contingent liability the sudden maturing of which, by the concurring demands of a large number of purchasers, may easily absorb its capital instantaneously. Certainly such a power is not the design of the law, nor should it be permitted to any one officer of a quasi public financial institution such as a bank or a trust company. It is rather one of those unusual powers, accompanied by such hazards if used indiscriminately or too much, that it must be considered restricted to the board of directors, except as they themselves authorize its use in special cases.
We hold that there was no such implied authority. A power not incidental or necessary to one that is expressed does not attend the latter by implication. Dispatch Printing Co. v. Nat. Bank of Commerce, 109 Minn. 440, 124 N.W. 236, 50 L.R.A.(N.S.) 74; First Nat. Bank v. Schirmer, 134 Minn. 387, 159 N.W. 800; Bloomingdale v. Cushman, 134 Minn. 445, 159 N.W. 1078; Koivisto v. Bankers & M.F. Ins. Co. 148 Minn. 255, 181 N.W. 580. Not only is the power here sought to be implied unusual and unnecessary, but, because of its inherent danger, its absence rather than existence is the thing implied. An agent having authority to sell goods is not presumed to have authority to sell them in an unusual manner, particularly one obviously dangerous to the principal. His authority is presumed to go only to sales "in the usual manner in which goods or things of that sort are sold." Ide v. Brody, 156 Ill.App. 479, quoting from Story on Agency. As remarked by Mr. Justice Peckham in Wait v. Borne, 123 N.Y. 592, 25 N.E. 1053, it would be giving an agent altogether too broad a power and would be placing the principal too much at the mercy of the agent to empower the latter by implication to "lead his principals into liabilities of which they knew nothing and might know nothing until a claim for their settlement was presented to them." He went on to say:
The same thought controlled in Friedman & Sons v. Kelly, 126 Mo.App. 279, 102 S.W. 1066. A salesman of merchandise, the defendant purchaser averred, had agreed if the goods were not as represented "or if for any cause he (defendant) found he could not sell them," they might be returned for credit. The agent had no express authority so to bind his principal and the court held that he had no other, saying:
"He (defendant) is therefore precluded from asserting the apparent authority of the agent to make the contract, which, if made, and was binding in every case, would probably result in entailing bankruptcy upon the most stable manufacturers and wholesalers who attempted to sustain their credit by abiding such conditions."
Compare John Stember & Co. v. Keene (Tex. Civ. App.) 152 S.W....
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