Crain v. First National Bank

Mr. Justice Sheldon delivered the opinion of the Court: This was a suit by the First National Bank of Jacksonville, •against John A. Crain and James W. Manson, upon a promissory note purporting to be made by Crain & Manson to the plaintiff, for $5000, dated at Jacksonville, Illinois, May 8, 1883, and payable four months after date, with eight per cent per annum interest after maturity. The plaintiff recovered in the circuit court a verdict and judgment for $5303.33, which judgment, on appeal to the Appellate Court for the Third District, was affirmed, and the defendants appealed further to this court. The defendants’ plea put in issue the execution of the note. It appears from the evidence, that the defendants, under the firm name of Crain & Manson, were retail merchants at Waverly, Illinois, and had been for a good many years, and for a number of years prior to the date of the note they were •also private bankers, having a bank of deposit. Both the banking and goods departments were conducted in the same room. James W. Manson gave his personal attention to the business of the firm, Crain not being all the time an active man in the business, but both partners continuing a general ■supervision over the business of the firm. William 0. Manson was a son of James W. Manson, and was employed as a clerk or cashier, having no interest, but working on a salary. He kept the books of both departments, and more generally ■attended to the banking department. He drew sight drafts, received deposits, issued certificates of deposit, and wrote letters for the firm. The firm had as correspondents, with whom accounts were kept, M. P. Ayers. & Co., Jacksonville, •and a house in each of the cities of St. Louis, Springfield, Chicago and New York. William O. Manson had authority io use the firm name at these particular places, and to sign the firm name to notes in the transaction of business at these banks, but not elsewhere. Defendants had never kept any account with the First National Bank of Jacksonville, nor authorized William 0. Hanson specially to negotiate any loan "there, nor had they any knowledge of his having done so till long after the firm dissolved,—August 23, 1883. The signature of the name of Crain & Hanson to the note in suit ’ was in the hand-writing of William 0. Hanson, and the note was given for money borrowed from the bank. It is assigned for error that the circuit court erred in •sustaining the plaintiff’s objection to the following questiopp put to James W. Hanson, one of the defendants, by his own ■counsel: “Was the banking department exclusively under "the control of any one?”—“Who had general charge of the ■establishment, if any one?" Notwithstanding the objection was sustained, the witness appears to have answered, substantially, both questions,—as to the first, saying: “Banking was under control of defendants, as was the merchandising. W. 0. Hanson was hired to attend to that. He was some times away, but not long at a time.” And to the second: “Both partners attended to the bank when it was necessary; we thought we -had a good clerk in W. 0; Hanson for that; I often received deposits and paid out money and drew drafts; Mr. Crain generally left it to myself and son; firm had other clerks; we thought it was all right; no other clerk in banking department. ” Objection is made to the admission of proof of the custom of banks in Waverly to borrow money on time. We think this was proper testimony, as tending to show that the borrowing of money was within the scope of the ordinary and .customary business of the defendants. Another question raised on the admissibility of evidence ■offered by the plaintiff, is as to the following paper, which the court permitted to be read to the jury: “Waverly, III., April, 1888. “Herewith please find signatures of persons authorized to •sign for Crain & Hanson: ” —With the firm name written three times, the first being in the hand-writing of William 0. Hanson, and the second in that of J ames W. Hanson. The paper was properly admitted as an admission of James W. Hanson, one of the defendants - It is said this paper was not furnished to the plaintiff, and it did not act upon the faith of the paper; that defendants’' commenced business with the Commercial National Bank of Chicago about Hay 1, 1883, and that this was a private paper, which was forwarded to that bank in a letter, for its guidance alone. All this might have detracted from the force of the paper as an admission, and rendered it of but little weight; but still it can not be said to have been evidence, which was irrelevant and erroneously admitted. . The refusal of the court to permit proof of other fraudulent drafts drawn by William 0. Hanson in the name of the defendants, upon their correspondents in St. Louis, which is complained of by defendants, was proper. There, being no attempt to bring knowledge of such drafts to the plaintiff, they were irrelevant as evidence in this suit. Appellants complain of instructions Nos. 1, 2 and 5, given for the plaintiff. .Numbers 1 and 5 were substantially alike, being to the purport that if the jury believed, from the evidence, that the defendants, Crain & Hanson, were bankers at Waverly, Illinois, and that William 0. Hanson was their cashier, and intrusted by them with the general management of their bank, and the power to carry on all their general banking operations, and that it was one of the usual operations of a bank in Waverly and its vicinity to borrow money on time, and execute a note therefor, and that said William 0. Han-, son, while so acting as cashier and manager for the defendants, borrowed in their name from the plaintiff the sum of $5000, and thereupon executed and delivered to the plaintiff the promissory note in evidence, then the verdict of the jury should be for the plaintiff, even though the said sum was appropriated by said William 0. Hanson to his own use. The criticism made upon these instructions is, that they ignore the question of notice to plaintiff of sufficient facts to put it on guard and make inquiry as to the authority of William 0. Manson to execute the note, and that the instruction was faulty in not defining the meaning of “general manager, ” or what constituted “general management. ” We do not think there was enough of evidence of such notice to have required the making of any reference to it in the instruction. All that is relied upon as tending to show any such notice, is the fact that at the time of the giving of the note there were delivered over several promissory notes of other persons, of over $5000 in amount, as collateral security, with authority, on maturity of the note given, to sell the collaterals at public or private sale, and without notice, and apply the proceeds to the payment of the note given. This may have been a transaction of a- somewhat extraordinary character in its details, but it was all for the better securing of the payment of the note, and did not point to want of authority to execute the note, or to fraud in the giving of it. In the giving of such an instruction there was no occasion for defining what constituted a “general manager, ” or “general management. ” It was open to the defendants to have asked any instructions in that regard which they might have thought necessary. As propositions of law, we perceive no error in the instructions. There is plainly no ground of complaint as to the second instruction, which was .to the effect that the fact of the note being secured by collaterals did not affect the right of recovery. Complaint is made of the modification by the court of defendants’ sixth instruction. As modified, it was, in substance, that when an agent acts beyond his authority, the principal is not bound, unless he had held out to the party dealt with, or to the. public generally, the agent as having authority to do the act,—the modification consisting of the insertion of the words in italics. The ease cited by appellants’ counsel (Thompson v. First National Bank, 111 U. S. 537,) as against such medication, seems to lend somewhat of countenance thereto, in its. being there said: “There may be cases in which the holding out (as a partner) has been so public and so long continued that the jury may infer that one dealing with the partnership knew it, and relied upon it, without direct testimony to that effect. ” As asked, the instruction was erroneous in ignoring any holding out to the public. Such holding out, here, might, have been to the extent above indicated, and the instruction was properly enough modified so as to recognize that element of holding out to the public. The modification might have been made more full by laying down to what extent the “holding out” must have been; but we are not prepared to say there was error in this regard. Had the defendants desired a more full instruction in that respect, it was open to defendants to have asked it. The third instruction asked by defendants, “that a general agent is defined to be one who has authority to transact all the business of his employer, ” was properly refused. Power to act generally in a particular business or a particular course of trade in a business, however limited, would constitute a general agency, if the agent is so held out to the world, however so restricted his private instructions may be. Doan v. Duncan, 17 Ill. 272; Story on Agency, sec. 17. Defendants’ tenth refused instruction respected the question of notice, remarked upon in passing upon the first and fifth instructions for the plaintiff, and what was there said sufficiently disposes of the objection in not giving this tenth instruction. Defendants’ fifteenth refused instruction was, that the fact that defendants authorized William 0. Hanson to sign their name to notes to the firm of H. P. Ayers & Co., or to other correspondents, would not of itself authorize said William 0. Hanson to sign the name of defendants to the note in suit, was objectionable in singling out a particular fact, and telling the jury that such alone would not warrant a recovery. Defendants’ sixteenth refused instruction, though somewhat exposed to the same objection as the last, and claimed by appellants to be equally faulty, we think to be distinguishable, and that it should have been given. It was in reference to the paper which has been before mentioned, and set out as having been given by defendants to the Commercial National Bank of Chicago,—that the furnishing of that paper to that bank would not of itself confer authority upon William 0. Hanson to execute to the plaintiff the note sued on. The paper purported on its face to give the signatures of persons who were authorized to sign for Crain & Hanson, and it was without limit. The paper was extremely liable to mislead the jury to think that the authority was unlimited to sign the name of Crain & Hanson not only at that, the Commercial Bank, but at any other bank; and to guard against the jury being thus misled, the instruction was a very proper one. Yet there was such a weight of evidence, besides, of the holding out by defendants of William 0. Hanson as possessing authority to borrow money and execute notes in their name, that we can not think the not giving of this instruction was of any harm to defendants, and that it was a material error. The refusal to give the seventeenth instruction asked by defendants was manifestly correct. We find no material error in the record, and the judgment of the Appellate Court must be affirmed. Judgment affirmed.