Stainer v. Tysen — 3 Hill & Den. 279

Majority

p. 279

Stainer v. Tysen.

Headnote

A naked power to do acts for and in the name of the principal, negates all authority on the part of the attorney to act for the benefit of any one beside the principal ; and persons dealing with the'attomey, as such, are bound to notice this limitation.

If an agent or attorney transcend the limits of his authority, and the person with whom he deals has notice of this, sufficient to put him upon enquiry, he cannot ' charge the principal.

D. executed a letter of attorney authorizing G. to draw and endorse notes for and in the name of the former. Afterwards G., being a member of a firm largely indebted to tile plaintiff and utterly insolvent, but with which D. had no connection, applied to the plaintiff for a compromise, and terms were agreed on ; whereupon G. made a note in D.’s name, payable to the firm, and delivered it to the plaintiff by way of perfecting the compromise. Held, in an action against D., that the plaintiff could not be deemed to have received the note bona fide; and as G. had given it without authority, the action could not be maintained.

Assumpsit, tried at the New York circuit, in March, 1841, before Edwards, C. Judge. The action was on a promissory note payable to the order of George W. Tysen & Co., by whom it was endorsed to the plaintiff. The note purported on its face to have been made by the defendant David I. Tysen, by George W. Tysen his attorney. It appeared on the trial, that before the making of the note, the defendant executed a letter of, attorney in these words : “ Know all men &c., that I, David I. Tysen,

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of &c., have made, constituted and appointed, and by these presents do make, constitute and appoint George W. Tysen, of &c., my true and lawful agent, for me and in rny name, place and stead, to demand, sue for &c., all sums of money due and owing to me &c.; also to receive and transfer any stocks standing in my name, or to which I may have any right; to draw and to endorse checks, notes and hills of exchange in my name; and to receive dividends &c. Giving and granting to my said attorney full power and authority &c. about the premises, as fully to all intents and purposes as I might or could do if personally present” &c. The note in question was given under the following circumstances : Prior to its date, George W. Tysen—then a member of a firm styled George W. Tysen Sc Co. which was largely indebted to the plaintiff and utterly insolvent—applied to the plaintiff in behalf of his firm for a compromise. Terms were agreed on ; and George W. Tysen made and delivered the note by way of perfecting the compromise. The signature to the note, as well as the endorsement, were in the hand writing of George W. Tysen. It was not pretended that the defendant was at all connected with the firm of George W. Tysen & Co.; indeed, it was expressly admitted by the plaintiff’s attorney on the trial, that the note, so far as the defendant was concerned, was given without consideration. The plaintiff, however, when he took it, was not apprised in terms of that fact. Upon these facts appearing, the judge directed the jury to find for the defendant, which they accordingly did. The plaintiff excepted, and now moved for a new trial on a bill of exceptions.

JV*. jD. Ellingwood, for the plaintiff.

• J. Wallis, for the defendant.

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principal should be bound at all events, is, that he has authorized another in general words and without any qualification to give his notes. That having given such authority, he cannot require any person who takes under it to notice and decide at his peril whether the agent act in good faith towards his principal or not. That he has virtually authorized his agent to speak conclusively and by way of estoppel as to all extrinsic circumstances—all facts not apparent on the face of the power, or actually known to the man who trusts to it. That the attorney, by the very act of making the note &c. does, in effect, declare that it is available. Some of us felt so much difficulty upon this argument in The North River Bank v. Ay mar, that we held the question under advisement, and directed a second discussion, which took place in the course of the same term at which the present case was argued. (May term, 1842.) The answer given to the argument is, that such letters of attorney import, in their own nature, an obligation to act for and in behalf of the principal and in his proper business ; that the man who receives the note is bound to look to the power, and in so doing must take notice of its legal effect at his peril; that he is therefore bound to see that the attorney does not go beyond his power by making or endorsing notes for the benefit of himself or persons other than his principal. The authorities pro and con are cited in The North River Bank v. Aymar, (ante p. 262.)

But we are all of the opinion that the necessity for weighing these arguments does not exist in the case before us. It cannot be pretended that, where the person who takes the note is aware of the attorney acting fraudulently towards his principal, there is any color for insisting on the ground of estoppel. There is no doubt that a power drawn up nakedly to do acts for and in the name of the principal, negatives all idea of interest in the agent, or authority to act for the benefit of any one beside the principal. This limitation, therefore, the plaintiff was bound to notice. It is an intrinsic fact, and when he is moreover told that the attorney, as between himself and prin

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cipal, is abusing his trust, the reason for making the act conclusive entirely ceases. The plaintiff himself then becomes a party to the fraud. In this case, he must be presumed to have known who it was that constituted the insolvent firm of George W. Tysen & Co., the payees of the note—a firm which had just compromised with him—and that this defendant was therefore not a member of the firm. Had he been, there was no need of George acting as attorney. When a person sees the note of a stranger made and endorsed by one of the payees to discharge their own debt, and takes such an endorsement, he has seen enough, in connection with the power, to raise a strong suspicion, not to say conviction, that the whole is a fraud upon that stranger. It is too much to allow that he may shut his eyes and say, he supposed there was some special circumstances on which the attorney had a right thus to act. The transaction is, Oft its face, out of the ordinary course of business. This was of itself sufficient to put him on enquiry. In the case of The North River Bank v. Aymar, it was assumed that the plaintiffs were bona fide hofders.

We are therefore of opinion that the circuit judge was right in directing a verdict for the defendant.

New trial denied.