National Shoe & Leather Bank's Appeal from Commissioners

12 A. 646, 55 Conn. 469, 1887 Conn. LEXIS 63

• Court: Supreme Court of Connecticut
• Decided: October 19, 1887
• Status: Published

Opinion

Loomis, J.

The appellant bank presented to the commissioners on the assigned estate of Brown & Brothers, an insolvent corporation, a claim aggregating the sum of twenty-nine thousand nine hundred dollars, represented originally by three notes, one dated January 15th, 1884, for $2,400, one dated March 15th, 1884, for $12,500, and one dated March 27th, 1884, for $15,000, all signed by Wm. H. Brown, and payable to H. N. Knapp, cashier of the appellant bank, four months from date, and all indorsed “ Wm. H. Brown, Agent,” and discounted at the appellant bank and the avails appropriated to pay the legitimate debts and obligations of Brown & Brothers. The commissioners rejected the claim and the bank appealed to the Superior Court, where the claim was allowed in full, and now the trustees of Brown & Brothers bring the case to this court to revise the rulings of the Superior Court.

At the outset of the discussion before this court the counsel for the appellees made a vigorous effort to restrict the inquiry simply to the question whether Brown & Brothers could be held liable as makers, indorsers or guarantors of the notes in question, irrespective of the fact that they received the proceeds; and many of the errors assigned hiiige upon this idea. Had the claim been so restricted in its presentation and prosecution there would be obvious difficulties in the way of sustaining the judgment of the Superior Court, for one must be a party to a note to be made liable as maker or indorser, and the face of the notes in question does not indicate that they had any relation to Brown & Brothers, and if the indorsement “ Wm. H. Brown, Agent,” could be regarded as the indorsement of Brown & Brothers, it would still be a mere contingent liability, without any foundation being laid to make that liability absolute.

We think, however, that the record does not sustain the claim that only the notes themselves were presented and considered before the commissioners. The form of the presentationof the claim is not explicitly stated. The report of the commissioners only shows the gross amount presented, without a reference to any notes. The reasons of appeal from the doings of the commissioners, after referring to the three notes presented to the commissioners as representing the claim of the appellant amounting in the aggregate to the sum of $29,900, give this additional reason, “ that the consideration of all said notes was money loaned to Brown & Brothers and that the money so loaned was used by the corporation in conducting its business and for its benefit.” Now it is obvious from the record that this last mentioned reason was one of the issues of fact before the trial court and much evidence was received on both sides bearing on this point without any objection on the part of the appellees based on the restricted nature of the claim presented, and this issue as to the consideration and the application of the proceeds of the notes was distinctly found against the appellees. We think therefore there is no foundation for this objection ; and what we have said in this connection is a sufficient answer to all the arguments and all the assigned errors which assume or imply that the claim of the appellant was based solely on the technical liability of Brown & Brothers as makers, indorsers or guarantors of the notes referred to.

In regard to most of the remaining objections, we think the appellees have been concluded by the finding of facts.

The contention in the court below (as indeed in this court! centered around three propositions of fact, namely, that Wm. H. Brown was the financial agent of Brown & Brothers in New York at the times these loans were made by the bank; that under his general agency he had authority to bind the Brown & Brothers corporation by procuring accommodation loans on its credit; and that the entire proceeds of the loans in question went to pay the debts and obligations of the corporation.

Now a reference to the finding will show that every one of these propositions is affirmed in the most direct and explicit language. This result carries the case upon its merits entirely beyond our province for review, for it will not suffice to assign for error that the court ought not to have so found the propositions of fact, and this it will be seen characterizes several of the assignments. Some intervening error of law must be shown which led to an erroneous result. Does any such error appear ?

It was claimed in the argument, (but is not assigned for error and therefore it does not require notice,) that the avails of these notes were used in copper speculations by Wm. H. Brown, and therefore his acts, though for the benefit of the corporation, were ultra vires.

It is not found that the avails of the notes in question were so used, but it is found that “ for many years before the failure of the corporation Wm. H. Brown had been in the habit, in connection with the business of buying supplies for immediate use at Waterbury, of obtaining loans in the name and for the benefit of the corporation, for quantitities of copper, spelter and other supplies, in excess of the immediate necessities of the corporation, and for the purpose of obtaining the benefit of any rise in the price thereof that might occur.” Now if the inference was legitimate that the avails of the notes in question were included, there is nothing ultra vires in the act. The corporation was organized for the manufacture of copper and brass goods. It would be a strange restriction if it could not invest in the raw material it must use, in excess of its immediate necessities, or that it could not buy largely when the material was low in price with a view of having the benefit of it when it should rise. There is nothing in the finding that intimates that the purchases of the copper were not made for ultimate use or that they were made merely to sell again in the market.

There are two assignments of error which relate to the ruling of the court as to the admission of evidence. The first is stated in the finding as follows : “ Against the objection and exception of the appellees, Wm. H. Brown testified that about the year 1872, with the knowledge of the officers of the corporation, and with the acquiescence and in the presence of said Philo Brown, Wm. H. Brown opened accounts with the Loan & Indemnity Company, a banking corporation in New York city, as follows: One account with ‘ Wm. H. Brown, Agent,’ and the other with ‘Brown & Bros., Wm. H. Brown, Secretary,’ and the signatures of Philo and Wm. H. Brown, were then left at the bank. The records of the corporation do not show Wm. H. Brown’s appointment as secretary until January, 1874. I find the facts as above testified to by said Brown, except as to the date of beginning the account.”

The facts above testified to were the only ones to which objection was made. The court proceeded without objection to hear evidence, upon which it was further found that “ it was confusing to have the same bank account for the business transactions at Waterbury and New York city, and the two accounts were opened as matter of convenience in transacting the business of the corporation. The account under the name of Wm. H. Brown, Agent, was the one used in the conduct of the New York business, and the account under the name of Brown & Bros, was used in connection with the business at Waterbury. Wm. H. Brown had entire and exclusive control over the account of Wm. H. Brown, Agent. The Loan & Indemnity Company went out of business in 1875, when the accounts were transferred to the National Shoe & Leather Bank, the appellant in this case. The accounts were opened in the National Shoe & Leather Bank in the same forms as in the Loan & Indemnity Company. Philo Brown and Wm. H. Brown left their signatures at the bank, and the signature of Van Dusen was sent or left there. Philo Brown had full knowledge of this transfer of the accounts to the Shoe & Leather Bank, and the accounts were so kept with his consent thereafter.”

By way of criticism it may not be amiss to say that the error as assigned, contrary to the record, applies the objection to evidence of other connecting facts as well as to the one first mentioned. It also makes the alleged inadmissibility of the evidence depend wholly on the fact that it did not appear that the appellant had knowledge of the facts so proved, 'a point not raised at the trial; if it had been th.e evidence might have been supplied.

But we will consider the objection as it stands. In the first place, we do not see how the evidence could have prejudiced the appellees, for if it were stricken out we would have precisely the same mode and course of dealing by the same person and for the same objects continued for nine years with the appellant bank. But the evidence was admissible to complete the continuous history of Wm. H. Brown’s financial transactions for the corporation in New York, to explain the origin and mode of keeping the accounts and of procuring loans for the benefit of the corporation, and to show knowledge of his doings on the part of the directors.

It is a mistake to assume, as is done in the assignment of error we are considering, that knowledge on the part of the appellant was a prerequisite to the admissibility of the evidence in question. Had the appellant’s claim been based solely upon an appearance of authority upon which it relied, where the circumstances would estop the corporation, knowledge might be essential. But the parties were at issue upon a question of agency. It was immaterial whether or not the bank had any proof that Brown was agent of this corporation when they furnished the money. It will suffice if they first discover and produce it on the trial of their claim. A general agency is established and defined not merely by the authority which the agent actually receives from his principal, but by that which the latter allows the former habitually to assume and exercise. Now this evidence that Wm. H. Brown was allowed to act during the many years covered by his transactions with the appellant bank and its immediate predecessor with the knowledge and acquiescence of the directors of Brown & Brothers, tended strongly to establish the fact found by the court, that he was the general and exclusive financial agent of the corporation in New York.

The remaining claim as to the admission of evidence is stated as follows in the finding: “The appellees, for the purpose of showing a reason why the account in the name of Wm. H. Brown, Agent, was opened in that form at the bank, offered evidence that Wm. H. Brown became insolvent about the year 1878 or 1874, and was thereafter unable to hold property in his own name until his father’s death in 1880which the court excluded.

We think this would have raised an issue entirely outside the merits of the controversy. It was incumbent upon the bank to show that it loaned the money to Brown & Brothers and not .to Wm. II. Brown individually or as agent of anybody else, and whether he was a bankrupt or not was of course immaterial to this question. The only possible pertinency of the fact was in its furnishing a reason why he kept the account in this way. But not only is the fact found that the two accounts were kept in this way from the outset as a matter of convenience, and to save the embarrassment that would grow out of their keeping only one account for the two branches of the business, and that discounts for Brown & Brothers were constantly carried to this account, but no evidence whatever was presented, or proposed to be offered, to show that his insolvency operated as a motive to the keeping of the account in this way, or was operative in determining his conduct in other like cases. Wm. H. Brown was a witness on the trial and could easily have been inquired of upon the point. As the matter stood when that evidence was passed upon by the court, nothing was offered but the mere fact of his insolvency. The court could not presume that other evidence would be offered to make it relevant. That fact standing alone could have no pertinency.

We do not think the remaining objection, that the bank by its conduct has estopped itself from making and enforcing its claim against the corporation, has any foundation to rest upon. The finding shows that there ivas no concealment by the bank of these notes from the Brown & Brothers corporation or its officers. At a meeting of the directors on the 5th of May, 1884, Wm. H. Brown called attention to the three notes in question, and on the next day Van Dusen and Chatfield called at the appellant bank and Avere then shown the three notes in question and the maimer in which they were signed. The court expressly finds that “the officers and directors of Brown & Brothers had, when the contract was made with Farrel, knowledge of the’existence of the notes in question, but failed to inform him of their existence; but they did not regard them as obligations of the corporation.” It was not then the conduct of the bank that misled the directors, but their own erroneous views of the law.

Whether or not Farrel has any grievance as against the appellant it is not our province to determine in the present case.

There was no error in the judgment complained of.

In this opinion the other judges concurred.