Brooklyn Bank v. Metropolitan Trust Co.

Blackmar, J.: The indorsement on the note made by Alexander McDonald, now deceased, was made by the defendant “ Edmund K. Stallo, His Attorney in fact.” The plaintiff read in evidence a power of attorney executed by McDonald, which empowered Stallo “ to guarantee the payment of promissory notes, obligations and debts of any company in which I may be or become a stockholder.” The note sued on was made by the Alabama Securities Company, in which the evidence showed that McDonald was a stockholder, to the order of the plaintiff. The indorsement was made before delivery to the payee, for the purpose of lending credit thereto, as was found by the court. The attorney was empowered to guarantee the payment of the promissory note. The indorsement was not for the purpose of negotiation, but to give the credit of the indorser to the note, and it had no other effect. It amounted, in legal effect, to a guaranty of payment, conditioned on presentation, dishonor and notice. It was within the scope of the power granted by the power of attorney, [227] and was such an obligation as has been held to be a guaranty. As Justice Field said of a like indorsement in Brady v. Reynolds (13 Cal. 31): “ The indorsement is not evidence of any title in the parties, or of any transfer thereof; it is of an irregular character, not made in the usual course of business, and is, in fact, nothing more than a guaranty.” The principal authorized the attorney to lend his credit to the note by a form of obligation which required his principal to pay upon default of the maker. The attorney did lend the principal’s credit, but in legal effect imposed a condition that.he should receive notice of dishonor of the note. The condition so imposed for the benefit of the principal should not be held to vitiate the obligation. In acting under the power of attorney, it was not necessary to use the word “ guarantee.” An act which had the same legal effect was authorized. The power of attorney would not authorize an indorsement which passed title and shut off defenses under the Negotiable Instruments Law (Consol. Laws, chap. 38; Laws of 1909, chap. 43), but an indorsement like this had no legal effect beyond that authorized in the power of attorney, i. e., to bind the principal to pay if the maker did not. The attorney acted within the power, but not up to its limits. It does not appear that the appellants were aggrieved by the method of computing interest which the court adopted, and the orders appealed from were properly made. The judgment’ is affirmed, with costs, and the orders are affirmed. Stapleton and Rich, JJ., concurred; Jenks, P. J., read for reversal, with whom Thomas, J., concurred.