Union Bank & Trust Co. v. Long Pole Lumber Co.
| Decision Date | 26 March 1912 |
| Citation | 74 S.E. 674,70 W.Va. 558 |
| Parties | UNION BANK & TRUST CO. v. LONG POLE LUMBER CO. |
| Court | West Virginia Supreme Court |
Submitted June 9, 1911.
Syllabus by the Court.
On the termination of an agency, persons who have dealt with the principal through the agent may continue to do so, in the absence of knowledge of the fact, and, as to them, such acts of the former agent will bind the principal.
The general principles of the law of agency apply to private corporations and their officers.
To protect itself against subsequent action, on its behalf by an officer or agent, whose powers have been terminated, as to persons with whom it had previously transacted business through him, a private corporation must give notice of the termination of his powers, unless actual knowledge thereof has otherwise been obtained by such persons. Mere publication of the fact in a newspaper is insufficient.
If a thing done by an officer of a corporation is part and parcel of its general and ordinary business, and he apparently has the general management and control of its business, it is within his apparent authority, and binds his principal in favor of a third person, relying in good faith upon such authority in the transaction.
A principal, benefited by an unauthorized act of his agent cannot deny the authority of the agent to do the act from which such benefit accrued, without first having restored the property or other thing so acquired, or paid to the injured party the value thereof.
On an issue as to the authority of an agent, he is a competent witness and may testify to acts done on behalf of his principal and the latter's knowledge thereof, in favor of a third person, even though such third person is not shown to have had knowledge thereof.
A third person may recover from a principal on a contract made by the agent on proof of apparent authority in the latter, within the scope of which the act in question is included.
Error to Circuit Court, Mercer County.
Action by the Union Bank & Trust Company against the Long Pole Lumber Company. Judgment for plaintiff, and defendant brings error. Affirmed.
Sexton & Roberts and Ritz & Ritz, for plaintiff in error.
Sanders & Crockett, for defendant in error.
This writ of error involves the propriety of rulings on evidence and instructions in a controversy as to the liability of a corporation, the plaintiff in error, as indorser of a certain note, made by its president in renewal of others previously discounted by it.
It is a single note for a balance of $2,628.60, remaining due and unpaid June 24, 1908, on some of the following notes Jamestown Veneer Door Company, $738.56; F. L. Knowles, $500 James H. Cranwell, $560; James H. Cranwell, $720; Wakefield Manufacturing Company, $200; Toler & Sons, $314; and J. W Holloway & CO. $769.70, all payable to Soble Bros., assigned to the Long Pole Lumber Company and by it discounted at the Union Bank & Trust Company October 15, 1907--and the following notes: Century Furniture Company, $252.52; Crouch & Beahen Company, $216.53; and Jamestown Veneer Door Company, $400, likewise payable, assigned, and discounted, November 6, 1907. Between those dates and June 24, 1908, some of these notes were wholly and others partially paid. Some of them or portions thereof were combined in a new note, executed by Soble Bros. payable to W. J. Newenham, president of the company, and indorsed successively by him and the company. This, with others of the original notes wholly or partially unpaid, constituted the balance for which Soble Bros. then executed their note, payable in 60 days to Newenham, who, until the 9th day of the same month had been president of the Long Pole Lumber Company. He indorsed it in his individual name, wrote the name of the lumber company on the back of it, and gave it to the bank in exchange for the remaining notes. Defense to this action on said last-mentioned note is founded upon the hypothesis of lack of authority in Newenham to indorse it for and on behalf of the Long Pole Lumber Company, which, it is said, neither the by-laws nor any course of conduct, known to the defendant in error, conferred, while he was president, and which, of course, he did not possess after his resignation, made and accepted June 9, 1908. In opposition to this denial of authority, a by-law and conduct are relied upon as conferring it, supplemented by lack of notice to the bank of termination thereof by resignation.
The only evidence adduced to prove notice of the termination of such authority as Newenham had was oral testimony to the publication of a notice of the resignation in a newspaper. That is wholly insufficient, in the absence of proof that it was seen and read by the agents of the bank, who deny that they ever saw it. On the termination of an agency, persons who have dealt with the principal through the agent may continue to do so, in the absence of knowledge of the fact, and the principal will be bound by the acts of the former agent as fully as if his authority had not ceased. Spencer v. Wilson, 18 Va. 130; Smith v. Watson Summer & Co., 82 Va. 712, 1 S.E. 96; Clark & Skyles, Agency, p. 414, § 173; 31 Cyc. 1305; 1 Am. & E. Enc. L. 1220. The duty of the principal to notify third persons of the termination of the agency is of the same character and requires the same degree of certainty as that which the law imposes upon the members of a copartnership in the case of dissolution as a measure of protection from liability by reason of subsequent acts of the former members of the dissolved firm. Claflin v. Lenheim, 66 N.Y. 301; Gragg v. Home Ins. Co. (Ky.) 107 S.W. 321.
In all such cases, persons who have dealt with the principal through the agent will be protected in continuing to do so, unless and until they have in some way obtained actual notice of the termination of the relation, and, as to them, mere publication of notice in a newspaper and local notoriety of the fact are not sufficient. Werner Co. v. Calhoun, 55 W.Va. 246, 46 S.E. 1024.
The general principles of the law of agency are applicable to corporations, and the policy of the law forbids such results as would flow from denial of their application under the circumstances here disclosed. "A corporation is subject to the same extent as a natural person to the general principle that one who holds out another, or allows him to appear as having authority to act, as his agent with respect to his business generally, or with respect to a particular matter, is estopped, as against persons dealing with him in good faith, to deny that his apparent authority is real." Clark & Mar. Cor. [74 S.E. 676] p. 2161, § 708. The acts of a person acting as treasurer of a corporation, though not legally elected to the position, are binding. Bank v. Gas & Light Co., 159 Mass. 505, 34 N.E. 1083, 38 Am.St.Rep. 453. In a case involving the exercise of the powers of the president of a railroad corporation, the principle was declared and applied, as follows: "Persons who deal with an agent before notice of the recall of his powers are not affected by the recall." Hatch v. Coddington, 95 U.S. 48, 24 L.Ed. 339. Here Newenham had been not only ostensibly, but actually, the president, and, as such, dealt with the plaintiff, and the latter had had no notice of the termination of his authority at the time the note in question was indorsed by him in the company's name. Hence he still had apparent authority, and the principle of estoppel applies as in other cases of agency. This conclusion accords with general legal principles also. A status or condition shown to exist is presumed to continue until the contrary appears.
The letters transmitting the notes to Newenham, president of the company, to be by him discounted, are relied upon as notice to the bank of a special authority in him. These letters are not addressed to the bank. Its officers may never have seen them. If they did, their terms wholly fail to sustain any such contention. They bear only the signature of the treasurer of the company, and import no direct or special authority from the board of directors from which an inference of lack of general authority might arise. They transmit the notes pursuant to an understanding between the writer and the president, and then the first one says: "After having these notes discounted, I would like to have a memorandum showing the proceeds of each note." The other says "We will need all the money we can possibly raise at present, to meet our present obligations and to arrange for our pay roll, and I hope you will be able to negotiate all the notes that I have sent to you." On the contrary, these letters carry on their faces an implication, assumption, or recognition of authority in the president to discount notes and bills for and on behalf of his company. The president kept an office of the company in Bluefield, and the secretary and treasurer kept its books at another office in Pocahontas, Va. His testimony is that he had the entire management and control of the corporation, made its contracts, borrowed money for it, and conducted its business generally, with the knowledge, acquiescence, and approbation of the directors. At Bluefield, the city in which the business of the plaintiff bank was conducted, he kept an office open, over the door of which was the name of the company. His incumbency of the office of president covered a period of more than seven years, and seemingly he transacted its business, or at least a large portion of it, in the city of Bluefield during that entire period. The manager of a fire insurance agency says he made practically all of the numerous and large contracts of insurance with his agency. After the notes sent to him for discount had been accepted by the bank, with the...
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