Mott v. Hicks , 1 Cow. 513 ( 1823 )

Woodworth, J.

It is very clear that Hicks was not liable in his individual capacity, as maker of the note. The case is distinguishable from Taft v. Brewster and others, (9 John. 334.) There the defendants acknowledged themselves bound, by the description of “ Trustees of the Baptist Society of the town of RichfieldThe Court considered it a mere descriptio personarían ; and that the defendants were individually liable. By the note in this case, “ the; president and directors promise to pay,” subscribed by the defendant, as “ president.” It is evident, here was no persona^ engagement, nor was any such intended. The plaintiff and Horsefield were intimately acquainted with the whole transaction. The endorsement of the former was obtained, for the purpose of giving credit to the note, not on account of the defendant’s personal responsibility being questionable, but because the company were involved, and. in doubtful credit. It cannot therefore be permitted to the plaintiff, or Horsefield, to call on the defendant in his individual capacity. If he is liable, it must be on the collateral undertaking set out in the special counts. Whether the Woodstock Glass Company were bound by the note, cannot be decided merely by the want of a seal, for a corporation may- make a valid contract not under, seal. (12 John. 231.)

In 7 Cranch, 299, (Bank of Columbia v. Patterson,) the question whether a corporation could make a contract legally binding, except under its seal, was fully examined. It was considered as sound law, that wherever a corporation is acting within the scope of the legitimate purposes of its institution, all parol contracts, made by its authorized agents, are express promises by the corporation ; and all duties imposed on them by law, and all benefits conferred at their request, raise implied promises, for the enforcement of which an action may well lie. This Court, on several occasions, have taken the same ground. Although the particular cases may not have required them to carry the dóctrine to the same extent, they have nevertheless considered the law correctly settled by the Supreme Court of the United States. (12 John. 227, Danforth v. Schoharie Turnpike Company. 14 John. 118,Dun v. Rector of St. Andrews’ Church.) The gre.at convenience of such a rule, indeed the necessity, in some cases, to prevent a failure of justice, will not be doubted. Modern decisions (although it may have been anciently held otherwise) warrant a relaxation of such technical strictness, not answering any salutary purpose. The note declared on was given for a dejaand against the company, for supplies of wood : the de-< fendant was president and treasurer : Horsefield was agent: they concurred iij giving it: it was given for the benefit of the corporation by their authorized agents : the assent of the corporation is inferrible from such acts : they are within the principles laid down, and consequently binding. But admitting the corporation, were liable, it seems to me this will not decide, whether Horsefield was interested in the present suit: that will depend on the question of his liability to the plaintiff as endorser. If liable to him, he is certainly an interested witness ; for the effect of his testimony is to charge the defendant on a collateral undertaking, and create a fund for the payment of the note. If the p laintiff is satisfied from this source, Horsefield is discharged. The defendant could not, after payment, substitute himself in the place of the plaintiff, and call upon Horse-field ; for it will be remembered, that the recovery against him would be founded on the fact, that he had received funds which ought to be applied—this making him the debtor to that extent. No principle of law or equity could, in my view, sanction such a claim, if attempted tq be em forced.

The remaining inquiry is, whether the plaintiff could sustain an action on this note against Horsefield as endorser ? I incline to think he could not. As to personal liability to the plaintiff on the note, I apprehend he stands on the same ground as the defendant. To Roe, the holder, or any other third person, he might be holden ; but here is a different state of facts. Horsefield acted as agent in this transaction, and Mott knew it: he also knew that the note was given by the company for their proper debt. Titus, the defendant’s witness, says the plaintiff and Horsefield called together on the defendant, and stated that they had agreed to give Roe a note of the company, and wished the defendant to sign it as president. The note was executed and endorsed by the plaintiff and Horsefield, and passed to Roe, who recovered the amount from the plaintiff. Jacob C. Mott testified, that he stated to the defendant, that he understood he was to put glass in the plaintiff’s hands, to secure the payment; of the note, and that agreement had been the plaintiff’s inducemenj- for endorsing the same : the defendant replied, there" was such an agreement. From the testimony of Titus, that ■ ^le plaintiff acted jointly with Horsejield, in obtaining the note, for the purpose of discharging the debt to Roe, it would seem to follow, that if Roe compelled the plaintiff), who was the second endorser, to pay the money, the plain,tiff must necessarily have a right of action against Horsejield, to contribute a just proportion, and consequently he must be an interested witness; for although the company were liable on the note, they might, or might not be responsible ; and a recovery against the defendant would, at least, be. gaining additional security, in which Horsejield had a decided interest. When, however, the evidence of Mott is considered, I think it evident, as between Horsejield and the plaintiff, the latter did not look to the former as a surety, or liable to him ; but that he trusted" solely to the agreement to deliver glass for his indemnity. The defendant admitted to the witness, Mott, that this was the inducement. This fact, connected with another, that Horsejield was agent of the company, and annexed the word agent to his signature, seems to warrant the conclusion that it was never intended he should be answerable to the plaintiff in any event; and that the designation of the character in which he endorsed, Was a declaration to the plaintiff, that he intended to incur no individual responsibility. The true question is, what was the meaning of the parties ? Horsejield professed to act in the capacity of agent. It was analagous to a special assignment to the endorsee, at his risk, as in Rice v. Stearns, (3 Mass. Rep. 225,) where it was hplden that the endorser was not liable to pay. Parsons, Chief Justice, observed, “ as the promisee had the property of the note, he might dispose of it on what terms he pleased, with the assent of the purchaser, and the latter cannot complain of the necessary effect of his own agreement. The endorser cannot be charged upon his own contract, decidedly against the express intent of it.” So here, Horsejield elected to endorse, in the character of agent. In Macbeath v. Haldermand, (1 D. & E. 181,) the words of the defendant’s letters were sufficient to have fendered him liable ; but it appeared that he acted as a commanding officer, and that the supplies were for the use bf the py-blick. It was determined that the action could not be maintained. Ashurst, Justice, said, the question mustbe, what was the meaning of the parties at the time of entering into the contract ? He said that a person acting in the capacity of an agent, may, undoubtedly, contract in such a manner as to make himself personally liable, and that brought it to the true question, namely, whether, from any thing that passed between the parties at the time, it was understood by them that the plaintiff was to rely upon the personal security of the defendant. The general principle is recognized in England, and in our own country, and cannot be questioned. (1 D. E. 674. 1 Cranch, 325. 8 Mass. Rep. 162, 3 Caines’ 69.) In 15 John. 1, (Rathhone v. Budlong,) it is said, there is no difference between the agent of an individual and of the government. The question in all cases is, to whom was the credit given ? (18 John. 407.)

In examining the question of Uorsefieldh interest, I have kept out of view every thing testified by himself; for when, he was objected to, he ought or ought not to have been rejected. If the former, and yet is admitted, as in this case, de bene esse, we cannot receive his testimony to remove the objection, which might otherwise be urged against it. But if, from the disclosures of other witnesses in the course of the trial, it appears that he stands indifferent, the Court will receive his testimony. It is on this ground I have considered the question.

If Horsejield was competent, I think the verdict is supported by the weight of testimony, and ought not to be disturbed.

But it is contended, that if Horsejield was not personally liable, then there is a fatal variance between the note declared on, and the note proved. This objection is nor well founded. The description of the note and the endorse-merit by Horsefield, may be considered as inducements td action. The liability of the defendant arises on the special contract made with the plaintiff, by which the former promised, if the latter would endorse, to deliver glass, for his indemnity. Whether Horsefield endorsed in his individual capacity, dr as agent for the company, does not affect that liability. In either character, it was a valid transfer of the rióte to the plaintiff.

fey the averment, that Horsefield endorsed, must be understood, that his interest passed to the plaintiff. This allegation is satisfied by the evidence at the trial. • I am of opinion that the plaintiff is entitled to judgment.

Sutherland', J.

ít is perfectly well settled, that if ¡¿ person undertake to contract &s agent for an individual or Corporation, arid contracts in á manner which is riot legally binding upon his principal, he is personally responsible (White v. Skinner, 13 John. Rep. 307. Randal v. Van Vechten and others, 19 id. 60. Taft v. Brewster and others, 9 id. 334. Tippets v. Walker, 4 Mass. Rep; 595. 7 T. R. 207. Thomas v. Bishop, Cas. Temp. Hard. 1. 3 John. Cas. 70.) And the agent, when sued uptinsuch a contract, Can exonerate hiniself frdm personal liability, only by shewing his authority to bind those for vidiorn h'é has Undertaken to act. It is not for the plaintiff to shew, that he had not Authority. The defendant must show affirmatively, that he had. But as the authority of the defendant, to" act for the company on this occasion, was riot questioned at the trial, we are now,' perhaps, bound to presume it.

If the defendant was instructed or authorized by the company to make the note in question, then there is no doubt that they are liable to the plaintiff for the amount which he has paid ; and if the company are liable, the defendant is not. It is either the note of the company, or of Whitehead Hicks. It Cánnot be both.

The ancient technical doctrine, that a corporation could not contract, except under its corporate seal, is now exploded. There are a variety of cases in this Court, in which they have been held liable upon implied a's well as express promises. (Danforth v. Schoharie Turnpike Company, 12 John. 227. Dunn v. Rector of St. Andrews, 14 John. 118. Randal. v. Van Vechten and others, 19 John. 60.) In the case of The Bank of Columbia v. Patterson, (7 Cranch, 306,) Mr. Justice Story, in discussing this point, says, “ it would seem to be a sound rule of law, that where-ever a corporation is acting within the scope of the legitimate purposes of its institution, all parol contracts made by its authorized agents, are express promises of the corporation ; and all duties imposed on them by law, and all benefits conferred at their request, raise implied promises, for the enforcement of which an action may well lie.”

The Woodstock Glass Company, therefore, are clearly responsible to the plaintiff, either in an action upon the note itself, or in' an indebitatus assumpsit for money paid to their use. It seems to follow, that the defendant cannot be liable upon the note.

But the special agreement of the defendant to deliver to the plaintiff the first glass which he should receive from the company, as his indemnity against his endorsement, was exclusively personal; and if the making and breach of it were proved by competent testimony, there is no ground for disturbing the verdict.

This presents the question whether Israel Horsefield, the payee and endorser of the note, was a competent witness to prove that agreement.

It is contended by the defendant’s counsel, that Horsefield was directly and strongly interested in procuring a recovery by the plaintiff against the defendant, upon this collateral guaranty, because, if he failed to recover against him, he would resort to the witness upon his endorsement. And Hicks, not being liable upon the note as maker, the endorsee could not recover over from him. It might, perhaps, be sufficient to say, in reply to this argument, that the company would be liable to the endorser, if Hicks was not; and although it may be inferred from the case, that the company were not in very good credit, it does not appear that they were insolvent. But this question is susceptible of another and more conclusive answer. The plaintiff could not recover against Horsefield, as endorser of this note. Whatever doubt ma/ once ¡jave heen entertained upon the subject, it is now well-settled, that an endorser may make a restrictive endorsement. He may limit the' payment to a particular person. (Burr. 1226. Anchor v. The Bank of England, Doug. 637. Chitty on Bills, 151-2.) He may exempt himself from all liability as endorser, without affecting the negotiability of the note', by specially staling in the endorsement, that it is taken at the risk of the endorsee.- (Rice v. Stearns, 3 Mass. Rep. 225.) That the endorser is not in any event to be liable'to pay the note, (Russell v. Ball, 2 John. Rep. 50.) That it is taken without recourse to the endorser, (Wilson v. Codman’s Executor, 3 Cranch, 193.) In Rice v. Stearns, the endorsement was in these words-: “ For value received, I order the contents of this note to be paid to A. B. at his ozon risk.” The suit was against the makers of the note, and the endorser was offered as a witness to prove their hand writing, and other facts showing their liability. He was objected-to on the ground of interest.- Ch. J. Parsons, in deliverving the opinion of the Court, says.,. “ Upon consideration, we are of opinion, that the promisee, endorsing the note under this express stipulation, is not eventually holden to pay the note, if the maker should not. As- the promisee had the property of the note, he might dispose of it on what terms he pleased, with the-assent of the purchaser, and the latter cannot complain of the necessary effect of his own agreement ;■ and the endorser cannot be charged upon his own contract, directly against the express intent of it. The- endorser, therefore, had no interest in the event of the suit, and was a' competent witness.” The endorsement of a note creates a new .contract between the parties, and it requires no reasoning to show,.that if the endorser can exempt himself from- all liability by á special endorsement, he can make that liability depend* upon a- particular contingency, or restrict it to a particular character, or fund. A bill of exchange, or promissory note,: must, as between the drawer and acceptor of the one, and-the maker and payee of the other, be absolute and payable At all events ; notout of any particular fund, or dependent upon any contingency. But when such an instrument 1» ©nee made, the subsequent parties to it may attach such condition .to its transfer as they may think proper. (Chitty on Bills, 140.)

Was Horsefield?s endorsement upon this note conditional or absolute ? There can be no doubt, that it was not the • intention of the parties, that either Hicks or Horsefield should be individually liable upon the note. And this is apparent upon the face of it. It is drawn in the name of The president and directors of the Woodstock Glass Company, signed by Hicks as president, and endorsed by Horsefield as agent, carrying, upon the face of it, strong, if not conclusive evidence, that it was a company transaction, and that Hicks and Horsefield acted in their official characters only. It is not necessary for us to determine whether a bona fide holder of this note, without notice of the original transaction, could recover upon it against the endorser or not $ though I should be strongly of the opinion that he could not, as enough appears upon the note to put him upon inquiry. But the plaintiff, with a full knowledge of all the facts, most clearly cannot recover .against Horsefield in his individual character, admitting the company to be bound by the note. Whether, if the contract was not binding upon the company, Horefield would be personally responsible (as I have already shown Hicks would,) it is not necessary to discuss. I am, therefore, of opinion, that Horsefield was a disinterested witness, and was properly admitted by the Judge to prove the guaranty of the defendant,

There is no force in the objection, that if Horsefield is not personally responsible as endorser, there is a variance between the note declared upon and that given in evidence. In the count upon the guaranty, upon which the plaintiff must recover, the note is stated merely by way of" inducement to, and as explanatory of the special agreement, It is not the contract declared upon. It is mere matter of evidence, and the question of variance cannot arise,

The plaintiff is entitled to repover, not only the amount pi the note, but also the damages and costs sustained in consequence of the suit against him. The defendant unddrtook to ¡¡n¿emn¡fy as far as the glass which he should receive would go. The evidence justifies the belief, that the §lass receive(l by him exceeded in value the recovery against the defendant.

Upon the whole case, therefore, I am of opinion,

1. That the note in question is binding upon The Woodstock Glass Company, and that the defendant, therefore, is not personally responsible upon it.

2. That he is responsible upon his guaranty, and that Horsejield, the endorser, was a competent witness to prove the special agreement.