Manhattan Life Insurance v. Forty-Second & Grand Street Ferry Railroad

from 1883 to April, 1888, when he became president, and Ealph J. Jacobs became treasurer, and Charles P. Emmons secretary and transfer agent. When Allen issued the certificate in September, 1888, both Green and Curtiss were dead; and every name attached to it was, in a legal sense, forged. While the signatures of Green and Allen were genuine, they were not then the officers of the defendant which the certificate represented them to be, and the act of making and uttering the instrument was a forgery as to all the names written thereon, under §§ 519 and 522 of the Penal Code.

It is thus very plain that as president, in 1888, Allen had no authority, either actual or apparent, to issue the certificate of stock upon which this action is brought. The company had not invested him with any power as its then president to participate in the creation of certificates bearing date seven years previous. The authority which he possessed in 1881, as secretary and transfer agent, had then ceased to exist; and no state of circumstances has heen suggested, or can be conceived, under which he was empowered to countersign the certificate as transfer agent in 1888, and antedate it as of the time when he held that office.

The rule which imposes a liability upon the principal for the unauthorized acts of his agent is founded upon public policy, and is well defined. It is limited to cases where there was an apparent authority to do the act in question, and it appeared to have been done in the course of his employment as agent and was within the scope of his general powers. Hone of these grounds of liability have been shown here. The agency did not exist in 1888, which was necessary in order to deprive the principal of the right to disclaim responsibility for the unauthorized act. With respect to the creation of certificates bearing date in 1881 he was as destitute of authority as if he had been a stranger to the corporation. He not only could not issue them, but he could take no part in their issue, or do any act required by law, or by the bylaws, essential to give them validity. When he issued such a certificate in his own name, he was not apparently acting within the scope of any general authority conferred upon him by the corporation. The defendant cannot justly be held liable for the misuse of a power which it never created.

The case has no feature in common with the Fifth Avenue Bank against the same defendant, 137 N. Y., 231 ; 50 St. Rep., 712 There Allen, at a time when he was treasurer and transfer agent, rand invested with authority in both capacities to sign, countersign ■and seal valid certificates of stock, forged the name of the president to a certificate and issued it to a confederate, who negotiated a loan upon it at the bank, which, before receiving it, caused inquiry to be made at the office of the defendant, and was informed that the certificate was genuine. Allen was there acting within the •scope of his apparent authority, and whether the certificate had been actually signed by the president and was issued in the regular course of the administration of the affairs of the company were facts peculiarly within his knowledge, and the countersigning and issue of the certificate in due form was a representation by him

that these conditions had been complied with, and that the facts existed upon which his right to act depended. Here there was a total lack of delegated power to Allen to do a single lawful act in the issue of the certificate in the form in which it was presented to the plaintiff.

There was no negligent or wrongful use by him of any authority derived from the defendant. It was a willful and criminal act,, perpetrated for private gain, and not connected with the exercise-of any official authority or semblance of authority which he possessed as the defendant’s agent.

The plaintiff insists that there is another ground upon which a recovery is permissible. When Allen made the loan and pledged the forged certificate, he represented to the plaintiff that it was a genuine certificate of the stock of the corporation; and as he was-then its president and chief administrative officer, the claim is made that the defendant is bound by his representations.

This question in its general bearings was discussed at great length by the counsel in the Fifth Avenue Bank case, but we refrained from considering or deciding it because not necessary to the decision of the case, and we do not think that it is involved in the present appeal. Allen, when he negotiated the loan, was not. engaged in the transaction of the defendant’s business, or in the discharge of any duty imposed upon him by the defendant. The declarations of an agent are only admissible against his principal when made as a part of a transaction undertaken in behalf of the principal, or in the performance of the duties of his agency. First Nat. Bk. of Lyons v. Ocean Nat. Bk., 60 N. Y., 278 . Or, as is sometimes stated, the representations of the agent, when not expressly authorized by the principal, must, in order to bind him, be within the scope of his agency, which is but another form of expressing the same proposition. N. Y. Life Ins. Co. v. Beebe, 7 N. Y., 364 . But, without determining what are the duties of the-officers of a corporation when called upon to respond to the inquiries of intending purchasers of the stock, there is sufficient reason why the plaintiff cannot avail himself of the representations of Allen in regard to the genuineness of this certificate. They were-made in a private and personal transaction, undertaken for his individual benefit, and so understood by the plaintiff.

The plaintiff knew that Allen, in the negotiation of the loan, was not acting as the officer or agent of the defendant, or in its behalf, and that his personal interest in the transaction might lead him to betray his principal. It is an old doctrine, from which there has never been any departure, that an agent cannot bind his principal, even in matters touching his agency, where he is known to be acting for himself, or to have an adverse interest. Stone v. Hayes, 3 Denio, 575 ; Bentley v. Columbia Ins. Co., 17 N. Y., 423 ; Claflin v. Farmers & Citizens' Bank, 25 id., 293; Wilson v. M. E. R. R. Co., 120 id., 145; 30 St. Rep., 787 ; Moores v. Citizens' Nat. Bank, 111 U. S., 156 ; Farrington v. South Boston R. R. Co., 150 Mass., 406 .

The plaintiff in such a case assumes the risk of the agent’s disloyalty to his trust, and has no occasion for surprise when

he discovers that the agent has served himself more faithfully than his principal.

The learned trial judge correctly decided when he held that, under the proofs, the certificate of stock was not admissible as evidence of the defendant’s liability, and dismissed the ■complaint, and the judgment and order appealed from must be affirmed, with costs.

All concur.