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{z) This point was much considered in Melledge v. Boston Iron Co., 5 Cush. 158.
That was an action against the defendants on certain promissory notes, signed
"Horace Gray & Co." At the trial the judge instructed the jury, that, as the defend-



168 NOTES AND BILLS. [CH. V.

If a corporation, certainly authorized to make, sign, accept,
or indorse negotiable paper, has an officer authorized to use
their name in this way, and this officer writes his own name,
as drawer of a bill of exchange, with the express addition of



jints' corporate name did not appear on the notes, and the notes on their face did not
disclose any ai^cncy, Horace Gray & Company, tiie si{^ncrs, and not tlic defendants,
were bound thcrel)y ; but that tliis was not to be understood to prevent the phiintiff
from inaintaiiiinj; his action, if tiie jury should be satisfied that the notes were in fact
the notes of the Boston Iron Company, executed under a name adopted and sanctioned
by them as indicative of their contracts. It was held, that this instructicm was correct.
Shaw, C. J. said : " The effect of the instruction thus given, wc think, was, that the
facts mentioned in the prayer for instructions, to wit, the corporate name not appearing
on the notes, and the notes not disclosing any agency, but signed Horace Gray & Com-
pany, constituted jirimn facie cvidnncc that those were liie notes of Horace Gray &. Com-
pany and not of the Boston Iron Company; and, standing alone, would warrant and
require the direction, that Horace Gray & Company, and not the Boston Iron Com-
pany, were hound by them ; hut that this evidence might be rebutted and controlled by
proof aliunde that they were in fact the notes of the Boston Iron Company, because
executed under a name adopted and sanctioned by them as indicative of their contracts,
and, it may be added, given in satisfaction of their debt. The court are of opinion that
t})is direction was correct. If by any possible proof the presumption arising from the
face of the note, and from the form of the execution, from the corporate name of the com-
pany not being used, and the use of the name of a mercantile firm, could be rebutted,
tlien the evidence was prima facie, and not conclusive. It seems to be now well settled,
in this Commonwealth, since the great multiplication of corporations, extending to al-
most all the concerns of business, that trading corporations, whose dealings embrace all
transactions from the largest to the minutest, and afi'ect almost every individual in the
community, are affected like private persons with obligations arising from implications
of law, and from equitable duties which imply obligation ; with constructive notice, im-
plied assent, tacit acquiescence, ratifications from acts and from silence, and from their
acting upon contracts made by those professing to be their agents ; and, generally, by
those legal and equitable considerations which affect the rights of natural persons. We
are not dealing here with the weight, force, or effect of the evidence, but oidy whether
any evidence aliunde could control the presumption arising from the notes ; and we
think there was evidence competent to go to the jury, from which they might infer that
the defendants had so adopted a name, other than their corporate name, for the special
purpose of giving notes, as to be bound by it when used by a general agent, in liquida-
tion of their own debts Under this same objection, also, the question was dis-
cussed, whether a corporation can adopt the name of a mercantile firm, and bind them-
selves by notes given in its name. It may not be a wise arrangement, but wc are not
prepared to say they cannot do it. Suppose the case, which actually occurred, as ap-
pears in the case of Goddard ;?. Pratt, 16 Pick. 412, that a manufacturing corporation
pass a vote or by-law, providing that all their mercantile business shall be done and
contracts made in the name of a partnership, whose stock they have taken, and to
whose business they have succeeded. This may be wise in such a case, in order to keep
up an established, extensive, and valuable correspondence, and retain the run of custom
and good-will of an old, established firm. That case was the reverse of the present,
and the struggle there was to charge the firm, who defended on the ground that their
firm name designated the obligations of the company, and not their own ; and *he case



CH. v.] COEPORATIONS. 169

his office, it seems that he will be held to do this officially, and
not personally, and to bind the corporation and not himself. (^;)
And a bill drawn upon and accepted by him in the same way,
will be held to have been drawn upon and accepted by the
corporation. (6)

Any signature of a corporation should always be by writing
the name of the corporation, and adding, "by A. B., agent," or
" treasurer," &c. And the body of the instrument should con-
tain the name of the corporation only. But it is very common

to find a note running " I, A. B., Treasurer of Company,

promise," &c., and signed " A. B., Treasurer of Company";

and a note actually of the corporation, if made and signed in
tliis way, should, we think, be held in law to be their note.(c)



turned on the question, whether the plaintiff, when he dealt with them, knew of the dis-
solution of the old firm ; if he did not, then, by a well-known rule of the law of part-
nership, the firm was bound to him, not having given notice of their dissolution. Had
the point in that case been whether the corporation were bound, we can have no doubt
tliat they would have been held bound by their vote for notes made in the name desig-
nated." And see, to the same effect, Conro v. Port Henry Iron Co., 12 Barb. 27, 55.
See also, ante, p. 92, note g.

(a) Thus, in Witte v. Derby Fishing Co., 2 Conn. 260, a bill was drawn by the
president of the company, containing a direction to the drawee to place the amount " to
account of the Derby Fishing Company," and signed " Canfield Gillet, President."
Held, tiiat the company were liable as drawers. So in Safford v. Wyckoff, 1 Hill, 11,
4 Hill, 442, it was held, that a bill of exchange commencing, " Famicrs' Bank of Seneca
County," directing the drawee, afier payment, to " charge this institution," and signed
"J. J. Fenton, Cashier," was to be deemed tlie act of the bank. But in Kcan v. Davis,
1 N. J. 683, where a bill of exchange directed the drawee to " charge as ordered," and
was signed " John Kean, President E. & S. R. R. Co.," it was held, that Kean was,
prima facie, personally liable as drawer.

(b) In Shelton v. Darling, 2 Conn. 4.35, the bill was directed to " Noycs Darling,
Esq., Agent of the Commission Company," and was accepted '• Noyes Darling, Agent
0. C." Held, that it was the acceptance of the company, and not of Darling. So in
Farmers' and Mechanics' Bank v. Troy City Bank, 1 Doug. Mich. 457, it was held,
that a bill of exchange directed to "John A. Welles, Cashier Farmers' and Mechanics'
Bank of Michigan," and accepted by writing across the face thereof, " Accepted, John
A. Welles, Cashier," was drawn upon and accepted by the bank, and not by Welles in
his individual capacity. In Moss v. Livingston, 4 Comst. 208, a bill was drawn on,
and accepted by " J. R. L., President of the Rosendale Manufacturing Co." That
company was a corporation, and J. R. L. was the president ; but there was no proof that
he was authorized to bind the company by his acceptance. Held, that an action on the
acceptance was properly brought against J. R. L. individually. See ante, p. 97, note o.

(c) Mann v. Chandler, 9 Mass. 335. But see Barker v. ]\Iechanic Fire Ins. Co., 3
Wend. 94 ; Brockway v. Allen, 17 Wend. 40 ; Hills v Bannister, 8 Cowen, 31 ; M'Clure
V. Bennett, 1 Blackf. 189; Mears v. Graham, 8 Blackf. 143; Cleaveland v. Stewart, 3
Ga. 283.

VOL. I. 15



170 NOTES AM) BILLS. [CH. V.

If the note begins, " The President and Directors of Com-
pany promise," &c., and is signed " A. B., President," or " Sec-
retary," or " Cashier," or " Treasurer," or " Agout," it is un-
doubtedly tlie note of the corporation. (^) In fact bank-l)ills
are universally signed in this way. It has been said, tliat if
a note be in this form, " I, John Franklin, President of the
Meclianic Fire Insurance Company, promise," <fcc., (Signed)
" John Franklin " ; or in this form, " I promise to pay," &c.,
(Signed) " John Franklin, President of the Mechanic Fire In-
surance Company " ; that in both of these cases it is the note
of Franklin, and not of the Company. (e) But we doubt the
correctness of these positions. There can be no reasonable
doubt, in either of the above cases, that the intention was to
bind the company, and not the president personally. (/)

If a bill or note is made payable to "A. B., Cashier," we
have authority for saying that an action may be maintained
upon it, either by A. B. personally,(^) or by the bank of which
he is cashier, if the paper was actually made and received on
account of the bank. (A) And where a promissory note was
made payable " to the Cashier of the Commercial Bank or his
order," and the consideration proceeded from the bank, it was
held, that an action on the note might be maintained in the
name of the bank as the promisee. (i) A note or bill made

(rf) Mott V. Hicks, 1 Cowen, 513 ; Pitman v. Kintner, 5 Blackf. 250; Commercial
Bank v. Newport Man. Co., 1 B. Mon. 13 ; Shotwell v. M'Kown, 2 South. 828. In
Fitch V. Lawton, 6 How. Miss. 371, the note was in the following form : —
Post Note. " Commercial Bank of Hodneii,

$ 100. — No. 40. Rodney, Miss., 8 March, 1839.

Six months after date, we promise to pay R. W. Worthington or order one hundred
dollars, at the bank in Rodney, with five per cent, interest until dnc.

J. Lawton, Cash'r. Thomas Freeland, Pres't."

Held, that prima facie it was binding upon Freeland and Lawton individually. Sed
quaere.

(e) Per Savage, C. J., in Barker v. Mechanic Fire Ins. Co., 3 Wend. 94.

(/) See Lindus v. Melrose, 3 H. & N. 177 ; Aggs v. Nicholson, 1 H. & N. 165 ;
Healey v. Story, 3 Exch. 3 ; Penkivil v. Connell, 5 Exch. 381.

(g) Fairfield v. Adams, 16 Pick. 381 ; Shaw v. Stone, 1 Cush. 228, 254.

(A) Watcrvliet Bank v. "White, 1 Denio, 608 ; Barney v. Newcomb, 9 Cush. 46 ; Du-
pont V. Mount Pleasant Ferry Co., 9 Rich. 255 ; Wright v. Boyd, 3 Barb. 523.

(t) Commercial Bank v. French, 21 Pick. 486. Morton, J. said : " The note is in
terms payable ' to the cashier of the Commercial Bank ' ; and the defendant contends
that the action should have been brought in the name of the person who was then
cashier, and will not lie in the name of the corporation. It is not denied that the prop-



GH. v.] CORPORATIONS. 171

payable to the order of the cashier of a bank authorized by
its charter to indorse, is as negotiable as if payable to the order
of the bank.(y)

If a bill or note belonging to a bank be indorsed " A. B.,
Cashier," there may be some doubt wliethcr this alone will
be sufficient to pass the property in the note ; and still more
would it be doubtful whether it would render the bank liable
as iudorser. But it has been satisfactorily established that the
holder may fill up such an indorsement so that it will read
" The President and Directors of Bank, by A. B., Cash-
ier. (A;) We have already seen that such an indorsement will



erty of the note is, and ever has been, in the plaintiffs ; but the argument is, tliat the
promise being in the name of the cashier, although made to him in trust, and fur the

benefit of the corporation, it can only be enforced in his name A contract may

be made to or with a person, as well by description as by name. And wlicre the par-
ties can be ascertained, it will he valid, although their names be mistaken or their de-
scription be incorrect. It cannot be doubted that a note to the Commercial Bank would
be valid, and might be declared on as a promise to the plaintiffs, although their legal
name is, ' The President, Directors, and Company of the Commercial Bank.' So a
contract with the stockholders, or with the president and directors, or with the directors
of the Commercial Bank, would doubtless be, in its legal effects, a contract with the
corporation. It is not easy to perceive why a contract with the cashier of a bank is not
a contract with the bank itself. The accounts of banks with each other arc usually kept
in form with the cashiers, but undoubtedly the banks themselves are the real parties to
them. The Master, &c. of Sussex Sidney College v. Davenport, I Wilson, 184. A
corporation being an incorporeal being, and having no existence but in law, can neither
make nor accept contracts, receive nor pay out money, but by the agency of its officers.
They are the hands of the corporation by which they execute their contracts, and re-
ceive and make payments. Of these officers the cashier is the principal. If the note
Iiad been made to the corporation, by its appropriate name, the same officer would have
demanded and received payment, or would have given notice of non-payment and pro-
tested it, and, had it been negotiated, would have made the indorsement, and in pre-
cisely the same form as he would upon this note The principle is, that the

promise must be understood according to the intention of the parties. If in truth it be
an undertaking to the corporation, whether a right or a wrong name, whether the name
of the corporation or of some of its officers be used, it should be declared on and
treated as a promise to the corporation. And there is no so safe criterion as the consid-
eration. If this proceed from the corporation, it raises a very strong presumption that
the promise is made to them. If no express promise be made, but itr be left to legal
implication, it must be to them." And see Med way Cotton Manufactory v. Adams, 10
Mass. 360.

{j) Haynes v. Beckman, 6 La. Ann. 224.

(k) Northampton Bank v. Pepoon, 11 Mass. 288 ; Folger v. Chase, 18 Pick. 63. In
the recent case of Bank of Genesee v. Patchiu Bank, 3 Kern. 309, where the indorse-
ment was in the same form, and the action was brought against the bank as indorser,
[ieriio, J. said : " I find some difficulty in saying that this indorsement, as it stands,
can be held to be the contract of the defendant. But I am of opinion that the defend-



172 NOTES AND BU.LS. [CH. V.

not render tlie cashier personally liable. (/) A person wlio car-
ries on business on his own account, in the name of a company
which has been incorporated but not organized, and receives
in j)aynient of a debt contracted with him in such business a
promissory note payable to the order of the corporation, may
transfer tiie note by indorsing it in his own name.(M)

It is doul)tful whether the president, secretary, treasurer,
cashier, or any other officer of a corporation, has prima facie
a general authority to bind the corporation as a party to bills



ant should be held liable as indorscr upon a diflferent principle, — that of allowing the
indorsement to be filled up according to the intention of the parties. In the Northamp-
ton Bank v. Pcpoon, 1 1 Mass. 288, the defendant was sued as tlie maker of a negotiable
promissory note, which had been indorsed to and held by the Berkshire Bank ; and the
question was, as to the transfer by that bank to the plaintiff. The indorsement was by
one Learned, an attorney, with full authority from the board of directors ; but the form
in which it was done was by the attorney writing his own name upon the note, adding,
* as attorney.' The formal words of a common indorsement appear to have been in the
first instance written over the name of the attorney, but the court allowed it to be al-
tered and filled up as an indorsement by the Berkshire Bank, according to the intent.
The court. Chief Justice Parfce?- giving the ojjinion, upon a motion for a new trial, said :
' We arc all satisfied that if the authority of Learned was good to indorse as attorney,
the plaintifTs may erase the words written over his name, and substitute other words,
which will give effect to the indorsement' Folger v. Chase, 18 Pick. 63, presented
substantially the same question. The plaintiff, in an action against the prior parties to
several notes which had been indorsed to, and held by, the Phoenix Bank, made title to
the notes by the indorsement of the cashier of that bank made in the same form with
that of the bill in question, namely, ' P. H. Folger, Cashier.' It was held that the
plaintiffs were entitled to recover, the court saying: 'As to the oVyection that the in-
dorsement is not made in the name of the corporation, we think the indorsement by the
cashier, in his ofBcial capacity, sufficiently shows that the indorsement was made in be-
half of the bank ; and if that is not sufficiently certain, the plaintiffs have a right now to
prefix the name of the corporation.' It will not fail to be remarked, that these actions
were not against the bank whose officers had indorsed the paper, but against prior par-
tics ; but the question in each case was as to the effect of what had been done towards
transferring the paper. This, however, does not affect their application to this case;
for if the indorsement operated to transfer the paper upon the principles of the law
merchant, it at tlie same time created by force of the same law the obligation of indorscr.
If the holder in these cases could write the name of the corporation over the signature
of the officer, the contract would then be in the usual form, and would carry with it
the ordinary consequences. The principle thus settled by the Supreme Court of Mas-
sachusetts carries into effect the intention of the parties to such transactions, is in
accordance with legal analogies, by which effect is given to indorsements on negotiable
paper by allowing them to be filled up in such manner as to carry out what was de-
signed, .and is not opposed to any case in our own courts. I am disposed to follow it in
this case." The point was not decided by the court.

(/) See ante, p. 96, note m.

(m) Bryant v. Eastman, 7 Cush. 111.



GH. v.] . CORPORATIONS. 173

of exchange or promissory notes. (») It has been held, how-
ever, that the cashier of a bank has prima facie authority to
indorse all paper belonging to the bank, so as to pass the prop-
erty and render the bank liable as indorser.(o) That he has
authority to indorse, for the purpose of collection merely, there
is no doubt. (jw) It may be well to remember, that at common



{n) See Moss v. Livingston, 4 Comst. 208; McCullough v. Moss, 5 Denio, 567;
Farmers' and Mechanics' Bank v. Troy City Bank, 1 Doug. Mich. 457.

(o) Tlius, in Wild v. Bank of Passamaquoddy, 3 Mason, 505, Story, J. said : " The
ca.shier of a bank is, virtute officii, generally intrusted with the notes, securities, and
other funds of the bank, and is held out to the world by the bank as its general agent
iQ the negotiation, management, and disposal of them. Prima facie, therefore, he
mtist be deemed to have authority to transfer and indorse negotiable securities, held
by the bank, for its use and in its behalf No special authority for this purpose is
necessary to be proved. If any bank chooses to depart from this general course of
business, it is certainly at liberty so to do; but in such case it is mcumbent on the bank
to show that it has interposed a restriction, and that such restriction is known to those
with whom it is in tiie habit of doing business. In the present case, the cashier has, as
cashier, indorsed the bill in behalf of the bank, and this is prima facie evidence of au-
thority, it being within tJie ordinary duties performed by such an officer. If he was
restricted in his authority, it is for the defendants to show it. The proof is in their
possession, and tlie plaintiff, who is a stranger to their regulations, caimot be presumed
to be conusant of it." So in Fleckner v. U. S. Bank, 8 Wheat. 338, 360, Story, J.,
delivering the opinion of tlie court, said : " We are very much inclined to think that
the indorsement of notes, like the present, for the use of the bank, falls within the ordi-
nary duties and rights belonging to the cashier of the bank, at least if his otfice be like
that of similar institutions, and his rights and duties are not otherwise restricted. The
cashier is usually intrusted with all the funds of the bank, in cash, notes, bills, &c., to
be used, from time to time, for the ordinary and extraordinary exigencies of the bank.
He receives directly, or through the subordinate officers, all moneys and notes. He
delivers up all discounted notes, and other property, when payments have been duly
made. He draws checks, from time to time, for moneys, wherever the bank has de-
posits. In short, he is considered the executive officer, through whom, and by whom,
the whole moneyed operations of the bank in paying or receiving debts, or discharging
or transferring securities, are to be conducted. It does not seem too much, then, to
infer, in the absence of all positive restrictions, that it is his duty as well to apply the
negotiable funds as the moneyed capital of the bank to discharge its debts and obliga-
tions." And see, to the same effect, Everett v. United States, 6 Port. Ala. 166 ; Harper
V. Calhoun, 7 How. Miss. 203; Farrar v. Oilman, 19 Maine, 440. But see U. S.
Bank v. Fleckner, 8 Mart. La. 309, and cases cited in next note.

{p) Hartford Bank v. Barry, 17 Mass. 94 ; Elliot v. Abbot, 12 N. H. 549. This was
au action of assumpsit, upon a promissory note, dated September 30, 1839, pavalile to
the President, Directors, and Co. of the Ashuelot Bank, or order, in sixty days and
grace, and alleged to be indorsed by the cashier of the bank to the plaintiff. The note
in question was signed by John Townsend as principal, and by the defendant as surety,
and had upon it the indorsement of the cashier of the bank. In giving the opinion of
the court, Parker, C. J. said : " Although the bank never had any interest in this note,
we see no objection to regarding it as having been made to them, and indorsed to the
15*



174 NOTES AND BILLS. [CH. V.

law no stockholders of iuiy corj)oration are liable for its debts,
in any form. But this rule is importantly qualified by statutes
in many of our States.

plaintiff, if tlic indorsement can be uphold upon the evidence. Tlie signers did promise
to pay the hanlc ; and as tiiey made the promise negotiable, the bank might well trans-
fer it. And it makes no diflercnec to the defendant, whether the bank diseounted the
note, and tlien sold and indorsed it to tlie plaintiff; or whether the plaintiff, having
funds in the bank, furnislied the money in the first instanee, the bank indorsing the
note to him, and the defendant assenting to the transfer. We eome, then, to the
question. Has this note been indorsed to the plaintiff, by the bank ? Is that allegation

in the plaintiff's declaration sustained ? The defendant may deny this The

ground upon which the cashier may indorse the name of the bank, and transfer the
legal interest, in any case, is not because the indorsement is merely nominal, transfer-
ring no actual property. If it were so, this indorsement might bi; supported as the
indorsement of the bank. But it is, that the cashier is the agent of the bank for that
purpose ; — that, by virtue of his appointment as cashier, the bank authorizes him to
make indorsements in such cases. Tested by this principle, the indorsement in thi.s
case must fail. It is not the act of the bank, because not made by an agent iiaving
power to make an indorsement in such case. The directors are the general agents of
the bank. The cashier is a special agent, and a matter of this kind is not within the
scope of his authority. The plaintiff's allegation that the note was indorsed by the
bank, therefore, fails ; and this is a material allegation as the case now stands."



en. VI.] CONSIDERATION. 175



CHAPTER VI.

OF THE CONSIDERATION.



SECTION I.

OF THE GENERAL PRINCIPLES IN RELATION TO THE CONSIDERATION
OF NOTES AND BILLS.

By the rules of the common law, no promise which is not
made for a consideration can be enforced. This consideration
may be either a gain or benefit of any kind to him who makes
the promise, or a loss or injury of any kind suffered by him
to whom it is made ; such gain being the cause of or the
inducement to the promise, and the promise being the cause
of or the inducement to such loss.

To this rule there is an exception, by the ancient law, in
favor of a written promise which has a seal attached to it ;
or, as it is commonly expressed, a promise under seal ; for



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