The Second National Bank of Akron, Ohio v. The Midland Steel Company

• Decision Date: 13 December 1900
• Docket Number: 19,220
• Citation: 58 N.E. 833,155 Ind. 581
• Parties: The Second National Bank of Akron, Ohio, v. The Midland Steel Company
• Court: Indiana Supreme Court

58 N.E. 833

155 Ind. 581

The Second National Bank of Akron, Ohio, v. The Midland Steel Company

No. 19,220

Supreme Court of Indiana

December 13, 1900

From the Delaware Circuit Court.

Reversed.

C. S Cobbs, Rollin Warner and A. W. Brady, for appellant.

J. W Ryan, W. A. Thompson, W. A. Ketcham, B. K. Elliott, W. F Elliott and F. L. Littleton, for appellee.

OPINION

Dowling, C. J.

This case was transferred to this court by the order of the Appellate Court.

The appellant, an indorsee, sued the appellee upon a promissory note of which the following is a copy: "Midland Steel Company. Muncie, Ind., April 13, 1896. Three months after date, we promise to pay to the order of the Muncie Land Company $ 2,000, value received, negotiable and payable, without defalcation or discount, at Union National Bank, Pittsburg, Pa., with interest at six per cent. per annum. R. J. Beatty, President."

The complaint was in seven paragraphs. The first alleged, in general terms, that the appellee executed the note sued on. The second averred that the appellee executed the said note through one R. J. Beatty, who was at the time the president, general agent, and general manager of the appellee, and who, in executing the note, acted by appellee's authority, and on its behalf, as such president, etc., and not personally; that the sole consideration of said note was a debt of $ 2,000 then due from and owing by the appellee, alone, to the Muncie Land Company, which indorsed said note to the appellant. The third paragraph charged that the appellee executed said note by the name of R. J. Beatty, president. The fourth paragraph stated that the appellee had adopted and used as its name in the execution of negotiable promissory notes, etc., the name of R. J. Beatty, president, and by that name executed the note mentioned in the complaint. The allegation of the fifth paragraph was that the appellee executed the note under the name of R. J. Beatty, president, and that the note so executed was received, and accepted by the appellant as the note of the appellee. The sixth paragraph is the same as the fifth with the additional averments, however, that the note was executed for a debt due and owing from the appellee to the Muncie Land Company, and for no other consideration; that said note was executed by the appellee through one R. J. Beatty, who was, at the time, the president, general agent, and general manager of the appellee, who acted by authority of the appellee, on its behalf, as its president, etc., and not personally; and that when the Muncie Land Company indorsed and delivered said note to appellant, it notified appellant that said note was the note of the appellee executed under the name of R. J. Beatty, president, and that appellant received it as such note of the appellee, and not otherwise. The seventh paragraph avers that, on the day of the execution of the note sued on, and long prior thereto, the appellee had adopted and used in the execution of its notes, drafts, etc., the name of R. J. Beatty; that, on said day, the appellee, by the description of "R. J. Beatty, president," executed to the Muncie Land Company the said note, whereby it, the said appellee, promised to pay said Land Company, three months thereafter, $ 2,000, with interest, etc., and that the Muncie Land Company received and accepted the same as the note of the appellee, and of no other person; that said note was given and executed for a debt of $ 2,000, owing from the appellee to the Muncie Land Company, and for no other consideration; that the said note was executed by the appellee, through one R. J. Beatty, who was the president, general agent, and general manager of the appellee, and who acted by the authority of the appellee and on its behalf in executing said note as such president, agent, etc., and not personally, or in any other capacity; that said Beatty intended to execute said note in such manner that it would be the note and obligation of the Midland Steel Company, and of no other person; that said Muncie Land Company accepted said note in the belief that it was the note and obligation of the appellee, and not the note of any other person, and that if said note is not the note of the said corporation such fact is due to the mutual mistake of the said R. J. Beatty and said Muncie Land Company; that the appellant accepted said note at the time it was indorsed to said appellant as the note and obligation of the appellee, and not otherwise, and that said note should, if found defective, be reformed so as to express the true intent of the parties.

Each paragraph avers the indorsement of the note by the Muncie Land Company to the appellant. It is also alleged that by the law of the state of Pennsylvania, where the said note is payable, it is negotiable as bills of exchange are negotiable, and that no grace is allowed. A copy of the note is properly made an exhibit.

Prayer for judgment, the reformation of the instrument sued on, and all other proper relief. Demurrers to the several paragraphs of the complaint were sustained, and, the appellant refusing to plead further, judgment was rendered for appellee. The rulings on the demurrers are assigned for error.

Must the instrument set out in the complaint be conclusively presumed the personal obligation of R. J. Beatty, whose name is subscribed to it, or, under proper averments, may it be shown by parol evidence to be the contract of the appellee, the Midland Steel Company?

It is irregular in form, and ambiguous in its terms. The name of the Midland Steel Company is not subscribed to it, neither does the name of that corporation appear in the body of the contract. The instrument reads, "We promise to pay, etc.," but the plural pronoun "we," in the first person, cannot properly be used by a corporation. The name of the company appears on the instrument above the line in which are written the place and date of execution.

The signature to the instrument is "R. J. Beatty, president." It is not stated of what corporation Mr. Beatty is president, or on whose behalf, or as whose agent he signs the paper. The words 'we promise to pay,' are not grammatically correct, if it is understood that Beatty is the sole promisor.

Men do not usually describe themselves as president, secretary, treasurer, trustee, or agent, when signing their personal contracts by which they intend to bind themselves as individuals. If negotiable paper executed in this manner may be shown by proof of extrinsic circumstances to be the contract of a corporation, or of any unnamed principal, then it may be suggested that an indorsee of such instrument might be left in doubt as to the identity of his debtor. On the other hand, it may be said that if the description of the person signing the paper must be disregarded, and if the instrument is to be conclusively presumed the contract of the person whose name is subscribed to it, then, in many cases, the person so signing would find himself personally liable for the debt of another, while the holder of the instrument might discover in an action upon it that, instead of having, as he supposed, the obligation of a solvent corporation or person, he held only the personal note of an irresponsible officer or agent of such corporation or person. In the usual course of business in this country, the addition of a title, or description of any kind is not customary,--indeed, it may be said that such addition or description is never appended, --when men sign their names to contracts by which they intend to bind themselves in their own proper persons, and not as the representatives of another. Again, it is to be observed that such additions and descriptions as president, secretary, treasurer, trustee, agent, and the like, plainly import a relation to some other person, as a principal, distinct from the person subscribing the instrument. Besides, the appearance of such description of the party signing the instrument is sufficient, in fact, to apprise the other party that the person so signing his name and describing himself, is not the principal in the transaction, but, that another, disclosed or undisclosed, is the real party in interest; or, at least, such addition or description is sufficient, in fact, to put the other party upon inquiry, both as to the identity of the real principal and the authority of the agent to bind him. We do not mean to assert here, however, the sufficiency in law of every such indication that the paper is executed in a representative capacity only.

The decisions in this State upon the question presented here cannot easily be reconciled or distinguished. Among those holding that extrinsic evidence is not admissible to show that a contract executed by one who adds to his signature the words president, secretary, agent, trustee, etc., is not the contract of the person so signing, but the obligation of another party are the following: Prather v. Ross, 17 Ind. 495; Kendall v. Morton, 21 Ind. 205; Wiley v. Shank, 4 Blackf. 420; Mears v. Graham, 8 Blackf. 144; Hays v. Crutcher, 54 Ind. 260; Williams v. Second Nat. Bank, 83 Ind. 237; Willson v. Nicholson, 61 Ind. 241; Hayes v. Brubaker, 65 Ind. 27; Avery v. Dougherty, 102 Ind. 443, 2 N.E. 123; Hobbs v. Cowden, 20 Ind. 310; Jackson School Tp. v. Farlow, 75 Ind. 118, 123.

A different view seems to have been taken in other cases. Means v. Swormstedt, 32 Ind. 87; McHenry v. Duffield, 7 Blackf. 41; Pitman v. Kintner, 5 Blackf. 250, 33 Am Dec. 330; Kenyon v. Williams, 19 Ind. 44; Bingham v. Kimball, 17 Ind. 396; Indiana, etc., R. Co. v. Davis, 20 Ind. 6; Gaff v. Theis, 33 Ind. 307; Vater v. Lewis, 36 Ind. 288; Pearse v. Welborn, 42 Ind. 331; Neptune, Adm., v. Paxton, Rec., 15 Ind.App. 284, 43 N.E. 276; Louisville, etc., R. Co. v. Caldwell, 98...