Tradesmen's Bank v. Astor — 11 N.Y. 87

Majority

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Tradesmen’s Bank vs. Astor and others.

Headnote

Where a joint stock company appoint a treasurer, who deposits the funds of the association in a bank, and from time to time as such treasurer draws his checks, which are paid when presented, the members of the association are liable to the bank for moneys overdrawn by the treasurer beyond the amount of the deposits.

A principal, is liable for the acts of & general agent, although the agent disregards particular instructions relative to his agency ; it is otherwise in the case of a special agent.

Where several are liable for work done for their benefit, and a payment is made to their creditor by a third person at the request of one of the debtors, an action lies against all for money paid to their use.

An agreement between the members of a firm or association that neither shall make a contract to charge the other, docs not affect third persons ignorant of such agreement.

This was an action of assumpsit, tried at the New-York circuit in June, 1829, before the Hon. Ogden Edwards, one of the circuit judges.

The defendants were members of a joint stock company for the building of the Bowery Theatre. Matthew Reed, one of their number, was their treasurer, and made deposits in the Tradesmen’s Bank, in his character of treasurer, to the amount of $34,303T3/T, and from time to time drew checks on the bank, which were accepted and paid. On the 15th July, 1826, he drew a check, as treasurer of the association, for $3000, in favor of Messrs. Riley & Geer, builders, and delivered it to them on account and in part payment of a contract made with them to build the theatre. The check was presented at the *bank and paid. The whole amount of Reed’s checks, in-eluding the above for $3000, was $37,457,15, which of course exceeds the amount of deposits $3153f^„; to recover which excess or amount overdrawn this action was brought. During the whole of the time of the running of this account, Reed was president of the Tradesmen’s Bank. The'defendants offered in evidence the articles of their association, which, though objected to by the plaintiffs, was received by the judge : from which it appeared that the defendants were proprietors of the stock of the association in different proportions, and had agreed between themselves that they should not be responsible personally in any case or upon any account, by virtue of their association, for the contracts or acts of each other, but each proprietor was to be responsible to the association for the contracts or acts of the trustees to the

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extent of his shares and no further, and that the trustees should not be authorized to bind the members of the association personally. It appeared that Reed was the principal manager among the proprietors. The plaintiffs had a verdict for the amount of their demand, subject to the opinion of this court.

P. W. Radcliff, for the plaintiffs.

Reed was the authorized agent of the defendants ; acting within the scope of his authority, the defendants are bound by his acts. 15 East, 408. Paley, 162. The defendants were liable to Riley & Geer, the payees of the check, under the contract for building the theatre, and the money obtained from the plaintiffs having been applied to their use, they are on this ground responsible. 5 Johns. R. 176. 1 Ld. Raym. 225. The articles of association ought not to have been received in evidence, it not being shown that the plaintiffs had knowledge of their contents ; but there is nothing in those articles to exempt the defendants from liability.

J. Anthon, for defendants.

Reed was not the general agent of the defendants ; he was merely their treasurer, and as treasurer of the association, he was limited in his powers in his dealings with the bank, to the amount of the defendants’ deposits. When he overdrew, he acted in his own wrong, and *not as the agent of the defendants, and is alone responsible. Besides, Reed being the president of the bank, the bank must be deemed to have had notice that he exceeded his authority. 3 T. R. 757. 1 Esp. Cas. 111. 2 Johns. R. 48. 6 Cowen, 354.

By the Court,

Upon the evidence on the part of the plaintiffs alone, I think there can be no doubt of their right to recover. Reed was one of the trustees of the association ; he was their treasurer, and as such, their financial agent; he received all the funds of the association, deposited them in the bank, and drew them out and appropriated them to the object for which they were intended.. He drew as agent of the company, (and such he was,) and it was an act within the general s.cope of his agency ; his principals are therefore liable.

“ Even independent of the special character of Reed as treasurer and agent, I think the defendants are liable. They had associated together to build the Bowery Theatre ; they had contracted with Geer & Riley to rent the building and the plaintiffs, at the request of one of the joint contractors, advanced to the builders $3000, which was applied upon the joint contract of all the defendants. They have all had the benefit of this money; it is therefore money paid to their use. Suppose the money had not been paid, an equal amount would be due to Geer & Riley upon their contract; and though the contract was made in the name of the trustees, there is no doubt that all the joint proprietors would be responsible to the builders.

That Reed was at the same time president of the Tradesmen’s Bank can make no difference. He may or may not have known that his account was overdrawn. In the view which I have taken of the question, that fact is not material; but if it were otherwise, there is no evidence that he knew how the account stood when the draft in question was drawn.

The articles of association do not affect the plaintiffs in this suit. Those articles were intended to govern the members in the management of their concerns ; but as the plaintiffs had no notice of those articles, they are not concluded by *them. The defendants are subject to the liability of joint proprietors and of pricipals for the acts of a general agent acting within the scope of his authority. If a general agent receive particular instructions, which he disregards, his acts as agent are nevertheless binding upon his principals. For instance, he is authorized to sell an article at a particular price, and he sells for less, the sale is good; but if a spicial agent were

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to do so, the sale would be void. If several persons become partners, and agree among themselves that neither shall make any contract to charge the other, such agreement between the partners will not affect strangers having no notice of it. As between the firm and the public, the liability of the firm will be controlled by the general law of partnership. So in this case, the agreement between the proprietors, being unknown to the bank, can have no influence on the decision of this case, and regularly should not have been received in evidence.

I am therefore of opinion that the plaintiffs are entitled to judgment.