First National Bank of Omro v. Bean

Siebegkee, J. The trial court adjudged that Mrs-. Bean was liable because the acts of Herbert L. Sweet were within The authority conferred by the power of attorney. Mrs. Bean by the power of attorney grants Herbert L. Sweet power “to take the general control and management of [her] affairs, business and property,” to perform all acts connected therewith, including the execution, indorsing, and paying of promissory notes, the receipting for and paying of money, and [480] “generally [to] do every act, matter or tiling which the nature of said business shall require.” The powers thus conferred are clearly defined by the context of the writing and confer authority to control and manage her affairs as her business, and property may require. The authority to execute, indorse, and pay promissory notes is restricted to the scope of the general power conferred to do all acts required for the control and management of her affairs, business, and property. ® This power to execute and indorse notes should therefore 'not be extended to include authority to execute promissory notes-for purposes not embraced within the execution of the powers conferred. The terms of the power include the authority to indorse only such promissory notes as are necessarily connected with the execution of these powers, and apply only to promissory notes which her business necessities demanded. The inquiries therefore are: Was the note in question made- and executed to carry out the power conferred on Sweet for the control and management of Mrs. Bearís affairs, business,, and property ? and Had the bank officers, under the facts and circumstances of the negotiation of the note, the right to accept it as a note pertaining to the management of Mrs. Bean’s affairs and as executed under the power of attorney ? There-is no dispute but that Herbert L. Sweet made and executed the note, and it clearly appears that it was not in fact connected with the management and control of Mrs. Bean’s affairs, business, and property. The evidence relevant to this question permits of but the one inference that this note had in fact no connection with the administration of Mrs. Bean’s property and business affairs. It is averred by the respondent that the bank officers were-not apprised of this fact when they negotiated for the note, and that they therefore had a right to assume that it was made and executed by Herbert L. Sweet under the power of attorney, and that it was necessarily connected with the affairs and business intrusted to his control and management. This [481] claim is negatived "by the facts. The power of attorney was properly recorded. This afforded a convenient opportunity for the officers of the hank to ascertain the extent of the powers actually conferred by the power of attorney. In the light of the facts of the transaction with the.bank it cannot be said that the officers were warranted' in concluding that the note Uas given by Herbert L. Sweet as attorney in fact for Mrs. Bean. The face of the note shows-that it was the note of the Winnebago County Agricultural & Horticultural Association. It purported to be executed by its president and secretary and to be personally indorsed by the president and secretary and by Mrs. Sweet and Mrs. Bean. The note and the indorse-ments bear no evidence that the note was connected with the affairs, business, and property of Mrs. Beam Nor did it then bear any evidence that it had been executed by Herbert L. Sweet as attorney in fact. Herbert L. Sweet deposited the proceeds of the note with the bank t_G the credit of his personal account. Obviously this must have been known to the bank, and it accords, with and corroborates the idea that-the bank was apprised of the fact that Herbert L. Sweet had obtained the money on the note for his own use and benefit. Taking these facts in connection with the restriction in the power of attorney, by which he was limited as such attorney in fact to the giving of such notes as were required for the conduct and management of Mrs. Bean's business affairs and property, and it dearly follows that the plaintiff has failed to show any grounds which justified it in accepting the note in question as one authorized by the power of attorney. Erom these facts and circumstances it also follows that the alleged guaranty of February 24, 1902, was not binding upon Mrs. Bean, though it is in form executed by Herbert L. Sweet as such attorney in fact. The bank was then informed that the note was not embraced within the authority of Herbert L. Sweet’ and that he was powerless to impose such a liability upon his principal in this manner. Furthermore, this con [482] tract of guaranty is an apparently independent undertaking of a date long subsequent to the making and negotiation of the note and before its maturity. It is wholly without consideration as to Mrs. Bean, and the alleged guaranty is therefore of no .effect. In view of the fact that the powers of Herbert L. Sweet to make notes for Mrs. Bean were limited and restricted to cases where they were necessarily required for the conduct and management of her affairs, business, and property, and in view of the facts and circumstances established by the evidence, the case does not show that the note in question was one within the authority conferred on Herbert L. Sweet or that the bank had the right to deem it to be such a note. It is contended that the payments made by A. J. Barber as Mrs. Bean's agent on the collateral note of February 26, 1902, are a ratification of the obligation of the original note. When these payments were made, neither Mrs. Bean nor Mr. Barber had any knowledge of the alleged original obligation. To make the acts of Mr. Barber efficacious as a ratification it must appear that he had authority to act in the matter for Mrs. Bean and that both he and Mrs. Bean had knowledge of the material facts. The record shows that neither Mrs. Bean nor Mr. Barber knew that the note upon which the suit is brought was in existence. This in itself is conclusive that he did not ratify it. AVe are persuaded that the trial court erred in holding Mrs. Bean liable on the note. By ihe Court. — Judgment reversed as to Julia M. Bean, and the cause remanded with directions to- award judgment dismissing the complaint as to Julia M. Beam.