Williams v. Dugan

• Decision Date: 22 May 1914
• Citation: 105 N.E. 615,217 Mass. 526
• Parties: WILLIAMS v. DUGAN.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

217 Mass. 526

105 N.E. 615

WILLIAMS v. DUGAN.

Supreme Judicial Court of Massachusetts, Suffolk.

May 22, 1914

COUNSEL

Nelson B. Vanderhoof, of Boston, for appellant.

Ward F Porter, of Boston, for appellee.

OPINION

RUGG C.J.

The power to borrow money or to execute and deliver promissory notes is one of the most important which a principal can confer upon an agent. It is fraught with great possibilities of financial calamity. It is not lightly to be implied. It either must be granted by express terms or flow as a necessary and inevitable consequence from the nature of the agency actually created.

It was said in Smith v. Cheshire, 13 Gray, 318, at page 320:

'An agent who has authority to pay the debts of his principal to disburse his moneys, to settle with his creditors or even to bind him by a contract or agreement to pay money, is not authorized to sign negotiable paper, by which his principal will be bound.'

In Paige v. Stone, 10 Metc. 160, at page 168 (43 Am. Dec. 420), is this statement:

'The power of binding by promissory negotiable notes can be conferred only by the direct authority of the party to be bound, with the single exception where, by necessary implication, the duties cannot be discharged without the exercise of such a power.'

To the same effect see Brown v. Parker, 7 Allen, 337; Exchange Bank v. Thrower, 118 Ga. 433, 45 S.E. 316. There is no essential distinction in this respect between the power to borrow money upon negotiable instruments and the power to borrow money upon a credit manifested by nonnegotiable obligations. It is an unusual and extraordinary authority. It is not commonly incident to the relation of principal and agent. The nature and extent of the results to the principal might be as disastrous in the one case as in the other. The substance is the borrowing of money upon the principal's responsibility. The kind of pledge which is given for the money borrowed is incidental to the main matter. The burden imposed upon the principal is no different in kind nor greater in its extent when a negotiable promissory note is given by the agent than when a nonnegotiable agreement to repay the money borrowed is given. In Warren v. Pazolt, 203 Mass. 328, 349, 89 N.E. 381, it was held that trustees in whom was vested the legal title to property and the duty of its management had not by inference the right to borrow money. A mere agent without express authorization can have no such power. Jacobs v. Morris, [1902] 1 Ch. 816; Bickford v. Menier, 107 N.Y. 490, 14 N.E. 438; Spooner v. Thompson, 48 Vt. 259.

The rule that a principal is held for acts done by the agent within the apparent scope of his authority is not in conflict with this proposition. The borrowing of money is not within the apparent scope of an agent's authority unless directly granted or indispensable to the execution of the power actually conferred or approved by a long course of dealings of such nature as inevitably to have been brought home to the knowledge of the principal. See Ashley v. Dowling, 203 Mass. 311, 319, 89 N.E. 434, 133 Am. St. Rep. 296.

The facts in the case at bar are that the defendant appointed Edward Dugan her attorney in fact by an instrument which authorized him----

'to sell, take charge of, and control any and all real estate and rights in real estate now or hereafter owned by me; to care for, and manage the same; to execute, acknowledge and deliver any and all deeds, or other instruments in writing which may at any time become necessary or advisable to convey the title thereof; to collect the interest and principal of any mortgage now or hereafter held by me, and in case of default to make an entry of possession, and to foreclose the same by sale or otherwise; to give deeds and make conveyances under said foreclosure; to compromise claims arising out of said mortgages or said sale; to discharge, assign, and partially release any mortgage; to effect any insurance necessary or proper to protect any property belonging to me; to pay all taxes, and other assessments; and in general to do every act and thing concerning the premises, which I might myself do if personally present. It is understood...