National Bank of the Republic v. Old Town Bank of Baltimore

JENKINS, Circuit Judge, after stating the facts as above, delivered the opinion of the court. The authority to collect and to receive from the executors the amount coming to the distributees included all the usual means of executing that authority with effect (Story, Ag. § 58), and all appropriate modes and reasonable modes are deemed to be within the scope of the authority conferred (Leroy v. Beard, 8 How. 451, 468, 12 L. Ed. 1151). The authority is limited to the particular subject, but should be construed to effectuate the design and object. The authority of an attorney in the course of a litigation and in the prosecution and collection of claims has been often considered, but the courts have not at all times been at agreement. Hogg v. Snaith, 1 Taunt. 347; Howard v. Baillie, 2 H. Bl. 618; Merrick v. Wagner, 44 Ill. 266; Robinson v. Bank, 86 N. Y. 404; Jackson v. Bank, 92 Tenn. 154, 20 S. W. 820, 18 L. R. A. 663, 36 Am. St. Rep. 81; Harbach 728 v. Colvin, 73 Iowa, 638, 35 N. W. 663; Levy v. Brown, 56 Miss. 83; Maxwell v, Owen, 7 Cold. 630; Clark v. Randall, 9 Wis. 135, 76 Am., Dec. 252; Sherrill v. Clothing Co., 114 N. C. 436, 19 S. E. 365. There appears a tendency to relax the strict limitation of implied authority to meet the necessity of prompt action in modern business methods, particularly when client and attorney are at considerable distance, from each other. After all, the question of authority must depend, as Mr. Mechem observes, largely upon circumstances; and “authority to do a given act carries with it an implied authority to .do those things which are necessary in order to accomplish the main end, .apd what is necessary must be determined in many cases-by reference to the partícula’- facts.” Mechem, Ag. § 816. In the case at bar, Fairman, the attorney of the legatees, alone was authorized to receive from the executors the amount coming to the distributees. It was also his duty to take only money in payment of the claims. Garvin v. Lowry, 7 Smedes & M. 24. Elliott & Hoffman were engaged by Fairman to- assist in the prosecution and collection of the claims. They were subagents, without privity with Fairman’s clients. They were agents of the agent only. Mechem,. Ag. § 197. They were subordinates, not substitutes. They were responsible to Fairman, not to his principals. He was responsible .to his clients for the conduct of his subordinates, and for all moneys 'which should come to their hands. Their duty was fulfilled, their ■liability discharged, when they had paid to Fairman the moneys collected by them as the fruit of the litigation. They had no warrant to constitute themselves the guardian of Fairman’s clients, or to volunteer protection to them against their chosen counsel, if, indeed, they had any such purpose. They drew their checks upon their bank for the amount collected, less the fee for service, which had been -agreed upon with Fairman, but not with his clients. It was-Fairman’s duty to account to his principals as well for the amount collected as for the fee exacted. If he could not sustain' the reasonableness of that fee, he was. liable to respond to his principals. He, no't ¡Elliott _ & Hoffman, took the risk of the arrangement he had made with the latter. It was their duty to pay to Fairman the amount collected. The checks drawn did not constitute payment. They were but a convenient mode of making payment. Elliott & Hoffman could not rightfully curtail the authority of Fairman to-receive in money the fruits of the litigation, since he had been thereto fully authorized by his clients, with whom Elliott & Hoffman had no privity. Indeed, we are inclined to believe that Elliott & Hoffman did not design to limit, if they could, Fairman’s authority; that these checks were drawn to the order of the distributees, respectively, merely to indicate the division of the fund among them, and in the expectation that Fairman would himself collect and distribute the money. Otherwise they would at once upon receipt of the checks from their bank have objected to the manner of the indorsement. They rested without objection for an entire month after return of the checks to them, objecting for the first time upon ascertaining that Fairman had defaulted in his duty to his clients, and then-only upon, the ground that the indorsements were not satis 729 .factory, not that the indorsements were beyond' the authority df Fairman. His check to the order of Swander Was not returned or objected to, although similarly indorsed; and this, doubtless, because Fairman had accounted for the amount to his client. The subsequent proceedings against Fairman, successful in part, were instituted in behalf of his defrauded clients by the same attorneys who represent the Old Town Bank in this suit. These facts lend color to the suggestion. that Elliott & Hoffman’s late objections .and return of the checks were not because the indorsements were unauthorized and were not approved by them at the time,, but were made to forward the interests óf Fairman’s clients against the National Bank of the Republic, and that this suit, under some understanding and arrangement, is in fact prosecuted in the interest of those clients. However that may be, we are of the opinion that, under the peculiar facts disclosed, Fairman was authorized to collect this money, and for that purpose to execute these indorsements upon the check. His clients were scattered, some of them in distant states. He was responsible to them for the money which Elliott & Hoffman had collected. The checks were not payment to him of that ■amount. They were but a convenient mode or means of remitting to him the money collected. If for any reason, the'checks should fail of honor, his responsibility to his clients remained, and could not be discharged except by the actual payment of money to them. We do not mean to say that the implied authority of an attorney authorizes an indorsement of his client’s name in such way as to bind the client as an indorser, but that, under the circumstances of this case, Fairman was authorized to collect the money of his clients, and for that purpose to make these indorsements as a proper means to that end. The indorsement was availing to protect the drawer of the check, and that is sufficient. It was ruled in Brown v. Donnell, 49 Me. 421, 77 Am. Dec. 266, that the agent of a corporation may have authority to transfer a note by indorsement, but no authority to bind the corporation as indorser of it; remarking that in like cases the distinction is often overlooked between the authority to bind one by a contract of indorsement, and the authority to transfer property by an indorsement. The judgment is reversed, and as the cause was tried below upon stipulated facts, and upon those facts, as matter of law, we are of opinion that there can be no recovery, the cause is remanded, with a direction to the court below, upon the facts stipulated, to render judgment for the defendant below.