Kennedy & Parsons Co. v. Lander Dairy & Produce Co.

• Decision Date: 08 February 1927
• Docket Number: 1312
• Citation: 36 Wyo. 58,252 P. 1036
• Parties: KENNEDY & PARSONS CO. v. LANDER DAIRY & PRODUCE CO. ET AL. [*]
• Court: Wyoming Supreme Court

252 P. 1036

36 Wyo. 58

KENNEDY & PARSONS CO. v. LANDER DAIRY & PRODUCE CO. ET AL. ^[*]

No. 1312

Supreme Court of Wyoming

February 8, 1927

ERROR to District Court, Fremont County; C. O. BROWN, Judge.

Action by the Kennedy & Parsons Company against the Lander Dairy &amp Produce Company and others. Judgment for defendants, J. L Burch and others, and plaintiff brings error.

Judgment affirmed.

E. H Fourt, for plaintiff in error.

The notes sued upon do not show that signers were acting for the corporation; Burlingame v. Brewster, 79 Ill. 515; Tilden v. Barnard, 43 Mich. 376; Titus v. Kile, 10 O. S. 445. Position of the signature is immaterial; Quiwn v. Sterne, 71 Am. Dec. 204. The petition alleges that defendants were joint makers, a fact admitted by the demurrer; 3 R. C. L. 1095. The notes were personal obligations; Hypes v. Griffen, (Ill.) 31 Am. Rep. 71. A note reading, "we promise to pay" binds all of the signers; Bank v. Co., 52 L. R. A. 307. Questions of demand, notice and protest are immaterial; Ray v. Smith, 21 L.Ed. 666; Bank v. Andreson, 32 P. 168.

A. H. Maxwell, and O. N. Gibson, for defendants in error.

The notes were executed by the corporation; 3953 C. S.; Brannan's Negotiable Instruments Law, 70-73. Under the admission of plaintiff, defendants are not liable; the instrument discloses the principal of the persons signing; 3953 C. S. The word "we", in a note, does not necessarily imply a plurality of makers; Aungst v. Creque, (Ohio) 74 N.E. 1073. An instrument signed by a corporation, followed by the name or names of officers and their title, creates a corporation liability and nothing more; Swartz v. Cohen, (Ind.) 38 N.E. 536; Bird v. Daggett, 97 Mass. 494; Liebscher v. Kraus, (Wis.) 43 N.W. 166; New England Co. v. Shook, (Colo.) 145 P. 1002; 8 C. J. 164; Reeves v. Glassboro Bank, (N. J.) 23 A. 853; 16 L. R. A. 143. Agreed liability of an officer executing must be specially alleged and proved; 8 C. J. 869; White v. Co., (Cal.) 157 P. 544.

TIDBALL, District Judge. BLUME, Ch. J., and BURGESS, District Judge, concur.

OPINION

TIDBALL, District Judge.

In this case plaintiff sought recovery against the defendants upon several promissory notes. These notes are identical except as to the due date, and hence but one will be here considered, the one set out in the first cause of action. The petition alleges that the defendants are indebted to plaintiff in a sum certain which is stated; that the sum is due on a promissory note executed by defendants; that the note "was duly presented to the defendants," that the "note is in words and figures as follows:

Lander, Wyoming,

April 20, 1922.

$ 305.00.

Thirty (30) days after date we promise to pay to the order of Kennedy and Parsons Co.

Three hundred five . . . . Dollars at value received with interest at the rate of 8 per cent per annum.

Lander Dairy and Produce Co.

Board of Directors,

L. L. Burch

F. M. Chapman

Herbert Jensen

J. H. Mitchell

R. M. Adams."

that plaintiff is the owner and holder of the note, that the same is justly due and owing and payable from defendants to plaintiff and that no part has been paid.

The Lander Dairy and Produce Company defaulted and judgment by default was entered against it. The other defendants, who are the persons whose names are signed beneath the words "Board of Directors," demurred on the ground that the petition failed to state a cause of action against them. The several demurrers were sustained, and the plaintiff electing to stand on the petition, judgment was entered by the trial court in favor of the demurring defendants and the plaintiff has brought the case here on proceeding in error, claiming error in sustaining the demurrers and rendering judgment against the plaintiff as to the demurring defendants.

The only question to determine is whether the petition states a cause of action against the defendants whose names are signed beneath the words "Board of Directors." We think it does not. We believe that under the petition as drawn, the defendants Burch, Chapman, Jensen, Mitchell and Adams must be taken as persons constituting the Board of Directors of the Lander Dairy and Produce Company, and that they signed for or on behalf of their principal, or in a representative capacity only, and hence under the statute (Sec. 3953. W. C. S. 1920) are not liable on the instrument in the absence of an allegation that they were not authorized to sign on behalf of such principal. The petition contains no such allegation.

Section 3953, W. C. S. 1920, above referred to, is Section 20 of the uniform negotiable instruments law, and reads as follows:

"Where the instrument contains or a person adds to his signature, words indicating that he signs for or on behalf of the principal, or in a representative capacity, he is not liable on the instrument if he was duly authorized; but the mere addition of words describing him as an agent, or as filling a representative character, without disclosing his principal, does not exempt him from personal liability."

We think the instrument sued on in this case clearly contains words indicating that the defendants in question signed for and on behalf of their principal, the Lander Dairy and Produce Company, and that their principal is disclosed, and there being no allegation that they acted without authority, they are not liable. It should be borne in mind that a corporation can act only through its authorized agents and officers, and hence the mere fact that the corporate name is followed by names of individuals should raise no presumption that such individuals were acting in their individual capacity.

Nearly all the cases we have been able to find discussing this question are set out in Brannan's Negotiable Instruments Law (4th Ed.) under the above quoted section of the negotiable instruments law, and we do not believe any good would come from an extended discussion of these decisions. They were in hopeless conflict before the adoption of the negotiable instruments law and are still in conflict, though not in so marked a degree as formerly, many of the courts changing their former rulings in conformity with the statute above quoted. We cite the following cases, which we have chosen from among many, as upholding our conclusions in the present case: Chelsea Exchange Bank v. First United Presbyterian Church, 89 Misc. 616, 152 N.Y.S. 201; Liebscher v. Kraus, 74 Wis. 387, 43 N.W. 166, 5 L. R. A. 496, 17 Am. St. Rep. 171; Reeve v. Glassboro First National Bank, 54 N.J.L. 208, 23 A. 853, 33 A. S. R. 675, 16 L. R. A. 143; Wright v. Drury Petroleum Corp., 229 Mich. 542, 201 N.W. 484; Jump v. Sparling, 218 Mass. 324, 105 N.E. 878; Consumers Twone & Mchy. Co. v. Mt. Pleasant Thermo Tank Co., 196 Iowa 64, 194 N.W. 290; Wilson v. Clinton Chapel etc. Church, 138 Tenn. 398, 198 S.W. 244.

In Chelsea Exchange Bank v. First United Presbyterian Church, supra, the note read:

"Thirty days after date we promise to pay" etc.

"First United Presbyterian Church

16 West 108th St.

Pres. John Elliott

Treas. Edward A. Shea."

On the back of the note appears the following indorsement:

"First United Presbyterian Church

John Elliott, Pres.

Edward A. Shea, Treas.

Finance Committee

John Elliott

Edward A. Shea

John McKee."

The question was whether those who signed the note on the back under "Finance Committee' could be held individually as indorsers. The court held them not liable, saying:

"If there were doubt of this under common law principles, the Negotiable Instruments Law has resolved the doubt in favor of these defendants."

citing the section of that law above quoted and a further section, being identical with Sec. 3977, W. C. S. 1920, and reading as follows:

"Where any person is under obligation to indorse in a representative capacity, he may indorse in such terms as to negative personal liability."

The words 'Finance Committee, John Elliott, Edward A. Shea, John McKee,' appear as an integral part of the corporate indorsement, and parol proof to show an intent thereby to create a personal liability would necessarily be rejected or disregarded, as contrary to the convincing evidence of intent to be found within the four corners of the note itself."

In the case of Liebscher v. Kraus, supra, the note read as follows:

"Ninety days after date we promise to pay," etc.

"San Pedro Mining and Milling Co.

F. Kraus, Pres."

It was held that this note was, as a matter of law, the note of the company alone, and that parol evidence was inadmissible to show that Kraus signed in his individual capacity and was himself liable. The court, after discussing a great many cases, said:

"The principle of these authorities seems to be that if the agent signed the note with his own name alone, and there is nothing on the face of the note to show that he was acting as agent, he will be personally liable; but if his agency appears with his signature, then his principal only is bound."

In Reeves v. First National Bank of Glassboro, supra, the note read:

"We promise to pay," etc.

"Warrick Glassworks,

J. Price Warrick, Pres."

The court in discussing this case had this to say:

"In such case the note is taken conclusively to be that of the corporation. I do not perceive any significance in the use of the words 'we promise to pay,' instead of the company promises to pay.' The contention was that the use of these words raised an implication that it was the joint note of the corporation and Warrick, but, as has been remarked in more than one of the cases cited, * * * * the word 'we' is often used by a corporation aggregate."

In the case of Wright v. Drury Petroleum Corp., supra, the note read:

"Sixty days after date we promise to pay" etc.

"Drury...