President, Directors and Company of Peninsular Bank v. Hanmer

• Decision Date: 24 April 1866
• Citation: President, Directors and Company of Peninsular Bank v. Hanmer, 14 Mich. 208 (Mich. 1866)
• Court: Michigan Supreme Court
• Parties: The President, Directors and Company of the Peninsular Bank v. James Hanmer

14 Mich. 208

The President, Directors and Company of the Peninsular Bank v. James Hanmer

Supreme Court of Michigan

April 24, 1866

Heard April 7, 1866; April 10, 1866 [Syllabus Material] [Syllabus Material]

Error to Wayne circuit.

Hanmer sued the bank upon an agreement of indemnity signed by H. H Brown, cashier of the bank, and sealed with the corporate seal, and which was in the following words, to wit:

"In consideration of one dollar to the president, directors and company of the Peninsular bank in hand paid by James Hanmer, they do hereby agree to and with said Hanmer that they will indemnify and save harmless the said Hanmer and his assigns of and from all loss or damage by reason of or growing out of a certain mortgage heretofore made by Nathaniel P. Jacobs and wife to Charles Seymour, dated August 4th, 1855, recorded in liber 23, p. 669, and upon which there is now due the sum of eleven hundred dollars, or thereabouts; said mortgage having been given and executed on lot six in military reservation in the city of Detroit, being the N. W. corner lot of Fort and Wayne streets. Said Hanmer having this day taken a mortgage on said premises for five thousand dollars, this instrument is intended to operate as a full indemnity and protection to him against the first mortgage hereinbefore described. In witness whereof, the said parties of the first part hereto have set their official seal and the name of their cashier.

"On this 15th day of September, 1857.

[Seal.] "H. H. Brown, Cashier.

"In presence of D. Bethune Duffield."

Defendant pleaded the general issue, and denied by affidavit the execution of said instrument declared upon.

The facts were as follows: In September, 1857, the bank was much embarrassed. One N. P. Jacobs was largely indebted to the bank and had failed to meet his paper. Hanmer kept his account at the bank, and had over $ 5,000 to his credit. Brown wished to get this amount to apply on Jacobs' debt. He therefore proposed to Hanmer that he should loan this sum to Jacobs, to be secured by Jacobs' bond and a mortgage on his property. On this property was a prior mortgage which had been made by Jacobs to Chas. Seymour, and which Jacobs claimed had been satisfied. Hanmer was willing to make the loan, but only on condition that the bank should indemnify him against said prior mortgage. He knew that his money, if loaned, was going directly to the bank. He did not see Jacobs at all in the transaction. The bank gave the indemnify by Brown. The money went directly to the bank without going into the hands of Jacobs.

The Seymour mortgage was afterwards foreclosed, and the bank, being notified by Hanmer, defended the case by its attorney. Hanmer was obliged to pay about $ 1,800 under the foreclosure decree. Hanmer then sued the bank on its indemnity in assumpsit, and recovered a verdict.

This last case the bank now brings to this court on error. The bank defends on the ground that Brown had no authority to give the indemnity. There were fifteen assignments of error. The first eight arise on questions of evidence; the other seven on instructions given the jury, or requests refused.

The court held, and instructed the jury in substance that the authority of Brown to bind the bank by the indemnity was, on the evidence, a question of fact for the jury; and that if the jury found that the directors and stockholders had for years permitted the entire control and management of the bank to Brown, and this business had been done by him for the benefit of the bank, this would authorize the jury to find for the plaintiff.

This doctrine the defendant denied, and insisted that the bank could not be liable unless express authority was shown from the directors to the cashier to execute this instrument, or like instruments before this.

Judgment affirmed, with costs.

D. C. Holbrook, for plaintiff in error:

1. The authority of the cashier was a question of law for the court, and no implied authority of the cashier was shown: 1 Doug. Mich., 457; 21 Barb. S. C., 196; 5 Denio 283, 520; 36 Barb. 332; 14 Id. 358.

The giving of indemnities is not a part of the general duty of a cashier, and there was not shown any resolution giving him authority: 12 Barb. S. C., 196.

The only other way he could get it was by the acquiescence of the directors with knowledge of such previous acts.

G. V. N. Lothrop, for defendant in error:

1. An agent of a corporation, like an agent of a natural power, may be appointed by parol, and he may derive his authority from express or implied delegation. In this country this proposition now needs no citation of authorities: 1 Doug. Mich., 110.

2. And when an agent is held out, or permitted to hold himself out, as clothed with any power, it may be presumed that he has been clothed with such power in due form: 12 Wheat. 70; 12 Barb. 67; 26 Me. 428; 36 E. L. & Eq., 142.

3. The authority of the agent may be implied or presumed from the conduct, active or permissive, of the corporation: A. & A. on Corp., 270 (3d ed.); 14 Barb. 358; 10 Rich. S. C., 95; 21 Wend. 296.

And this is equally true, though his acts are in violation of the corporate by-laws: 1 N. Y., 290; 12 Cush. 1.

4. All the contracts made by a cashier, within the powers of the bank, are good, where he is suffered by the directors to take the general management of the bank: 4 Bosw. 420; 11 Ohio St., 153; 32 Barb. 9.

And the same is true of agents of other corporations: 34 N. H., 378; 14 Barb. 361; 17 Ill. 40; 7 Metc. 222; 1 Allen 34.

It matters little in this case what are the ordinary powers of a cashier. The evidence shows that under the name of cashier Brown was sole and absolute manager of the bank. From June, 1851, till September 27, 1857, there had not been a meeting of stockholders, and no election of directors.

5. Brown, as sole general manager, was authorized to use the corporate seal, where he thought it required, in the conduct of its lawful business. No formal vote is necessary to enable a cashier to affix the seal: 7 Hill 91; 4 Mich. 608.

Nor is it of any consequence that the by-laws made the president the custodian of the seal. The by-laws were dead letters even in the bank, and when they ceased to be observed there they were inert outside: 1 N. Y., 292.

6. If a corporation knowingly claims, retains, or uses the benefits of a contract made by its officers or agents, without authority, this amounts to a ratification: 7 Cranch 299; 1 Pick. 372; 19 Johns. 60; 24 Me. 36; 11 Ohio, N. S., 153.

And mere acquiescence will imply ratification: 19 N. Y., 207.

7. A cashier of a bank has authority to collect debts due the bank, and to take all usual means to do so. He needs no special delegation of authority to borrow money for the bank. It is an ordinary power: 15 N. Y., 9; 19 Id. 152.

OPINION

Cooley, J.

The action was brought by Hanmer, in the court below, upon a contract executed in the name of the bank by Brown, its cashier, to indemnify Hanmer against a certain mortgage made by Nathaniel P. Jacobs and wife to Charles Seymour. The contract is under the corporate seal, but it is claimed by the bank that it was entered into without authority, inasmuch as there was no action of the directors authorizing it, and the by-laws required all contracts to be signed by the president. On the other hand, Hanmer produced evidence that for a considerable period before and after the giving of this paper, the whole management of the bank was virtually in the hands of Brown, the directors seldom or never meeting, unless to declare dividends, and very little attention being paid to the rules prescribed by the by-laws for the...