Johnson v. Weed & Gumaer Manufacturing Co.

Bardeen, J. The facts in this case are substantially without dispute. The note in suit was given bjr Smith to pay the balance due on the timber he had purchased from plaintiff. At that time plaintiff had adequate security for the money due him, and he accepted the note with defendant’s indorsement thereon in satisfaction and payment of such balance. He relied upon the faith and credit of such indorsement, released his lien upon the logs, and acknowledged payment of the amount due on his contract. He had no knowledge [295] of the circumstances set up by defendant to defeat such in-dorsement. He took the note, in absolute good faith, from the vice president of the defendant company, and is entitled to hold it as a 'bona, fide purchaser for value. Cady v. Shepard, 12 Wis. 639; Davis v. Barron, 13 Wis. 227; Blakeslee v. Hewett, 76 Wis. 341. It is argued that the note had no valid inception, because the vice president, Mr. Gumaer, had no authority to fill out; the note as he did. It is admitted that Gumaer had authority to fill the blanks in the note. It is equally certain that plaintiff had no knowledge of any limitation of his authority. Plaintiff was dealing with an officer of the corporation apparently in charge of its business. Smith was also known to be an agent of defendant. For years he had been managing the Ashland store with Gumaer. Every circumstance known to plaintiff tended to show the good faith of the transaction. There was nothing in the situation to put him on his guard or on inquiry. The universal rule is that where a party to a negotiable note intrusts it to the custody of another, with blanks not filled up, it carries upon its face implied authority to fill up the blanks and perfect the instrument, and, as between such party and innocent third parties, the person intrusted with the note is deemed the agent of the former, and such party is bound by his act. Bank of Pittsburgh v. Neal, 22 How. 96; Johnston H. Co. v. McLean, 57 Wis. 258; Snyder v. Van Doren, 46 Wis. 602. We are also of opinion that the evidence shows a sufficient ratification of the delivery and use of this note. After full knowledge of the circumstances, defendant’s -president waived protest on the note, and promised payment if granted time; offered to turn out sleighs and other property, to pay it; and thereafter two payments were made upon the note by Mr. Gumaer, out of the money of the concern, before this action was brought. Repudiation of defendant’s liability •on the note should have been prompt and decisive. Mr Weed knew of what he claims to have been the unauthor [296] ized use of this note some time before it was due, and at a time when plaintiff might have reclaimed his logs. When payment was demanded, instead of denying liability, he promised payment, if granted time. He knew that Gumaer made the payments on the note after it was due, and made no objection thereto. Tested by the principles of fair dealing, the situation shows a ratification of the note. But there is another ground upon which this recovery can be sustained: While the evidence shows the logging operations were carried on in Smith’s name, there is ample to show that they were, in fact, firm transactions. It was admitted on the ■ argument that Smith was a partner in the Ashland store. All these logging deals were entered upon and carried out after full consultation between Smith and Gumaer. Supplies were taken from the store, and time checks of the men Avere made payable at that place. All of the circumstances are consistent with the claim that these Avere firm transactions, and inconsistent with the claim that Smith was carrying on an independent business for his personal profit. The firm received the proceeds of plaintiff’s timber, and, in legal effect, the note given was for a firm debt, which both Smith and defendant were bound to pay. Upon every permissible theory of the case, the judgment of the trial court was right. By the Qowrt.— The judgment of the circuit court is affirmed.