Monticello Bank v. Bostwick

71 F. 641, 1896 U.S. App. LEXIS 2490

• Court: U.S. Circuit Court for the District of Nebraska
• Decided: January 7, 1896
• Status: Published

Opinion

SHIRAS, District Judge.

Counsel for the adversary parties in this case are agreed upon the general proposition that in sales of personal property there is an implied warranty of title upon part of the vendor, and that this implied warranty covers cases of sales of . notes or other commercial paper wherein it appears that the names attached to the paper are not genuine, but are false and forged. In other words, one who offers for sale and sells commercial paper, purporting to be the obligation of A., is held to warrant the genu- ' ineness of the paper, and, if it proves that the paper, though upon its face it appears to be what it purports to be, is not such in fact, !but in truth is false and forged, the vendor is liable to the pur- ■ chaser, although he may have acted in perfect good faith. The ¡ question upon which the parties disagree in this case is whether the 1 obligation created by this implied warranty can be enforced against :nny one except the one in whose interest the sale was in fact made, , and who received the consideration price paid by the purchaser. On part of the plaintiff the rule is claimed to be “that, where a person, in executing a contract, describes himself as agent, without disclos’ing his principal, the contract becomes the personal obligation of the maker, and no one else”; and, further, that an agent, auctioneer, or brokér who deals in his own name without disclosing the name of his principal will be bound, not only by any express contract he may . make, but also by all the contracts which the law implies from the circumstances; and in support of these propositions counsel cite and rely upon the cases of Wing v. Glick, 56 Iowa, 473, 9 N. W. 384; Insurance Co. v. Stratton, 59 Iowa, 697, 13 N. W. 763; Dumont v. Williamson, 18 Ohio St. 515; Merriam v. Wolcott, 3 Allen, 258; Canal Bank v. Bank of Albany, 1 Hill, 287; Mills v. Hunt, 20 Wend. 431; Hamlin v. Abell (Mo. Sup.) 25 S. W. 516. It is further claimed that if the agent sells in his own name it is immaterial whether he discloses his principal or not, upon the theory that evidence is not admissible to discharge an undisclosed principal. I shall not attempt to dismiss the several authorities cited by counsel for the respective parties, nor to reconcile the real or apparent diversity found therein, for, in my judgment, thé -general rules of law applicable to this case are to be found in the decisions of the supreme court of the United States. Thus in Whitney v. Wyman, 101 U. S. 392, it is said:

“Where the question of agency in making a'Sontract arises, there is a broad line of distinction between instruments under seal and stipulations in writing not under seal, or by parol. In the former e&se the contract must be in the name of the principal, must be under seal, stjfcl must purport to be his deed, and not the deed of the agent covenanting for him. Stanton v. Camp, 4 Barb. 274. In the latter eases the question is always one of intent: and the court, being antramineled by any other consideration, is bound to give it effect. As the meaning of the lawmaker is the law, so the meaning of the contracting parties is the agreement. Words are merely the symbols they employ to manifest their purpose that it may he carried info execution. If the contract be unsealed, and the meaning clear, it matters not how it is phrased, nor how it is signed, whether by tbe agent for the principal or with the name of the principal by the agent or otherwise. The intent developed is alone material, and when that is ascertained it is conclusive. Where the principal is disclosed, and the „ agent is known to be acting as sneh, the latter cannot be made personally liable unless he agreed to bo so.”

To the same effect is the ruling in Post v. Pearson, 108 U. S. 418, 2 Sup. Ct. 799.

In Metcalf v. Williams, 104 U. S. 93-98, after a full discussion of a number of authorities, the court held that:

“The ordinary rule undoubtedly is, that if a person merely adds to the signature of his name the word ‘agent,’ ‘trustee,’ ‘treasurer,’ etc., without disclosing his principal, he is personally bound. The appendix is regarded as a mere doscriptio persona;. It does not of itself make third persons chargeable with notice of any representative relation of the signer. But if he be in feet a mere agent, trustee, or officer of some principal, and is in the habit of expressing' in that way his' representative character in his dealings with a particular party, who recognizes him in that character, it would be contrary to justice and truth to construe the documents thus made ami used as his personal obligations, contrary to the intent of the parties.”

<ls the contract in the case now before the court is not under seal, it is permissible, under the rules recognized in these decisions of the supreme court, to show by evidence outside the letters passing between the parties the real relation of the parties to the transaction, and the course of dealing between plaintiff and the defendants, in order fo ascertain what obligations, either express or implied, were created on part of the defendants to the plaintiff with relation to she forged paper in question. The facts, as found by the jury, show that the business of the defendants was that of bill brokers; th<u in that capacity they had dealings with the plaintiff bank previous fo the sale of the forged note; that they were not the owners of the forged note, but sold it on behalf of W. W. Bilger; that the defendants, beyond their commission of $30, received no benefit from the sale, the money received being paid over to W. W. Bilger. When, therefore, the defendants, in the usual course of their business, with which the plaintiff must have had a reasonable familiarity, addressed to the plaintiff bank the written communication daied Juno 24, 1892, headed: “Bostwick & Mxon, Brokers, Omaha, Bonds, Warrants, Bank Stocks, and Commercial Paper,”— the only reasonable inference is that the plaintiff dealt with them in their capacity as brokers, and there is nothing in this communication, viewed in the light of the facts known to the plaintiff, which would justify the bank in assuming that the paper offered was the property of the brokers. The paper offered was stated to be the joint note of seven persons, naming them, payable to W. W. Bilger, and indorsed by him. The note did not have upon it the names of the defendants in any capacity, either as makers, payees, indorsers, or guarantors. There was nothing upon the note, therefore, upon ;whicli to base an assumption that tbe defendants had‘any interest in or ownership of the note, and there is nothing in the' written proposition of June 24, 1892, which so states, but, on the contrary, the form of that communication tends strongly to show' that in dealing with the paper the defendants acted only in the capacity of brokers, and the jury have found such to be the fact.

Can it be fairly said that the defendants did not disclose the name of their principal, so that the plaintiff may invoke the rule that auctioneers, brokers, and others acting in fact in a representative capacity, but on behalf of an undisclosed principal, may be held bound by the contracts they have entered into in favor of third parties who have dealt with them not knowing who the real party in interest might be? What was offered for sale by the defendants in -their capacity as brokers was a promissory note, payable to the order of W. W. Bilger, and by him indorsed. When this note was thus offered for sale to the plaintiff bank, by parties to the bank known to be engaged in the business of negotiating the sale of commercial' paper for third parties, what other inference could be fairly drawn by the bank than that the paper so offered for sale was the property of the payee named in the note? If bill brokers offer for sale paper payable to A. B., and in fact owned by him, can it .be said that they are acting for an undisclosed principal? On the face of the paper A. B. would appear to be the owner, and such would be the reasonable conclusion to be declared from the facts thus made to appear. In the case, at bar, when the paper was offered for sale to the bank, and when it was delivered after the contract of purchase had been closed, it is clear that the bank must have known that it took title to the note as the indorsee of W. W. Bilger, the payee. Knowing from whom it thus took title, there is nothing in the facts that will sustain the contention that the bank supposed or had the right to infer that the defendants were the owners of the note. Their names do not appear on the note. The communica..tion offering the note for sale showed upon its face that the defendants were offering the note in the usual way of business as note brokers, and hence it fairly appears, in the language of the supreme court in Whitney v. Wyman, supra, that the principal was disclosed, and the defendants were known to be acting as agents, and hence cannot be made personally liable unless they had agreed to be so held. As the defendants did not, in fact, retain the money paid by the bank, but paid it over, in due course of business, to W. W. Bilger, there is no ground for implying a, promise or obligation to repay the money upon the theory that they had obtained from the bank a sum of money under circumstances which jnade it inequitable for them to retain it; and therefore the case stands as one in which, to entitle the bank to recover, it must appear that the defendants had agreed to be bound personally, and, as it does not appear that such an agreement was made by them, it must be held that, upon the facts as'found by the jury, the law is with the defendants, and therefore the verdict and judgment must .be in their favor.