Waterproof Paper & Board Co. v. Van Buren

Crownhart, J. A careful review of the testimony leads to the conclusion that the evidence submitted is conclusive on the question of the agency of Dow. The defendant was president of the corporation, .was its majority stockholder, was himself a creditor, and was personally anxious that the affairs of the corporation be composed. The plaintiff had begun an action in garnishment against the corporation before it became insolvent, and had released the garnishee’ [644] proceedings on the strength of the defendant having personally indorsed the corporation’s note for the amount due to the plaintiff. It thereby had the preference over unsecured creditors, which it naturally would not surrender under ordinary conditions. It appears perfectly plain in the composition proceedings that the plaintiff had no intention of surrendering that claim, and it became a party to the composition proceedings on the express condition that the defendant was to remain liable on his indorsement. That express condition was conveyed in writing to Mr. Dow, who had charge of the proceedings. The attorney for the plaintiff, Mr. Nye, had no authority to bind his client to any other condition than that submitted to him in writing, and he did not attempt to bind his client to any other condition. It appears from the evidence that Dow generally represented the creditors as well as the corporation; that in so doing he took up matters of progress with the defendant, Van Burén, from time to time, and that he did communicate to Van Burén the position taken by the plaintiff at the meeting of the creditors. It appears that the defendant, Van Burén, did discuss the matter with Mr. Dow, and did say to him that he would have to have an extension of time in which to pay the plaintiff, and that Dow communicated this information to plaintiff’s attorney. It seemed perfectly plain that the defendant intended that .Dow should so communicate with the plaintiff, and that Dow was his agent for that purpose. Dow secured the extension of time desired by the defendant, and the composition was signed by the plaintiff on that condition. It would seem that Dow had at least implied authority to act for the defendant, and did assume to so act. The defendant secured a settlement of the corporation’s affairs through the agency of Dow, on terms which he very much desired and which were beneficial to him. He is not now in position to claim that Dow was not his agent. On the question of presentment and notice to the defendant of the failure of the corporation to pay the note, there [645] is authority on both sides of the proposition. We think the better rule is that, under the circumstances of this case, where the indorser of the note of the corporation was the president of the corporation and held a majority of the stock, knew of the insolvency of the corporation, knew that the corporation had not paid, and could not pay, the note, it would be a perfectly vain and useless thing to require the presentment and notice of dishonor. It could add nothing to the defendant’s knowledge of the situation. If such presentment and notice were given him he could gain nothing thereby, and could not thereby protect himself from any liability. By the Court. — The judgment of the superior court is reversed, with directions to enter judgment against the defendant in accordance with this opinion.