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all, it was only in paying Bailey before Hie day of muster.
Their action does not show that Bailey was improperly en-
listed ; it completely sets aside anp such inference.

2. If Bailey could have recovered on the note, Ladd cer-
tainly can who is a holder for value. Ladd had a right to
presume that if the town had given the note, it was valid and
would not be repudiated. He was a resident of the town at
the time the votes were passed, and knew what they were,
and had no reason to suppose that the committee had acted
contrary to their authority. Commissioners of Knox County
V. Aspinwallj 2f Howard, 539.

8. But the maker of a negotiable note cannot attack it in
tlie possession of a third party having no knowledge of any
infirmities attaching to it, if there is nothing to awaken sus-
picion. 3 Kent's Com., 78 ; 1 Parsons on Notes & Bills, 274,
279 ; Swift v. Tyson^l Pet., 1. And the presumption of law is
that the holder took it in good faith. Case v. Mechanics Bank-
ing Association, 4 N. York, 166. The record finds that Ladd
" had no knowledge but that Bailey had been duly mustered
into the United States service." In respect to Ladd, there-
fore, there was a good consideration for the original note, and
whether the selectmen had authority to give it to Bailey as
soon as they did or not, does not affect his right to recover.
For if Bailey was mustered into the United States service,
there is no question whatever that whether he performed any
military service or not he could recover. Terrell v. Town of
Colebrooky 35 Conn., 188. But if there was no consideration
for the note, yet that is no defence against Ladd, who took
it, as the court substantially finds, without any notice of a
want of consideration. 1 Parsons on Notes & Bills, 279, 188,
note ff. Besides, Ladd did not take the note till after the 10th

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MAfeCH TERM, 1870. 69

Laidd V. Town of Franklin.

of November, 1862, at which time there was no infirmity at-
taching to it, even in the hands of Bailey. And in respect
to the refusal of the town to pay the note, Ladd had no such
notice before purchase as would bind him.

4. The note was not overdue at the time Ladd purchased
it. Tomlinson Carriage Co. y, Kimella, 81 Conn,y 268; 1
Parsons on Notes & Bills, 264, note y, 375.

Phelps, J. To determine this case let us briefly recur to
the facts. The defendant, on the 26th day of July, 1862, in
legal meeting, voted to pay $50 from its treasury to such
resident volunteers as should thereafter, before the 1st day of
September following, enlist in the service of the United States,
and also to those who had previously enlisted since the 14th
day of the said July ; such bounty to be paid when such re-
cruits should be mustered into the United States service and
accredited to the tovm ; and the selectmen were appointed a
committee to pay to the volunteer or his order such bounty
when the foregoing conditions were complied with, and were
authorized to borrow money if necessary to pay the same.

At another meeting duly warned and legally held on the
23d of August, 1862, it also voted to pay each resident volun-
teer from the town who should enlist for the term of nine
months before the first day of said September, $150 in addi-
tion to the $50 previously offered, and the selectmen were
directed to pay this bounty " on and after such volunteers were
mustered into the service of the United States"; and they were
required to use the utmost diligence in filling the quota then
assigned to the town.

Pursuant to the votes passed at the last mentioned meet-
ing Ezra B. Bailey, a resident of the town of Franklin, on or
about the 5th of September, 1862, volunteered for nine
months, and was examined, accepted and sworn on the 25th
of that month, but in consequence of sickness was never
mustered into the United States service and never accredited
tOy or applied upon the quota of the town. The regiment
in which he volunteered was duly mustered into service on
the 10th of the subsequent November. The note in suit

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Ladd V. Town of Franklin.

was dated on the 26th of September, and the consideration
expressed on its face is for " nine months volunteer militia
service." It is in form negotiable, but was made so by one
of the selectmen after the others had signed it, and in
their absence and without their knowledge or authority or
that of the town, but the fact of such alteration was subse-
quently communicated by the person by whom it was made
to the other selectmen, who made no objection. On the same
day the selectmen paid Bailey $35 in money, which together
with the note made the entire ?um voted by the town at their
meeting on the 23d of August. Between February first and
October first 1868 the plaintiflF purchased the note from Bai-
ley, and paid him therefor its full value. The plaintiff then
had knowledge of all the facts in relation to Bailey's service,
excepting that he did not know he had not been duly mus-
tered into the United States service. He had heard that the
selectmen questioned the liability of the town to pay the note,
but had no actual knowledge that they declined payment
until he saw a published notice to that effect dated October
12th, 1863, which cautioned all persons against purchasing
the note, and stated that payment of it had been stopped
because the service by Bailey, specified as the consideration
for the note, had not been performed. The court found that
neither Bailey nor the plaintiff knew that the former had
not been applied towards the quota of the town, unless such
knowledge is properly inferable from the time and manner
of Bailey's service ; and that the plaintiff took the note in
good faith excepting as the contrary is indicated by the other
acts found. It is conceded that the plaintiff was a resident
of the town of Franklin at the time of the passage of the
votes, and had knowledge of them.

In view of the character of the votes, and of the facts
found and admitted, and the law as applicable to them, we
are to say whether the Sujjerior Court properly found the
issue in favor of the plaintiff.

It is claimed in support of the motion for a new trial, that
the selectmen were the special agents of the town, and ex-
ceeded their authority in giving the note in suit. We think

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MARCH TERM, 1870. 61

Ladd V. Town of Franklin.

a fair construction of the votes passed by the defendant justi-
fies this claim. They "were appointed and authorized to exe-
cute the single and specific purpose of filling the then pending
quota ot the town, and of paying the volunteers when they
should be mustered into the service of the United States. So
far as the authority to make payment was concerned it was
carefully and expressly limited as to the time when it might
be performed. The object of the defendant was to fill its
quota, and its motive for procuring volunteer enlistments was
to secure the application of the recruits upon it. This could
not be done until they were actually mustered in, and hence
the obvious purpose and propriety of the defendant's action
in this respect. The circumstances are such as to exclude
all possible doubt of its intention, even if it had not been
unequivocally expressed in the language which it used. The
fact that the selectmen so luidcrstood it is shown by their
subsequent conduct in attempting to discharge the defendant
from liability upon it. The notice which they published was
in effoct an admission that they had prematurely and unau-
thorizedly executed the note.

If Bailey had been actually mustered in he would have
been accredited to the defendant and counted towards its
quota, even though he had immediately deserted and never
rendered any part ol the service which he promised to per-
form. Terrdl v. Town of Cold>rook, 36 Conn., 188. The
pivot of the whole matter was the being mustered into the
service of the United States. It this had been done every
requisite essential to the defendant would have been com-
plied with, and not having been done, the consideration
failed and the entire anterior proceedings were practically an
utter nullity.

frhe duty of filling quotas by towns was special and extra-
orSTnary, and grew out of the exigencies created by the
existence of the war. The discharge of this duty appertained
to the towns in their corporate and aggregate capacity, and
not to their selectmen as their ordinary general agents, except
as they were specially directed or empowe red r^ Even the
towns tliemselves had no authority to pay bounties until it

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Ladd V. Town of Franklin.

was expressly conferred upon them by the General Assembly
in 1862. It was a peculiar power, to be strictly exercised,
and one which the selectmen could not legally perform except
within the limits and according to the terms distinctly au-
thorized by the towns. The defendant evidently understood
this to be so, and acted intelligently upon that understanding.
It was precise in the declaration of the terms of its authority,
and careful not to hold out its agents as possessing any power
except what was expressly contained in its public and recorded
votes. The scope of the agency was restricted to the dis-
charge of a particular duty, and, so far as the act of making
payment was concerned, to a certain time ; and it is difficult
to conceive how language could have been more aptly em-
ployed to create a special, as distinguished from a general
agency. Story on Agency, §§ 73, 126, 127, 128, and notes ;
Chitty on Contracts, 216, note ; 2 Kent's Com., 620 to 622 and
notes ; Thompson v. Stewart^ 3 Conn., 183 ; Keyes v. West-
ford, 17 Pick., 273 ; Delafield v. State of Illinois, 26 Wend.,
192 ; Seals v. Allen, 18 Johns., 363.

That a special agent cannot bind his principal by any act
in excess of his authority, and that persons dealing with such
an agent do so at their own risk and peril, and are bound to
examine and ascertain the precise extent of his authority,
are propositions too long and well settled to admit of contro-
versy, and their correctness is distinctly recognized in the
foregoing and numerous other authorities ; and this doctrine
is especially reasonable and pertinent where the delegation of
power is contained in public votes or other records or instru-
ments readily accessible, and where the party asserting the
claim against the defendant is one of its citizens and has full
knowledge of its votes.

I am satisfied there is another reason why the action of the
selectmen in giving the note was unwarranted and not bind-
ing on the defendant. The votes of the defendant simply
direct its selectmen to pay the authorized bounties. This
means payment in the usual and ordinary mode, throup:h the
medium of orders drawn on its treasurer. This is the only
regular and legal method of liquidating claims against a

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MARCH TEEM, 1870. 63

Ladd v. Town of Franklin.

towa, and is expressly recognized as such in our statutes.
General Statutes, page 104, sec. 45. The vote of the deferd-
ant with reference to the bounty of $50, a part of which
must necessarily have been included in the note, distinctly
directs tliat payment shall be made from its treasury, and
the select pien are authorized if necessary to borrow money
to meet the demand arising from the defendant's obligation
to discharge the particular claim. Tlio borrowing of money
by a town through its agents necessarily implies payment of
it into its treasury upon its receipt from the corporation or
person from whom it is obtained ; and there is nothing in the
circumstances with i-eference to the remaining $150 of the
bounty to justify the inference that the defendant expected or
designed that the disbursement of the requisite funds to meet
it should be made in any other manner than that prescribed
by statute and ordinarily practiced by towns, which is by
orders on their treasurer duly issued and regularly entered in
a book kept for the purpose. A departure from this practice
would tend to complication and confusion in the accounts of
t3wns, which ought to be simply and intelligibly kept, and
produce irregularities of a mischievous tendency.

The authorities in support of the point that a Special agent
cannot without express authority from his principal bind him
by a negotiable promissory note, are nearly uniform and
entirely decisive. Savage v. MiXy 9 N. Hamp., 2G8 ; JDenison
V. Tt/sorij 17 Verm., 550 ; Taber v. Cannon^ 8 Met., 458 ;
Paiffe V. Stone, 10 id., 160; Webber v. Williams College, 23
Pick., 302 ; Rossiter v. RossUer, 8 Wend., 404 ; Smith v. GHb-
son, 6 Blackf., 369 ; Martin v. Walton, 1 McCord, 16 ; David-
gnn V. Stanley, 2 Mann. & Gr., 721 ; Umerson v. Providence
Hat Mfg. Co,, 12 Mass., 237.

And this principle may well be held to .be particularly
applical)le to a case where the selectmen of a town, under a
special power not embracing the execution of negotiable notes,
after having signed a note not negotiable, without tlic knowl-
edge of their principal so alter it as to render it negotiable..

2. It is alfio clairaerl that the plaintiff is not a bond fide
indorsee of the note, and is therefore not entitled to recover.

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Ladd V, Town of Franklin.

That there was an entire failure of consideration between
the defendant as maker and Bailey as payee of the note,
cannot be questioned. The sole consideration of the note
was the rendition of military service which was never per-
formed. No action therefore could have been maintained by
him upon it, and the question is, whether it was negotiated
to and received by the plaintiff under such circumstances as
to give him a legal right to collect it from the defendant.

The earlier rule on the subject vitiated a negotiable instru-
ment in the hands of an indorsee, even though he paid value
for it before maturity, if he took it with knowledge of such
facts as were sufficient to reasonably excite suspicion in, and
put upon inquiry, a person of ordinary prudence. Hall v. BidCy
8 Conn., 336 ; Cone v. Baldwiny 12 Pick., 545, and other

The more modem and convenient doctrine is, that good
faith, rather than diligence, is made the standard byw^hich
the holder's right is determined ; and diligence, or the want
of it, are immaterial except so far as they legitimately tend
to establish or rebut the claim of a bond fide possession of
the paper. Goodman v. Rarvey^ 4 Adol. & Ell., 870 ; Uther
V. Rich^ 10 id , 784 ; FoBter v. Pearson^ 1 Cromp., Mees. &
Rose., 849 ; Arhouin v. Anderson, 1 Adol. & Ell., N. S., 498.

The finding of the court substantially is, that there was no
bad faith connected with the plaintiff *s reception of the .note
unless it is inferable from the facts foimd. From these facts,
and from others which are conceded, it appears that the
plaintiff resided in the town of Franklin and was a brother-
in-law of Bailey, and that he knew what the terms of the
votes passed by the defendant were. He also knew that the
note was predicated exclusively on the consideration of nine
months militarj service, no part of which had been or would
be performed. He took it several months after it was deliv-
ered to Bailey, and after the fact of the failure of considera-
tion was established, and when it appeared upon its face to
have been materially altered ; and he had heard that the
selectmen of the town questioned the liability of the town to
pay it.

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MARCH TERM, 1870. 66

Ladd V, Town of Franklin.

Upon the facts thus substantially found by the court I am
entirely unable to resist the conviction that the plaintiff
should be held, when he purchased the note, to have been fully
cognizant of all the material circumstances connected with
it, and to have reasonably apprehended that the integrity of
the transaction would be challenged, and that an attempt to
enforce its collection would be resisted on the grounds which
have been interposed.

That Bailey acted in bad faith in disposing of a note which
was worthless in his hands cannot well be doubted, and al-
though the case finds that the plaintiff paid value for it, the
circumstances are such as to excite the gravest suspicion that,
there was a collusive arrangement between Bailey and himself
that he should pay full value for it, and in that way clothe
the transaction with the appearance of good faith, when its
real character was entirely otherwise.

An honest man with knowledge of the facts ought not to-
have taken it, and a prudent one would certainly have de-
clined the risk. If the determination of this question was.
necessary for the purposes of the case, I think we might well
hold that the immediate parties to the negotiation of the note
should be left to such remedy or adjustment of the matter as*
between themselves, as should in their own view of the pro-
priety of their conduct be best adapted to the accomplish,
ment of that end.

A new trial should be granted.

LooMis, J. We prefer to rest the decision of this case
upon the ordinary principles of agency, without discussing
other questions suggested in the argument.

In order to recover, it must appear that the note in suit
was the note of the town of Franklin. To make it the note
of the town the selectmen who executed it must have had
sufficient authority from the town. In giving the note the
selectmen were not acting under any general powers confer-
red on them as selectmen, nor under any power to borrow
money, but as special agents in this particular matter, pursu-
ant to special instructions contained in the recorded votes of

Vol. XXXVII. — 9

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Ladd V. Town of FrftnUto.

the town ; and by tliose votes it appears that authority was
given to pay the bounty only when the soldier should be mus-
tered into the United States service and accredited to the
town ; and as Bailey never was so mustered into service or
accredited to the town, no payment of the bounty by prom-
issory note, or otherwise, could be lawfully made. The note,
therefore, cannot be the note of the town in tiie hands of
Bailey, the immediate party to the transaction. But is it to
be regarded as the note of the town in the hands of the
plaintiff, who was a purchaser for value before tlie note be-
came due ? We think not. The plaintiff had no right to
presume that the note in suit was given by the selectmen,
either under their general powers as selectmen, (if their gen-
eral powers were sufficient, which is doubtful,) or under the
special power given by the vote of the town to borrow money
to pay the bounties, because it appears upon the face of the
note that it was upon consideration of "nine months volun-
teer militia service,*' and it was clear that the selectmen
could have given the note only under some special authority,
and, as such special authority could be given only by a record-
ed vote of the town, the plaintiff stands fully notified of such
vote and of its terms. Such knowledge on the pait of the
plaintiff may not only be fairly inferred from the facts found
by the court, but was distinctly admitted in the brief of tlio
plaintiff's counsel.

The record also shows that the plaintiff knew that the
selectmen had questioned the liability of the town on the
note. K therefore the plaintiff, when he purchased the note,
had full knowledge of the limitation of authority in the
selectmen, contained in the votes of the town, and that the
liability of the town had been called in question, upon what
principle can he claim that the authority of tlie selectmen to
bind the town should bo extended in his favor beyond the
terms of those votes ? In certain exceptional cases the lia-
bility of the principal for the act of the agent may be extend-
ed in favor of innocent third parties beyond the authority
actually given, but this applies only when the third party is
ignorant that restarictionB have been imposed on the agent,

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MARCH TERM, 1870. 67

Ladd v.iPowa of Franklin.

and when them is an appearance of authority, for which the
principal is respcmsible, which operates to mislead the party
80 dealing with the agent ; but in the case now under consid-
eration the votes of tlie town show tlie exact authority given,
and they are so explicit that there is no room for enlarge-
ment by appearances.

^It was claimed in the argument for the plaintiff, that the
act of the selectmen in giving the note was an admission
binding upon the town that the soldier, to whom the note was
made payable, had been mustered into service, and the case
of Commissioners of Knox Cownty v. Aapinwall^ 21 Howard,
639, was cited in support of this claim. A careful compari-
son of that case with this we think will show that they are
not analogous in principle. The case cited, was a suit against
the Gonunissioners of Eaiox Goimty in the state of Indiana,
to recover, in favor of innocent holders, the amount due upon
certain coupons, originally attached to bonds issued by tiie
board of commissioners, payable to the Ohio and Mississippi
Railroad Company, or bearer, at the North River Bank, New
York. An act of the legislature directed the board to sub-
scribe to the stock of the railroad company, and to issue
bonds for the payment of the subscriptions, in the event that,
at an election to be held at a certain time in the county, pur-
suant to notice to be given by the sheriff of the county, a
majority of the votes should be cast in favor of such sub-

The defence was that the defendants, the board of commis-
sioners, possessed no authority to execute the bonds or cou-
pons in question, in consequence of an alleged omission, on
the part of the sheriff, in respect to the notices to be given
of the election at which a vote was to be taken for or against
a subscription to the stock of the railroad company and the
issue of bonds to pay for the same.

The chief inquiry was, whether the bonds and coupons in
question were executed and put in circulation by competent
and legal authority ; and this question depended upon another,
namely, who was to determine whether or not the election
had been properly held, and a majority of the votes of the
county cast in favor of the subscription ? .

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Ladd V. Town of Franklin.

The court held that it belonged to the board to determine.
Nelson, J., in giving the opinion said: "The right of the
board to act in an execution of the authority is placed on the
fact that a majority of the votes had been cast in favor of
the subscription ; and to have acted without first ascertaining
it would have been a clear violation of duty ; and the ascer-
taining it was necessarily left to the inquiry and judgment
of the board itself, as no other tribunal was provided for the
purpose. The board from its organization and general duties
was fit and competent to be the depository of this trust'*
Much stress was evidently placed upon the fact tliat the board
had by law very large general powers over the police and
fiscal concerns of the county, as well as special power by law
to subscribe for the stock and issue the bonds in question.
Nelson, J., states the general powers given to the board by
the statutes of Indiana as follows: ''The auditor of the
county is to act as its clerk, and the sheriff is to attend its
meetings and execute its orders. It has a common seal, and
copies of its proceedings, signed and sealed by the clerk, are
evidence in courts of justice. It has power to dispose of the
property of the coimty ; to adjust accounts against it ; to
raise revenue ; and examine accounts of disbursing officers ;
and an appeal lies from its decisions to the Circuit Court."

From the foregoing statement we see that the general
powers of the board over the affairs of the county, given by
the laws of Indiana, are much more extensive than the pow-
ers of selectmen over the affairs of a town in this state.
The board is organized with the incidents and powers of a
court. It is also a body corporate, and the suit in that case
was brought directly against it, as maker of the bonds and
coupons in suit. In addition to these general powers, we
see that it was constituted, by the laws of Indiana, a special
tribunal to subscribe for this stock, and to issue the bonds
and offer them for sale. It is true that the board was called
to act in behalf of the county, but it was also the agent of
the law in this matter, and, having a duty imposed upon it

Online LibraryConnecticut. Supreme Court of ErrorsConnecticut reports: containing cases argued and determined in ..., Volume 37 → online text (page 6 of 61)