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Huie v. Allen

68 N.Y. St. Rep. 641 Court N.Y. Gen. Term Decision date 1895-06-21 English

Delivered by Bradley, J.

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p. 641
Charles F. Huie, Resp’t, v. Henry Allen et al., App’lts.
(Supreme Court, General Term, Fifth Department,
Filed June 21, 1895.)

Headnote

Principal and agent — Authority—Notice.
A corporation may recover from a broker the amount of a check, signed in its name and given by its agent, who was authorized to draw checks against its bank account, to the broker to pay losses arising on purchases on margins made by the broker for such agent.
Appeal from a judgment, entered on a verdict in favor of plaintiff.
Frank Brundage, for app’lts; Simon Fleischmann, for resp’t.

— The subject of the action is a claim assigned by the American Preservers Company to the plaintiff, for a sum of money alleged to have been drawn by the defendants from the funds with which that company hadcredit in the Manufacturers’ & Traders’ Bank of Buffalo, H. Y. The money was drawn from the bank upon checks purporting to have been made by one Charles F. Tomes, as manager for that company. Tomes then was the business manager of the Buffalo branch of the company, having quite general power in conducting that branch of its business. He was authorized, as such manager, to indorse, for deposit, collection •or discount, notes, drafts, ór checks; to deposit in the bank moneys which came to his hands; and to draws checks against the funds so deposited. The defendants, constituting the firm of Henry Allen & Co., having an office in Buffalo, were stockbrokers engaged in the business of buying and selling stocks on the Hew York Stock Exchange, of which they were members, and in buy-

p. 642
ing anti selling grain in Chicago on the Chicago Board of Trade, of which they were also members. In June, 1892, Tomes became a customer of the defendants, and they in that month bought and sold wheat in the Chicago market on his account. When a transaction for him was opened by a purchase, it was followed, by a sale; and when opened by a sale, a purchase followed, to supply the requirement of the sale, and to ascertain a balance, if any, arising from the deal. The balances resulting from the transactions were against Tomes. They were covered by three checks drawn on such bank by him. The company’s blank checks were used. They were headed, ‘‘American Preservers Company,” and signed, “American Preservers Co., Charles F. Tomes, Manager.” They were payable to the order of Henry Allen & Co.; and the amounts $500, $512.50, $500. The checks were indorsed, and the amounts of them drawn, by the defendants’ firm, and charged by the bank to the account of the American Preservers Company.

Those transactions with the defendants were throughout the individual affairs of Tomes, solely on his account, and were outside of the business of the company. He therefore had no authority to draw and deliver those checks to the defendants. It is urged on their part that, as it was within his power to draw checks in that manner upon the bank account of the principal the latter is es-topped from asserting his want of authority to issue those in question. If is true that, the company would be so estopped, as against the bank, but as against the defendants it is otherwise. They were chargeable with notice of the general nature of his agenncy, real or apparent. If the checks had been made under circumstances apparently within the scope of his power- as such manager, and had been taken by a person not chargeable with notice to the contrary in good faith for value, when in fact he had no authority to issue them, by reason of some extrinsic fact peculiarly within his knowledge, his principal would have been estopped from making available, to the prejudice of the party so taking them, the falsity of the fact upon which the right to make the checks depended. Railroad Co. v. Schuyler, 34 N. Y. 30 ; Bank of Batavia v. New York, L. E. & W. R. Co., 33 Hun, 589 ; Id., 106 N. Y. 195 ; 8 St. Rep. 209 ; Bank of New York National Banking Ass'n v. American Dock Trust Co., 143 N. Y. 559 ; 62 St. Rep. 776 . The bank was at liberty to rely upon the representation furnished by the import of the checks that they were issued by Tomes pursuant to his authority as manager of the company for the company for which they purported to have been drawn. But the defendants knew, or were chargeable with notice, that they were made in transactions with Tomes on his own account, and did not relate to business of his company, and therefore that it was not within his power to draw them for the purposes for which they were issued and taken. Gerard v. McCormick, 130 N. Y. 261 ; 41 St. Rep. 284 . In the view taken of the case as presented by the evidence, none of the authorities cited by the defendants’ counsel have any essential application in support of the defense. In Goshen Nat. Bank v. State, 141 N. Y. 379 ; 57 St. Rep. 599 , it seems to have been within th& power of the cashier who drew the draft there in question — of his

p. 643
bank on its corresponding bank — to draw drafts for himself on the same terms as, in due course of business, he drew drafts for others. And it was held that the comptroller received the drafts in good faith.

We are unable to-adopt the suggestion that it was for the plaintiff to prove that nothing was due from the company to Tomes on account of his salary. When it appeared that the checks were drawn by hifn, and taken by the defendant, in transactions known to latter not to be within the scope of his agency,. they were charged, prima facie with liability ; and if any fact existed to take the case out of the operation of the general rule, and in support of the defense, the onus was with the defendants to prove it.

"The conclusion is that the verdict was properly directed for the plaintiff.

The judgment should therefore be affirmed.

All concur.

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