Towle v. American Building, Loan & Investment Co.
| Decision Date | 04 January 1897 |
| Citation | 78 F. 688 |
| Court | U.S. District Court — Northern District of Illinois |
| Parties | TOWLE v. AMERICAN BUILDING, LOAN & INVESTMENT CO. [1] |
Winston & Meagher, for petitioners.
Collins & Fletcher, for receiver.
The hearing under consideration is on the petition of Grommes & Ulrich, co-partners, the answer of the receiver thereto, and the stipulation entered into between the petitioners and the receiver respecting the facts covering the case. From these pleadings and the stipulation it appears that on the 4th of October, 1893, the American Building, Loan & Investment Company, through its vice president, purported to accept a draft, at 60 days, for the sum of $1,608.47, drawn upon it by one George Montgomery, in favor of the petitioners. Like drafts had been previously drawn by the same Montgomery, and accepted by the vice president of the society, in the name of the society. Upon inquiry by the petitioners, the vice president informed them that Montgomery was a creditor of the society, and the draft presumably accepted in the payment of such credit. As a matter of fact, no indebtedness existed to Montgomery. The arrangement was, unquestionably, a device between the vice president of the society and Montgomery under which Montgomery, on the credit of the society, would obtain credit from the petitioners and others.
So far as the facts disclosed by the pleadings and stipulation go both the society and the petitioners are involuntary victims to this fraud, and one or the other must bear its pecuniary loss. Corporations act through their officers, and will not be heard to deny such officers' authority in a given instance where such instance is within the general field of their authority. In other words, the public dealing with a corporation, through its officers, is not required to know such officers' authority for the special transaction in hand; it is enough to know that such transaction is presumably under the general authority conferred. The corporation extending the authority, not the public dealing upon the fact of it, must suffer the loss if there is any abuse of it by the officer in the particular transaction in hand. This rule is founded upon the essential conveniences of commercial and corporate life, and is only holding that party liable for losses growing out of abuses of power who has it easiest in hand to prevent such abuses, either by the employment of none but hones agents,...
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