First Nat. Bank of Canton v. North

• Decision Date: 11 February 1889
• Citation: 41 N.W. 736,6 Dakota 136
• Parties: First Nat. Bank of Canton v. North.
• Court: North Dakota Supreme Court

41 N.W. 736

6 Dakota 136

First Nat. Bank of Canton v. North.

Supreme Court of Territory of Dakota

February 11, 1889

Appeal from district court, Lincoln county; C. S. PALMER, Judge l. S. Swezey and R. B. Tripp, for appellant. C. B. Kennedy for appellee.

TRIPP C. J.

This was an action for claim and delivery of certain goods and merchandise described in the complaint, brought by the plaintiff, as mortgagee, against the defendant, sheriff of Lincoln county, who had levied thereon under attachment against the property of M. B. Dean & Co. The defense was that the plaintiff's mortgage was fraudulent and void as against the creditors of Dean & Co. The case was tried to a jury, and resulted in a verdict for the defendant, and from a judgment directing a return of the property the plaintiff appealed to this court. No question was raised in the court below as to the bona fides of the debt from Dean & Co. to the bank, for which the mortgage was given, but it was contended that certain agreements were entered into between the bank and Dean & Co., at the time of giving the mortgage, whereby the mortgagors were to have their exemptions out of the mortgaged property, and were also to be permitted to withdraw sufficient of the goods to pay an indebtedness of $837 due to a brother of M. B. Dean, as a preferred creditor; so that while the mortgage upon its face secured only the indebtedness of the bank, it was intended by the parties thereto to keep off other creditors, and to hinder and delay them in the collection of their debts. Frank Dean, a brother of M. B. Dean, was sworn and examined as a witness on the part of the defendant; and he having testified that several days after the execution of the mortgage, and after it was filed for record, he assisted in making an inventory of the goods described in the mortgage, and having testified as to the value of the goods, he further stated that Gale president of the bank, was present, and objected to the valuation of the goods as being "too high." The witness was thereupon asked by defendant's counsel the following question; "Question. Did Gale say why he wanted it put down so low?" The plaintiff objected to this question as irrelevant and immaterial, and upon the ground that the agent cannot bind the corporation by subsequent acts or declarations. The court then asked when this conversation occurred with reference to the giving of the mortgage; and the witness replied that "the mortgage was made Friday; we began invoicing Saturday night. This, Mr. Gale said on Monday morning." The court thereupon overruled the objection, and the witness answered: "He said on two different occasions to me that he done that so parties would not attach."

It is difficult to see upon what theory the trial court permitted this evidence to go to the jury. The question before the court was as to the value of the goods. The witness' acquaintance with the goods had been shown by proving that he had assisted in making an invoice of them; and, in reply to the objection of plaintiff's counsel that testimony as to value was immaterial, counsel for defendant replied to the court: "I wish to show the value of the goods to show the intent of the parties in covering up $4,000 worth of goods to secure a claim of $1,800." And, under pretense of showing value, he was permitted to show what the plaintiff's agent did and said three days and more after the giving of the mortgage, in reference to fixing a low value in the invoice. No principle is better settled than that the agent cannot be permitted by subsequent acts or words to bind his principal. The principal is bound by the acts of his agent, done while acting as agent, and within the scope of the agency, and while so acting the language of the agent may be given to explain or qualify such acts as a part of the res gestoe. No one would be safe if the rule were to be enlarged or extended beyond this limit. Employers would be liable to be financially ruined by unfriendly and unprincipled agents, if their declarations as to past transactions were to stand like admissions of parties made against interest. The mere suggestion of the result proves the rule. Such declarations are the merest hearsay. Such agent is himself a competent witness, and may be called and examined as a witness relative to matters within his knowledge; but his declarations not made under oath, nor at the time of the act given in evidence, can never be used against his principal. In Goetz v. Bank, 119 U.S. 551, 7 S.Ct. 318, it was claimed that the lower court erred in refusing to allow the plaintiff to prove the subsequent declarations of the president of the defendant bank tending to show bad faith on the part of the bank, which was one of the issues in the case. Justice FIELD, in sustaining the ruling of the lower court in rejecting the evidence, says: "The testimony was excluded, and rightly so. The declarations had no bearing upon the good faith of the officers of the bank in the transactions in this case; and, if they had, being made some days after those transactions, they were not admissible, as part of the res gestoe, any more than if made by a stranger. Evidence of declarations of an agent as to past transactions of his principal are inadmissible, as mere hearsay." This is a rule laid down by all these cases: Packet Co. v. Clough, 20 Wall. 528; Insurance Co. v. Mahone, 21 Wall. 152; Bank v. Bank, 60 N.Y. 278; Bank v. Steward, 37 Me. 519; Baldwin v. Doubleday, (Vt.) 8 A. Rep. 576; Edmunds v. Curtis, (Colo.) 9 Pac. Rep. 793; Clunie v. Lumber Co., (Cal.) 7 Pac. Rep. 708; Randall v. Telegraph Co., (Wis.) 11 N.W. 419; Steamship Co. v. Landreth, 102 Pa. St. 131; Railroad Co. v. Riddle, 60 Ill. 534. The line is tautly drawn in the case of Baldwin v. Doubleday, supra, in which the court says: "The declaration of an agent, to bind a principal, must be made at the very time he is doing an act he is authorized to do, and must be concerning the act he is then doing." In Edmunds v. Curtis, supra, the court says of such declarations: "They must be made not only during the continuance of the agency, but in regard to the transaction pending at the very time. They must accompany the transaction or the doing of the business. They are admissible only when made as to a business matter which is being transacted at the time."

There is no tendency of the courts to relax this well-established rule, as...