Lynch v. Smyth

• Decision Date: 16 May 1898
• Citation: 54 P. 634,25 Colo. 103
• Parties: LYNCH v. SMYTH.
• Court: Colorado Supreme Court

54 P. 634

25 Colo. 103

LYNCH v. SMYTH.

Supreme Court of Colorado

May 16, 1898

Error to court of appeals.

Action by J. Thomas Lynch against Edward Ferris and Clement B. Smyth on a bond given to release property attached by plaintiff. There was a judgment of the court of appeals on the appeal of Smyth (43 P. 670) reversing a judgment for plaintiff, and he brings error. Reversed.

In 1889 and the early part of 1890 the River & Rail Electric Company was doing business in Colorado Springs. There was a disagreement respecting the management of the corporate affairs of the company, which resulted in a contest between the stockholders; one faction being represented by Clement B Smyth, the defendant in error in this court, whose business interest in the company was managed by Edward Ferris. It was apparently arranged by the faction represented by Smyth that an application for the appointment of a receiver should be made, and in contemplation of this move Smyth executed a power of attorney to Ferris, whereby he appointed the latter his attorney in fact, to act for him in all matters pertaining to the appointment of a receiver for the company and in all other matters connected with its affairs, in which he had an interest as a stockholder. The object of obtaining a receiver was to prevent the property of the company being attached by creditors, of whom plaintiff in error was one. In pursuance of this authority, Ferris commenced an action, in the name of Smyth, for the appointment of a receiver executed a bond on behalf of his principal, and secured a temporary injunction restraining Lynch from proceeding to collect his debt against the company, which action, however seems to have been abandoned. Subsequent to the dismissal of this suit, and on the 24th of February, 1890, Lynch commenced an action against the company to recover money which he had advanced to further its operations, in which suit a writ of attachment was issued, and personal property of the company levied upon. The next day the company executed a bond, under the provisions of section 97 of the Civil Code, whereby it was, in effect, provided that the obligors thereon should pay Lynch any judgment which he might obtain against the company in his suit. This bond was approved by the sheriff, and the attached property released. Upon this bond one Metcalfe, with Ferris, were sureties. Smyth's name was also affixed as a surety by Ferris, as his attorney in fact, a scroll seal being placed after the name of his principal. The suit of Lynch proceeded to judgment in May, 1890, and the present action is upon the above bond. The trial of the case on this bond in the district court resulted in a judgment for Lynch, from which Smyth appealed to the court of appeals, where the judgment was reversed, and the cause has been brought here on error by Lynch. On the trial of this cause in the district court, it appears from a letter dated February 27, 1890, written by Ferris to Smyth, the latter was advised that Lynch had placed an attachment on personal property of the company, and that Metcalfe and Ferris had given what he denominated 'a forthcoming bond,' and the attachment was released. Ferris testifies, in effect, that in April, 1890, he met Smyth in the East, and had some conversation with him regarding this bond, which he had assumed to execute on his behalf as his attorney in fact; that Smyth disapproved of this act of Ferris, claiming that he had no authority to do so under his power of attorney. Lynch, in his own behalf, stated that in April, 1890, he met Smyth in the city of New York, at which time they had a conversation about this bond, and that Smyth stated he would do everything in his power to prevent Lynch from collecting his debt; that he had given a bond for that purpose, and would give many more, if necessary. Smyth denies having had such conversation, or the making of such statements at any time. The suit of Lynch against the company in which this bond was given was appealed by the latter to this court, where, on May 23, 1894, it was dismissed. Under date of January 2, 1893, Smyth addressed a letter to Ferris, at Colorado Springs, making inquiry relative to the wording of the power of attorney which he had executed to Ferris, and the status of the bond in question, and whether it was a joint obligation with Metcalfe, or the obligation of each for a specified amount, indicating that he might repudiate this obligation if it could be done fairly, and requesting Ferris to look it up, and advise him. On February 17th, following, Smyth, in another letter to Ferris, indicates that he is unable to understand clearly what obligation he incurred on this bond. Smyth admits that in September or October, 1890, he learned from Ferris that the bond which is the subject of this controversy had been given, and that his name was signed thereto as a surety. There is no evidence that he ever gave any notice to Lynch that he repudiated the bond, or stated to him that Ferris had no authority to affix his name thereto. He also testified that he was advised in February, 1890, that the injunction proceedings might be dismissed, in which case a 'forthcoming bond' would have to be given. The trial court admitted in evidence the power of attorney originally given by Smyth, the bond in question, and also the pleadings and record, including the bond, in the suit brought by Smyth for the appointment of a receiver. The court, of its own motion, after defining the law upon the question of ratification, instructed the jury, in effect, that if they believed that Smyth knew of the existence of the bond sued on, and the transactions out of which the same arose, and, after such knowledge, failed, within a reasonable time, to give notice to the plaintiff that he repudiated the act of Ferris in causing his (Smyth's) name to be placed thereon, and that by reason of the failure to give such notice plaintiff was prevented from collecting his debt, such act on the part of Smyth might be taken as a ratification of the act of Ferris; and further instructed the jury that they must find from the evidence that Smyth ratified the act of Ferris in signing his (Smyth's) name to the bond, with full knowledge of all the material facts, or with such knowledge as he could, with reasonable diligence, have obtained. The court also instructed that the power of attorney from Smyth to Ferris did not of itself authorize Ferris to execute the bond in question in the name of, or on behalf of, Smyth. No exception was taken by plaintiff to this latter instruction. The verdict was for a considerable sum less than plaintiff was entitled to recover, if entitled to a verdict at all. The opinion of the court of appeals in this case will be found in 7 Colo.App. 383, 43 P. 670.that it was signed by one purporting to act as his agent, which act was ratified by him. Judgment (1896) Smyth v. Lynch, 43 P. 670, 7 Colo.App. 383, reversed.

R. D. Thompson and Brooks, Armit & Blackmer, for plaintiff in error.

Rogers, Cuthbert & Ellis, for defendant in error.

GABBERT J. (after stating the facts).

Before the court of appeals it was contended by counsel for Smyth that he was not liable upon the bond--First, because no advantage resulted to, or consideration was received by, him for the execution of the bond, or its subsequent ratification on his part; second, no disadvantage resulted to, or damage was suffered by, Lynch by the failure of Smyth to notify him that Ferris had no authority to execute the bond as his agent; third, the bond being sealed, and an instrument required to be in writing, there could be no binding ratification except by one in writing or under seal; fourth that the trial court erred in admitting evidence tending to show that Smyth was estopped by silence, no estoppel having been pleaded; fifth, admitting in evidence the power of attorney from Smyth to...