White-Wilson-Drew Co. v. Egelhoff

• Decision Date: 10 October 1910
• Citation: 131 S.W. 208,96 Ark. 105
• Parties: WHITE-WILSON-DREW COMPANY v. EGELHOFF
• Court: Arkansas Supreme Court

131 S.W. 208

96 Ark. 105

WHITE-WILSON-DREW COMPANY v. EGELHOFF

Supreme Court of Arkansas

October 10, 1910

Appeal from Fulton Circuit Court; John W. Meeks, Judge; reversed.

Judgment reversed and remanded for new trial.

Appellant pro se.

1. When a party signs his name, either as maker, acceptor, indorser or drawer, to a negotiable instrument and intrusts it to another to fill up the contract, he confers upon that other in favor of bona fide holders for value, the right to complete the contract at pleasure, and to bind the party so signing same. 22 How. 97; Id. 108; 40 O. 529; 2 Baxt. (Tenn.) 92; 9 Heisk. (Tenn.) 781; 7 Cyc. 529; Id. 619; 35 Ark. 146; 33 Ark. 712; 1 Metc. (Ky.) 58; 20 How. 361.

2. It is true that an agent cannot delegate to another the performance of duties which involve the exercise of judgment and discretion, but it is also true that he may delegate to another the execution of duties which are merely mechanical or ministerial, and the performance of such duties by a sub-agent is regarded as the act of the agent, binding upon the principal. 35 Ark. 198; 1 Hill (N. Y.) 501; 60 Mo. 116; 8 N.Y. 398; 31 Cyc. 1428; 108 Ga. 640; 16 Md. 220; 67 A. 1068; 51 N.Y. 117; 58 S.W. 953; 50 W.Va. 148; 43 N.W. 800; 6 Harr. & J., 146; 64 Am. Dec. 92; 2 Tex. Civ. App. 524; 3 How. 763.

3. The note sued upon is a Tennessee contract, and appellees are liable for the payment of the 10 per cent. attorney's fee and cost of collection. 13 Pick. (Tenn.) 19. The note was dated at, and made payable in, Memphis, Tennessee. The contract is governed by the law which the parties actually or presumptively intended should govern. 1894 A. C. 202; Quarterly Review (1894) 290-291; 87 Va. 661; 17 Gratt. 47; 12 Wall. 226; 77 N.Y. 573; 84 N.Y. 367; 37 Ala. 702.

4. White-Wilson-Drew Company in accepting Egelhoff's note in settlement of his account with it, without knowledge of any secret understanding between him and Ford, thereby extended Egelhoff's time of payment and became a bona fide holder for value. Bigelow on Bills & Notes (2 ed.), 245, and cases cited; 66 Vt. 541; 131 Mass. 397; 3 Cush. 162; 2 Allen 8; 5 R. I. 515; 41 Mich. 397; 3 Kelly 47; 1 Smith (Ind.) 89; L. R 10 Ex. 153; 14 C. B. N. S. 728; 102 U.S. 14.

Davis & Pace and Hamlin & Seawel, for appellees.

1. Appellants are not holders for value, the note having been given for a pre-existing indebtedness. 13 Ark. 150; 42 Ark. 22; 2 Humph. (Tenn.) 192; 3 Head (Tenn.) 176. Since no express agreement is shown to extend the time for payment of the alleged account, this case does not come within the rule that a new consideration would constitute appellant a holder for value. 4 Am. & Eng. Enc. of L., §§ 295, 296, and cases cited.

2. The promise to pay fees for collection rendered the note non-negotiable. 7 Cyc. 586.

3. If Egelhoff was Ford's agent for the purpose of filling the blank in the note, he had no right to delegate his authority to another. 92 Pa.St. 227.

OPINION

FRAUENTHAL, J.

The appellant instituted this suit upon a promissory note against the appellees as the makers thereof. The note is as follows:

"$ 758.42. Memphis, Tenn., November 30, 1907.

"On January 25, 1908, after date we promise to pay to the order of White-Wilson-Drew Company seven hundred fifty-eight and 42-100 dollars at First National Bank, Memphis, Tenn., with 10 per cent. attorney's fees and cost of collection after maturity. Value received.

"Clarence Egelhoff,

"J. E. Ford."

The testimony on the part of the appellant tended to prove that said Egelhoff was indebted to it upon account, which was past due on November 30, 1907, and that he on that day delivered to it the above note in settlement of said account. Egelhoff brought the note to appellant at its office in Memphis, Tenn., signed by said Ford and blank as to the amount thereof. After examining the appellant's books and arriving at the amount of his indebtedness, Egelhoff directed J. R. Paine, one of the members of appellant, to write the amount thereof in the note, which was done in his presence. Egelhoff then signed the note, and delivered same to appellant in satisfaction of the account.

The testimony on the part of the appellees tended to prove that said J. E. Ford was a resident of Mammoth Spring, Ark., and that Egelhoff came to him at that place, and stated that he was indebted to appellant in a sum of about $ 110; that the amount had not been definitely determined, but that it would not exceed that sum; that he presented the note with amount thereof and desired him to execute it as surety for him. Thereupon Ford signed the note thus made out in blank with the agreement and direction that Egelhoff would take same to appellant at Memphis and there fill out said blank with the amount of said indebtedness, provided that it did not exceed $ 110, and, after signing it as maker himself, to deliver same to appellant.

In the bill of exceptions it appears that Egelhoff testified that at the time he had the settlement with appellant and the amount of his indebtedness was written in the note he did not tell appellant that he was limited by Ford in his authority to fill out the amount of the note. Some time after the bill of exceptions had been duly signed and filed the appellees applied to the lower court for a nunc pro tunc order to correct the bill of exceptions relative to the testimony of Egelhoff. It was claimed in said application that Egelhoff testified at the trial of the case that he did notify appellant of the limitation made by Ford on his authority to insert the amount in said note. The lower court refused this application for a nunc pro tunc order to correct the record in this particular, and from that order thus overruling said application the appellees have appealed to this court.

The appellant requested the court to give several instructions to the jury, all of which were refused. Among these instructions was the following:

"No. 9. You are further instructed that, should you find that defendant, J. E. Ford, signed the note in blank and gave the defendant, Clarence Egelhoff, authority to fill out the amount in blank, then it would be immaterial for the purpose of this case whether Clarence Egelhoff filled out the blank himself or instructed some one to do it for him; and if you find from the testimony that Egelhoff advised and authorized the filling of the blanks, and they were filled in his presence and for a greater amount than Ford had authorized, yet you should find for the plaintiff unless you find by a preponderance of the testimony that the plaintiff had knowledge of the violation of instructions upon the part of Egelhoff in filling out or permitting the filling out of said note; and the burden to prove such knowledge upon the part of the plaintiff rests upon defendant, J. E. Ford, and unless you so find you should find for the plaintiff."

The court at the request of appellees gave the following instruction:

"No. 3. You are further instructed that, should you find that the defendant Ford had constituted said Egelhoff his agent to fill the blank in said note, that, while he would be bound by the act of Egelhoff in placing the amount therein, still said Egelhoff could not delegate his authority to any one else; and if you find that some one besides said Egelhoff placed the amount in the blank space in said note, then the defendant, Ford, would not be bound thereby."

The jury returned a verdict in favor of appellant and against said Egelhoff for the amount due upon said note; and against said Ford for $ 110 and interest. In his answer said Ford had agreed that judgment might be taken against him for $ 110 and interest. Thereupon the lower court entered a judgment in accordance with the above verdict.

The evidence in this case clearly proves that the appellee Ford signed the note herein sued on with the amount thereof left blank. He instructed Egelhoff to fill said blank when the amount should be definitely determined and to deliver the note to the payee. He contends, however, that he gave this power only to Egelhoff, and limited that power to an amount not exceeding $ 110. He urges that, because the authority thus given by him was violated in each particular, he is not liable on said note. The note is a negotiable instrument; and when such an instrument is intrusted by one who signs it to the custody of another with blanks left therein, the instrument itself presents an implied authority to perfect the instrument by filling up the blanks. When the extent of the authority given to the party to fill up the blanks is limited, then such authority must be strictly pursued; and if such authority has been exceeded, it will be available as a defense against the parties to such agreement and against those having notice thereof or those who in law are not innocent holders thereof. But such excess of authority will not be available against those who have become bona fide holders thereof for value and without notice. The Supreme Court of Ohio in the case of Fullerton v. Sturges, 4 Ohio St. 529, states this doctrine and the reasons for its adoption as follows:

"No rule is better settled or founded upon stronger reasons than that which affirms the liability of one intrusting his name in blank to another, to the full extent to which said other may see fit to bind him, when the paper is taken in good faith and without notice, actual or implied, that the authority given had been exceeded, or that the confidence reposed had been abused. It has the effect of a general letter of credit, and the rule is founded, not only upon that principle of general jurisprudence which casts the loss, when one of two equally innocent persons must suffer, upon him who has put it in the power of another to do the injury, but also upon that rule of...