Pluto Powder Co. v. Cuba City State Bank

• Decision Date: 29 April 1913
• Citation: 141 N.W. 220,153 Wis. 324
• Parties: PLUTO POWDER CO. v. CUBA CITY STATE BANK.
• Court: Wisconsin Supreme Court

153 Wis. 324

141 N.W. 220

PLUTO POWDER CO.

v.CUBA CITY STATE BANK.

Supreme Court of Wisconsin.

April 29, 1913.

Appeal from Circuit Court, Grant County; George Clementson, Judge.

Action by the Pluto Powder Company against the Cuba City State Bank. Judgment for defendant, and plaintiff appeals. Reversed and remanded.

This action was brought to recover from the defendant the amount of certain checks drawn to plaintiff's order indorsed in its name by its agent, and the amount of a sight draft drawn by the agent of the plaintiff in its name, upon which checks and sight draft the defendant bank collected the money and paid it to the plaintiff's agent. The complaint alleges that between January 28, 1909, and April 30, 1909, plaintiff was the owner of certain checks which were in the possession of one Robinson, its agent, at Cuba City, Wis., where the defendant bank is located; that the said agent without authority indorsed the checks in the name of the plaintiff, and obtained the money thereon from the defendant; that on April 30, 1909, said Robinson without authority drew a draft for $200 upon a certain mining company and without authority signed plaintiff's name thereto, and delivered the same to the defendant, and obtained the amount thereof from said defendant; that said checks and draft amount to $1,910.40 of which sum plaintiff received only $1,210.40, leaving a balance of $700 due from defendant to plaintiff.

The answer contains certain admissions and denials. At the close of the evidence by consent of parties, the jury was discharged and the case submitted to the court. The court made the following findings:

(1) That during the years 1908 and 1909 the plaintiff was a manufacturer of dynamite, with its principal office at Buffalo, N. Y.

(2) That in the summer or early fall of 1908 the plaintiff appointed one R. M. Robinson its agent at Cuba City, Wis., with authority to sell the product of plaintiff at Cuba City and vicinity, and collect payment therefor from the parties to whom said product was sold.

(3) That the checks described in the complaint were checks given to the said R. M. Robinson as agent of the plaintiff by customers of plaintiff in payment for dynamite purchased of plaintiff through said agent R. M. Robinson.

(4) That the said R. M. Robinson, as agent of the plaintiff, had implied authority to indorse the name of the plaintiff upon and cash the said checks set forth in the complaint of plaintiff.

(5) That the said R. M. Robinson, as agent of the plaintiff, had implied authority to draw the sight draft set forth in the complaint, and that the plaintiff with knowledge of the act of its said agent in drawing said sight draft received and accepted from him the proceeds thereof.

(6) That the defendant acted in good faith in cashing said checks set forth in the complaint, without any knowledge or information that to do so was contrary to the wishes or authority of the plaintiff.

The court concluded that the defendant was entitled to judgment dismissing the plaintiff's complaint with costs.

Judgment was entered accordingly, from which this appeal was taken.Charles N. Brown, of Madison, for appellant.

S. E. Smalley, of Cuba City, for respondent.

KERWIN, J. (after stating the facts as above).

The only serious question in this case is whether the agent Robinson had authority, implied or otherwise, to indorse checks made in favor of plaintiff given in payment of goods sold or to draw drafts in the name of plaintiff. It is clear that the agent had no express authority. The court below found that Robinson had implied authority, and the question arises whether such finding is supported by the evidence. The appellant deals in explosives with headquarters in New York. In the summer of 1908 one Robinson was employed as representative of plaintiff at Cuba City, Wis., to make sales of goods. The goods were shipped by plaintiff to Robinson usually in car load lots, freight prepaid, addressed to Pluto Powder Company. The bills of lading were sent to Robinson, and he received the goods from the railroad company, placed them in plaintiff's magazine at Cuba City, sold to mining companies and others, and reported sales to the office of plaintiff in New York, and invoices were sent to the purchasers by plaintiff from its office. It was understood that the purchasers generally should remit to the office of the plaintiff, although some small sales were made for cash and the money collected in such instances by Robinson. He also had authority to collect from two mining companies, who for certain reasons desired to deal directly with him. It was his duty in all cases to remit checks and drafts received in payment of goods to the plaintiff and if he received cash to remit that by draft, but he had no authority to sign the name of the plaintiff to commercial paper in any case, unless such authority can be implied from the acts and dealings of Robinson with the defendant and purchasers of goods. We find no evidence in the record sufficient to charge the plaintiff with notice that Robinson ever signed its name to negotiable paper until about the 30th of April, 1909, when due investigation was made, the defalcation discovered, and Robinson discharged. So that all checks and drafts, the proceeds of which are claimed in this action, were negotiated and the name of plaintiff signed thereon before the plaintiff had knowledge that Robinson signed its name to commercial paper.

[1] The question, therefore, is presented whether the fact that Robinson acted as salesman of plaintiff, had possession of its goods and received checks payable to plaintiff, receipted for goods in the name of plaintiff, collected some money on sales when checks were not given payable to plaintiff, receipted for money collected in plaintiff's name, had authority to employ help, incur expense for livery and to include livery bills in his account, clothed Robinson with implied or apparent authority to sign the name of plaintiff to commercial paper. We think the great weight of authority is to the effect that upon the undisputed evidence in this case Robinson had no authority, express or implied, to sign the name of plaintiff to negotiable paper. In the instant case the defendant cashed the checks drawn payable to plaintiff upon the unauthorized signature of Robinson of the name of plaintiff. Robinson also drew a draft in the name of plaintiff and obtained the money thereon without authority. The bank, therefore, became liable to the plaintiff; the funds having been misappropriated by Robinson. Robinson v. Chemical Nat. Bank, 86 N. Y. 404;Schmidt v. Garfield Nat. Bank, 64 Hun, 298, 19 N. Y. Supp. 252; affirmed 138 N. Y. 631, 33 N. E. 1084; Hogg v. Snaith et al., 1 Taunt. 347.

[2][3] Since no express authority was given Robinson to indorse or sign negotiable paper on behalf of plaintiff, such power must be shown to be necessary to the exercise of the power conferred, and the burden was upon the defendant to show implied authority. Ames v. Murray Mfg. Co., 114 Wis. 85, 89 N. W. 836;Parr et al. v. Northern E. Mfg. Co., 117 Wis. 278, 93 N. W. 1099;McDermott v. Jackson, 97 Wis. 64, at page 71, 72 N. W. 375;Heath v. Paul, 81 Wis. 532, 51 N. W. 876;Jackson P. Co. v. Commercial Nat. Bank, 199 Ill. 151, 65 N. E. 136, 59 L. R. A. 657, 93 Am. St. Rep. 113. Third persons having notice that they are dealing with an agent are bound to inform themselves of the extent and limitations of his authority. 31 Cyc. 1336, 1341; Sawyer v. Chicago & N. W. Ry. Co., 22 Wis. 403, 99 Am. Dec. 49;Hurley et al. v. Watson, 68 Mich. 531, 36 N. W. 726;Bohart, D. & Co. v. Oberne, H. & Co., 36 Kan. 284, 13 Pac. 388; Tiedeman on Commercial Paper, § 77, states the rule thus: “We have this general...