Jackson Paper Mfg. Co. v. Commercial Nat. Bank

• Decision Date: 25 October 1902
• Citation: 199 Ill. 151,65 N.E. 136
• Parties: JACKSON PAPER MFG. CO. v. COMMERCIAL NAT. BANK.
• Court: Illinois Supreme Court

199 Ill. 151

65 N.E. 136

JACKSON PAPER MFG. CO.

v.COMMERCIAL NAT. BANK.

Supreme Court of Illinois.

Oct. 25, 1902.

Appeal from appellate court, First district.

Action by the Jackson Paper Manufacturing Company against the Commercial National Bank to recover the proceeds of a check. From a judgment in favor of defendant, affirmed by the appellate court (99 Ill. App. 108), plaintiff appeals. Reversed.Bowen W. Schumacher, for appellant.

Tenney, McConnell, Coffeen & Harding, for appellee.

This is an action in assumpsit, brought on April 18, 1898, in the superior court of Cook county, by the appellant, the Jackson Paper Manufacturing Company, of Jackson, Mich., against appellee, the Commercial National Bank of Chicago. The declaration contained two special counts and the common counts. The special counts are based on a check bearing date December 18, 1896, payable to the order of the Jackson Paper Manufacturing Company, drawn on the Commercial National Bank, for the sum of $325.65, by J. Herz & Son. The defendant below (appellee here) filed a plea of general issue, and the trial below resulted in verdict and judgment in favor of appellee. An appeal was taken to the appellate court, where the judgment has been affirmed, and the appellate court has granted a certificate if importance. The present appeal is prosecuted from the judgment of affirmance so entered by the appellate court.

MAGRUDER, C. J. (after stating the facts).

The errors assigned by the appellant and relied on for a reversal of the judgment are the refusal to admit testimony offered in behalf of the plaintiff, the admission of testimony in behalf of the defendant over the objection of the plaintiff, the refusal to give instructions offered by the plaintiff, the giving of instructions in behalf of the defendant, and the overruling of the motion for a new trial.

[199 Ill. 153]1. The main question, arising out of the action of the trial court in the admission and refusal of testimony and in the giving and refusal of instructions, relates to the authority of the superintendent of a manufacturing corporation to indorse a check made payable to the order of that corporation, and given in payment of a debt, created by the purchase of goods from the corporation by the drawer of the check. The appellant was engaged in the manufacture and sale of paper at Jackson, Mich. In January, 1895, it employed one Charles A. Jackson to act as superintendent of its mill at Jackson, Mich., and he continued to act as such superintendent from January, 1895, to the latter part of December, 1896, or the first of January, 1897. In December, 1896, Jackson went to Chicago to solicit orders for the company, and to make sales of paper for it. J. Herz & Son and E. W. Copelin & Co., paper dealers of Chicago, were customers of the appellant. J. Herz & Son were indebted to the appellant at that time in the sum of between $300 and $400. Jackson went to see J. Herz & Son at their store in Chicago, and settled with them their account with appellant. J. Herz & Son, on December 18, 1896, gave to Jackson their check of that date for $325.65, payable to the order of the Jackson Paper Manufacturing Company, and drawn upon the Commercial National Bank of Chicago. Jackson took this check to E. W. Copelin & Co., of Chicago, and asked E. W. Copelin to cash it for him. Copelin had done business with the appellant, and had visited the mill of appellant at Jackson, Mich., and had seen C. A. Jackson there acting as superintendent and manager of the mill. Jackson indorsed the check as follows: ‘Jackson Paper Mfg. Co., C. A. Jackson, Supt.,’ and turned it over to Copelin. Copelin procured the check to be certified by the Commercial National Bank, upon which it was drawn, and gave Jackson the currency for it. Copelin then indorsed the check over to the American Exchange NationalBank, with which he did business, and deposited it to his credit in the American Exchange National Bank. The check went through the Chicago clearing house on December 19, 1896, and was paid by the Commercial National Bank on December 21, 1896. The amount thereof was charged to the account of J. Herz & Son, the drawers of the check. When Jackson thus obtained the money upon the check from Copelin, he did not remit the money to the Jackson Paper Manufacturing Company in Michigan, and the amount thereof was never received by the appellant. The appellant learned nothing of the whereabouts of Jackson until January, 1897, when they then learned of his death by suicide in New Orleans. About the same time they learned of his collection of this money from J. Herz & Son through letters received from the latter.

If C. A. Jackson had authority to indorse the name of appellant to the check, so as to transfer good title thereto to E. W. Copelin & Co., then the judgments of the lower courts are correct; but, if he has no authority to indorse the check for the appellant, then such judgments are wrong, and the rulings of the court below in the admission and exclusion of evidence and in the giving and refusal of instructions were erroneous. The evidence is clear and uncontradicted that Jackson had no express authority from the appellant to indorse checks in its name. Indeed, it is not contended by the appellee that Jackson had any express authority to make any such indorsements, but it is claimed that he had implied authority so to do. The appellee contends that his authority to make the indorsement is to be implied from the nature of his duties as appellant's superintendent and manager, and from his conduct in connection with the business of appellant. As superintendent of the mill, Jackson was under the direction of Nathan S. Potter, who was the treasurer and managing director of the corporation. Jackson had charge of the buying of the material and of the hiring of the men, and looked after the manufacture and sale of paper. He was paid a certain annual salary, and was entitled to a percentage of the net profits of the business in excess of a certain amount. His brother, Gale Jackson, was the bookkeeper of the corporation. Appellant had a president, a treasurer, and a secretary, though the president and secretary appeared to take but little active management of the company's business. Sometimes, when Jackson was traveling, he collected money from customers of the appellant, which was charged by his brother, the bookkeeper, to his account; but the testimony tends to show that appellant had no knowledge of these charges until after the death of Jackson. Sometimes, when Jackson was on a trip for the company for the purpose of selling goods or making collections, he would adjust accounts due to the company. It was not shown that any collections made by him had ever been paid by check payable to the order of the appellant, except the check here in controversy. It was shown that the letter head of the Jackson Paper Manufacturing Company had printed at the top of it not only the names of the president of the company and the treasurer of the company, but also the name of ‘C. A. Jackson, Supt.’ The only person who had express authority to sign notes for the company, and draw checks for the company, and indorse its paper and checks, was Nathan S. Potter, the treasurer, who, as managing director, had also the general supervision and management of the business. Sometimes one P. B. Loomis, Jr., the secretary of the company, indorsed Potter's name when he was absent. It appears, also, that Potter sometimes authorized Gale Jackson, the bookkeeper, to indorse checks and drafts in Potter's name for deposit in the People's National Bank of Jackson, Mich., where appellant kept its account. It is also shown that Jackson sometimes countersignedchecks drawn by appellant upon its own bank; that is to say, he wrote his name across the end of the check over the word ‘countersign,’ though this was not done in the case of all checks drawn by appellant upon its bank. The checks so countersigned by him were drawn by appellant to pay for purchases which Jackson would make for the use of the mill, and the object of such countersigning was to show that the amount of the purchase was correct; Jackson having charge of the purchase of material to be used in the manufacture of paper by the appellant. The checks, however, given by the appellant, were all drawn by Potter, the treasurer.

The weight of authority seems to be in favor of the contention of appellant that authority to indorse commercial paper can only be implied where the agent is unable to perform the duties of his agency without the exercise of such authority. In other words, the power of an agent to indorse commercial paper for his principal must be a necessary implication from an express authority conferred upon such agent. Wherever such power is implied from the acts of the agent, the acts, subject to such implication, must be acts of a kind like those from which the implication is drawn. Parsons, in his work on Contracts (vol. 1 [6th Ed.] p. 62), says: ‘An agent's acts in making or transferring negotiable paper (especially if by indorsement) are much restrained. It seems that they can be authorized only by express and direct authority, or by some express power which necessarily implies these acts, because the power cannot be executed without them.’ The power of an agent to bind the principal by the making or indorsing of negotiable paper can only be charged against the principal by necessary implication, where the duties to be performed cannot be discharged without the exercise of such a power, or where the power is a manifestly necessary and customary incident of the character bestowed upon the agent, and where the power is practically indispensable to accomplish the object in view. An agent cannot bind his principal by making or indorsing notes for his own benefit or the benefit of third persons. Mechem, Ag. §§ 389-392. It is true that Jackson was the superintendent of appellant's mill, and...