Taber v. Cannon

Shaw, C. J. This case involves a principle of considerable importance to those engaged in the whaling trade. It is founded on a bill of exchange, and brought by an indorsee against the defendants as acceptors. Two general questions arise in the case. First, whether an agent to make purchases and obtain supplies for the outfit of a whaling vessel has authority to bind the owners, by making a negotiable promissory note, or accepting a negotiable bill of exchange, in their names, as agent. Second, whether, in the present case, the act of the agent, under the circumstances stated, did bind the owners as acceptors; or whether the acceptance must be deemed his own personal undertaking. Asa general rule, a special agent, or an agent employed to make purchases for his principal, has no authority to bind his principal by a negotiable promissory note or bill of exchange. Webber v. Williams College, 23 Pick. 302. Rossiter v. Rossiter, 8 Wend. 494. The case of Tappan v. Bailey, 4 Met. 529, cited by the plaintiff’s counsel, in which a company was charged on a promissory note given by their agent, was decided on the ground that the articles of agreement constituted the defendants partners ; that the object being to carry on a trading establishment, in a special manner, in which buying, selling, and trading for profit, were contemplated, an authority to give [459] notes and draw bills was implied from the nature of the busi ness with which the agent was intrusted. But we can perceive nothing in the nature of the business of fitting out a whale ship, which varies the general rule of law. It consists in purchasing provisions, materials and stores, in repairing ships, &c., involving nothing more than contracts for labor and materials, or goods sold, in which there is no partnership, no buying, selling, or trading for profit. It is urged, as a reason in favor of such authority, that it is beneficial to the owners to obtain their goods on a credit. Be it so. The agent undoubtedly has authority to bind his principals, by a contract of sale, unless, the principals being known at the time, the sellers elect to give credit to the agent. But although charged to the agent, if the principals are not known at the time, they may be charged and held liable when discovered. Thomson v. Davenport, 9 Barn. & Cres. 90. And there is good rea son for this difference. In a contract of sale, the owners can be liable to no one but the actual sellers of the goods; the consideration may be inquired into; all the circumstances attending the sale may be shown ; and all payments and offsets may be adjusted; all which would be precluded, if an action could be maintained by the indorsee on an acceptance. Nor can this point, which is one of general law, be much aided by local custom. If such notes and acceptances are frequently given by agents, and afterwards voluntarily taken up by the same or other agents, it proves nothing as to the liability of the principals. Even if such a note should occasionally have been provided for by owners, (a very equitable thing for them to do, if the debt has not been paid,) it proves only that the owners misunderstood, or were willing to waive, their legal rights. But wé have not thought it necessary to decide this case upon the ground that the agent had no legal authority to bind his principals; because the court are of opinion, that, in the present case, the agent, even if he had power to bind the owners, has not done so by the acceptance in question. It is very clear, that where it is apparent, from the form of [460] the contract, that the agent intends to bind himself, and not his principals, and this is accepted by the seller of the goods, the principals are not liable. And there is often a great convenience in this course, which renders the intent probable ; and this, connected with the form pf the contract, may be decisive. If the credit of the agent is good, and satisfactory to the seller of the goods, it may be convenient to him to have the acceptance of an individual named, in preference to a more indefinite liability of a body of persons, as “ owners,” «fee. not named, but to be ascertained by other evidence. It is a convenience to the agent, because it enables him to take a full discharge from the sellers, which gives him a voucher to the account, against his principals, and enables him at once to settle with them. But, independently of these considerations, we think it is set tied by authorities, that when it is known that a party is acting as agent, or when a draft is addressed to him as agent, yet, it he give or accept it in his own name, he is personally liable; and, as a converse of this proposition, his principal is not liable. The strong case to this point, in our own State, is Stackpole v. Arnold, 11 Mass. 27, which, ever since its decision, has been regarded as a case of the highest.authority. It was that of an agent, who gave his own note for a premium of insurance on a policy made for his principal. See Bedford, Commercial Ins. Co. v. Covell, (ante, 442.) An early case was that of Thomas v. Bishop, 2 Stra. 955, and Rep. Temp. Hardw. 1, where the acceptor was servant of the York Buildings Company. The draft was addressed to him as cashier of that company, and the letter of advice was addressed to them. Yet it was held that he, having accepted it generally, was personally liable to an indorsee. In Goupy v. Harden, 7 Taunt. 159, it was held that an agent, purchasing bills in London, for his principal in Paris, at a small commission, having put his own indorsement on the bills, was liable to his principal, as indorser. So when one who was the known agent of a country bank, to whom the plaintiff sent money to obtain a bill on London, drew in his own name, with direction1, to charge the amount to the Durham Bank, he was [461] held personally liable, although the plaintiff knew he was such agent, and supposed he was acting on account of the bank Leadbitter v. Farrow, 5 M. & S. 345. There is a very strong case, to the like effect, showing that when the agency is fully proved, and even when it is known to all the parties, if the agent signs a negotiable obligation in his own name, he is bound. Mayhew v. Prince, 11 Mass. 54. Even when one signs as agent, it must appear in a suit brought by an indorsee, that the agent was authorized at the time; and subsequent ratification cannot make it good, as the act of the principal. Rossiter v. Rossiter, 8 Wend. 499. In looking at the facts of the present case, it appears that the bill was addressed to the “ agent and owners ” of the ship, and accepted simply by Stowell. It appears to us therefore, that, within the authorities, it is the personal obligation of Stowell, and not the obligation of the owners of the ship. If it was not their obligation at the time, the action cannot be maintained oy an indorsee, by showing the circumstances of the original contract; that the goods went to the use of the defendants; that the sellers, the drawers of the bill, had received no other payment, and the like. Whether these circumstances might amount to proof of an implied contract between the original sellers of the goods and the owners of the ship, it is unnecessary to consider. If they could be relied on, as proof of such implied contract, it would not be negotiable, and would not aid this plaintiff. It was considered as of some importance in the present case, that it was left to the jury, and found by them that the defendants would have had no offset or other defence, if the suit had been brought by the drawers, Hathaway & Co., for their goods. The verdict does not affirm that the owners had not paid Stowell, or accounted with him, for these supplies; nor, indeed, could it appear, because, as against an indorsee, no such issue could be taken. He must recover, if at all, simply upon proving the authority of the agent to accept for the principal, and on actual acceptance by him. If the agent had received payment of the defendants, it would constitute no defence, and cotdd not be given in evidence. As was remarked in Web [462] oer v. Williams College, 23 Pick. 304, the nature of the issue between indorsee and promisor or acceptor precludes the inquiry whether there may be matter of defence, or not, as between the original parties. The court being of opinion, that this acceptance bound the agent only, and not the defendants as his principals, and the direction to the jury not having been in accordance with this view, the verdict must be set aside and a New trial granted.