Greneaux v. Wheeler

• Decision Date: 01 January 1851
• Citation: 6 Tex. 515
• Parties: GRENEAUX v. WHEELER.
• Court: Texas Supreme Court

6 Tex. 515

GRENEAUX

v.WHEELER.

Supreme Court of Texas.

1851.

Where a principal invests his agent with a general power or with the absolute estate, with a parol or separate understanding or agreement that the authority is to be exercised or the estate to be conveyed for a particular purpose only, the principal will be bound, as a general rule, by the acts of the agent in fraud of the parol or separate understanding or agreement, the exceptions being in case of notice, &c.

Promissory notes and bills payable to bearer, or payable to order and indorsed in blank, are transferable as cash by delivery and may be reclaimed by a bona fide holder for value as against a former owner from whom they may have been stolen or obtained by fraud. (Note 87.)

A banker who receives indorsed bills from his customer, to be got when due and carried to his account, may discount, sell, or pledge them in the regular course of trade to a person without notice, so as to bind his principal. (Note 88.)

The mere circumstance that the holder of a note payable to bearer, or payable to order and indorsed in blank, is an attorney at law is not sufficient to put a person receiving the note upon inquiry whether the note belongs to him or is in his possession for collection merely.

Express notice is not indispensable to invalidate the title of the holder of a promissory note or bill payable to bearer or payable to order and indorsed in blank, who has received it from a person who was not the owner. It will be sufficient if the circumstances be of such a strong and pointed character as necessarily to cast a shade over the transaction and put the holder upon inquiry, presenting a case of that gross negligence which is tantamount to bad faith. (Note 89.)

A note received in payment of or as security for a precedent debt is taken in the usual course of trade.

Quere as to the rule requiring a note in certain cases to have been taken in the usual course of trade.

Error from San Augustine. This action was brought by Greneaux to recover damages for the conversion by the defendant to his own use of a promissory note, alleged to be the property of the plaintiff. The note was executed by B. J. Thompson in favor of the plaintiff or bearer, and, being in the hands of one C. M. Gould, an attorney at law, for collection, was by him for a valuable consideration transferred to the defendant.

The defendant being interrogated as to the amount of the consideration paid by him and the manner and time of its payment, and as to his knowledge of the fact that the note was placed in the hands of Gould for collection, and for that purpose only, responded that on or about the 1st day of January, 1844, he received the note from Gould and paid therefor a full, fair, and bona fide consideration, equal to that for which then and ever since he could have purchased paper against the said B. J. Thompson; that he paid fifty cents to the dollar for said note in groceries and cash to Mrs. Ford, on said Gould's order and by his request, and that a small part of the amount was a balance due him in cash from said Gould; that at the time of his purchase, transfer, and delivery of the note he did not know or believe that the note was held by Gould for collection, but, on the contrary, he supposed it to be the bona fide property of said Gould; and that the said note was payable to Greneaux or bearer, and was transferred in the fair and bona fide course of trade. It appeared from the petition that the note was executed on the 13th January, 1844, and became due on the 25th December, 1844.

B. J. Thompson, one of the witnesses, proved that the note was executed by him as a substitute for a note held upon him by the plaintiff; and that the note in suit was handed by him to Gould as attorney of the plaintiff; and that Gould told the witness the day before he left Texas that the note belonged to the plaintiff. Two witnesses testified that notes on good solvent men were at the date of the transfer of this note selling at fifty cents on the dollar.

D. S. Kaufman thought that Gould left Texas in the month of January, 1844; S. Francis, that he left in the spring of 1843 or 1844. T. G. Broocks testified that he had transactions with Gould in February, 1844, and thought he left Texas about the 4th March, 1844.

It was in evidence that Gould was a practising attorney, and so held himself out to the world at the date of the transfer of the note to the defendant; that he had been, for several years previous, and continued to be until he left Texas, a practising attorney.

The judge charged the jury-- 1. That an attorney at law is a special agent, whose powers are limited to the collection of money upon money (demands) intrusted to him by his client. The general rule that the special agent cannot bind his principal by any act which transcends the scope of his authority is subject to the qualification that, if the principal ostensibly vest in his special agent a legal title to the thing intrusted, a purchaser for a valuable consideration and without notice of the special authority will acquire a good title; as, for instance, if a principal appoint an agent to dispose of his property in a particular mode, and gives him a full title to the property, and the agent adopt another and different mode, the principal is bound by it as between himself and bona fide purchasers. Under this qualification or exception is embraced the case of a promissory note made payable to bearer and placed in the hands of an attorney at law for collection.

2. That if the defendant had purchased the note from Gould for a valuable consideration, without notice that the note did not belong to Gould, he had acquired a good title to the note; that notice to Wheeler might be either express or implied; express notice is where there is a direct communication from one party or some one else to the other party as to the ownership of the property; implied notice is where the facts which surround the transaction lead the mind of the party purchasing to a knowledge of the ownership of the property; and that the jury were to determine, from all the evidence before them, whether or not Wheeler had made the purchase for a valuable consideration without notice.

There was a verdict and judgment for the defendant, and a motion for a new trial was overruled.

The errors assigned were--

1st. That the court erred in the first charge to the jury.

2d. That the court erred in the second charge to the jury.

3d. That the court erred in overruling the plaintiff's motion for a new trial.A. H. Evans, for plaintiff in error.

I. The plaintiff's counsel assigned in his petition three grounds of error in the ruling of the court below; but as the third or last ground will substantially comprehend the other two, he will confine himself to the argument of that one. It is, “That the court erred in overruling the plaintiff's application for a new trial.”

II. In his application for a new trial the plaintiff stated grounds upon which the same was based:

1st. “That the court erred in the charge given to the jury, in that the law did not presume a knowledge of the relation of client and attorney between Greneaux and Gould.”

That an attorney is a special agent, whose ordinary powers are limited to the collection of money upon promissory notes, bills, &c., intrusted to him by his client, is not only well-settled law, but was so charged to the jury by the district judge upon the trial below. The question, then, arises, if this relation of principal and agent (client and attorney) did really exist between Greneaux and Gould, what was necessary notice to Wheeler of that fact? and did not the law presume notice? Justice Story says, that “a person dealing with a factor or broker is bound to know that by law a factor or broker, although a general agent, is not clothed with authority to pledge, deposit, or transfer the property of his principal for his own debts; and if a person receive such a deposit or pledge, the title is invalid and the property may be reclaimed by the principal. And in such a case it is wholly immaterial whether the pledgee knew that the party with whom he was dealing was a broker or factor, or not,” as the law presumes a knowledge of the fact.

Then the plaintiff contends, a fortiori, that a person dealing with a licensed attorney whom, too, he knew to be such and whom he is bound to know, in the language of the district judge, to be a special agent, whose ordinary powers are limited to the collection of money upon notes and bills intrusted to him by his client; that such person has legal notice of the relation of client and attorney (principal and agent) existing between Greneaux and Gould; that the law presumes such a knowledge or notice, and that the person dealing deals at his peril, and is bound by the law applicable to it. (Story on Ag., 225; Paley on Ag., 340-342; Liv. on Ag., 129, 130-149, edit., 1818; 3 Chitty on C. and M. Law, 204, 205; 1 Mass. R., 440; 6 M. & Selw. R., 14.)

III. The second ground assigned in plaintiff's application for a new trial is that “the jury found their verdict contrary to the law and the evidence.”

The law being settled that an attorney is a special agent, all the doctrines of special agency must apply, and not the doctrine charged by the court below of negotiable instruments. The latter doctrines were applied, and properly too, in the trial between Wheeler and Thompson, when Wheeler was enforcing the collection of the note; but the court below erred, we conceive, in not discriminating between the principles involved in that suit and those involved in this. There the doctrine of negotiable instruments applied; here the doctrine of special agency. It was this confounding of the doctrines applicable to the two cases which forced the court below to charge “the qualification or exception” noticed in the plaintiff's first ground of error, to avoid a conflict in well-settled principles.

“A special agent cannot...