ALBANY, MUNN V. COMMISSION The second exception was, I think, properly abandoned on the argument; and the opinion of the Court below on the last January, 1818 point, to wit, that the cartman was not to be regarded as the general agent of the consignees, for receiving goods merely on the ground of his being often employed by them to cart goods, was undoubtedly correct. Because a merchant usually selects a cartman, and employs him exclusively in carrying goods, according to his orders, it by no means follows that such cartman is his general agent for receiving goods, without orders. The defendants in error are, therefore, entitled to judgment Judgment accordingly Co. *MUNN against The President and Directors of the COMMISSION COMPANY. A [*44] corporation, authorized their THIS was an action of assumpsit, on a bill of exchange, drawn by Herman Ruggles, in favor of Oliver Ruggles, or order, by the act of on Noyes Darling, as agent of the defendants, dated the 26th incorporation to of April, 1814, at sixty days after date, for 4,500 dollars. The employ stock solely in bill was accepted by Darling, as agent, and was endorsed by Oliver Ruggles. The plaintiff was the holder of the bill. cause was tried before Mr. J. Platt, at the New-York sittings, in December, 1815. The By the second section of the act of April 9th, 1813, (sess. 36. c. 150.) (d) by which the defendants were constituted a corporation, it is, among other things, enacted, that the stock of the company "shall be employed solely in advancing money, when requested, on goods and articles manufactured within this state, or the United States, except salt manufactured within the same, advancing money upon goods, such goods up and the sale of on commission, may lawfully accept bills drawn on account of future consignments, or deposits of goods. The principal is liable for the acts of a gener al agent, acting within the general scope of his authority; and a third person cannot be affected by any private instructions from the principal to his agent. But the principal is not bound by the acts of a special agent beyond his authority. (a) A company, incorporated for the purpose of selling goods on commission, is bound by the acceptance of its general agent of a bill, drawn on the company, on account of goods, stipulated to be deposited with the company, for sale on commission. Where a bill or note is valid, as between the drawer or maker, and the payee, so that the latter can maintain an action upon it, against the former, it is valid in the hands of an endorsee, who has discounted it at a higher rate than the legal rate of interest, and he may recover the full amount of the bill, or note, against the maker or acceptor. (b) But the holder of a note, purchased at a discount greater than the legal rate, can only recover from his endorser the sum which he actually advanced. A bill, or note, drawn for the purpose of being discounted, at an usurious rate of interest, and endorsed for the accommodation of the maker, or drawer, is void in its original formation. (c) (a) Vide Perkins v. Washington Ins. Co. 4 Cow. Rep. 645. Beals v. Allen, 18 Johns. Rep. 363. Andrews v. Kneeland, 6 Cowen, 354. (b) Vide Rice v. Mather, 3 Wendell's Rep. 62. Beach v. Fulton Bank, Ibid. 573. Brown v. Dennison, 2 lbid. 593. Coster v. Dilworth, 8 Cow. Rep. 299. Rossiter v. Rossiter, 8 Wendell's Rep. 494. Bank of Chenango v. Hyde, 4 Cow. Rep. 567. Powell v. Waters, 17 Johns. Rep. 176. S. C. 8 Cowen, 670. (c) Acc. Bennet v. Smith, 15 Johns. Rep. 355. (d) 3 R. S. 550. MUNN V. and the sale of such goods and articles on commission: Provided, January, 1818. That no more than lawful interest shall be charged or received for any money so to be advanced, and that the usual mercantile commissions, with the usual charges, shall be charged or received COMMISSION on such sale, and that no commissions be charged or received, Co. 1 except upon actual sales: And provided also, That it shall not be lawful for the said corporation to use or employ any part of the said capital, nor any money, funds, or effects whatsoever, in the purchase or sale of any goods, wares, merchandise, or commodities whatever, other than, and except in advances in money, on American manufactures, and selling the same on commission as aforesaid, nor in banking, or in *any moneyed operations, nor in the purchase or sale of bills of exchange, or any stock, or funds, of this state, or the United States, except in selling the same, when truly pledged to the said corporation, for a debt, or debts, due to the same.' | * 45] [46] By the by-laws of the company, an agent was directed to be appointed, whose powers and duties are thus defined :-" The agent will be required to superintend, generally, the business of the company; to make contracts, both for advances and sales, under such directions as the board may give from time to time; to sign checks for the cash payments of the company, which are all to be countersigned by the secretary, and to countersign all obligations which may be signed by the president, with the seal of the company; to lay before the board statements of the affairs of the company, when required, and especially at each regular monthly meeting of the directors, to give a full and particular statement of the whole business of the company." Shortly after this bylaw was passed, a committee of the directors made a report, in relation to the duties of the agent, which was accepted by the board on the 17th of May, 1813, the most material parts of which are as follows:-" The committee do not deem it expedi ent to publish any proposals for the transaction of business, excepting that they will receive on consignment goods of American manufacture, and will make reasonable advances on the same, charging the customary commissions and expenses. They deem it expedient, however, to adopt certain rules for the guidance of the agent, who will make known such parts of them as are proper to individuals proposing to transact business with the company. 1. The agent is authorized to receive on consignment all goods of American manufacture, and to make advances on the same not exceeding three fourths of the market value of such goods, and requiring a receipt for the advance, with promise to refund, with interest, in case the goods should not be sold within a limited time, not exceeding one year, or should be insufficient to meet the advance. 2. The agent, with the advice of a monthly committee of two directors, may make arrangements with individuals, or manufacturing companies, for the general consignment of their manufactures. 3. The agent, with the advice of the same committee, may make reasonable ad vances on shipments of American manufactures. 4. The agent shall not make any other appropriation of the funds of the company, without the order of the board of directors, except the current expenses of the company, and balances due for sales. 5. The agent may agree to transact business on the following terms, &c. &c. The preceding regulations are deemed to be sufficient restrictions on the agent, whose general duties are pointed out in the report made to the directors, on the 26th of April," (the material part of which was the by-law above stated,)" with which he is expected to comply." Darling was appointed the agent of the company, and was at the same time one of its directors. At the time that the acceptance in question was made, Herman Ruggles gave Darling a receipt, stating the terms of the agreement entered into between them, and dated the 26th of April, 13. This receipt was as follows:-"Received of Noyes Darling, agent of the Commission Company, his acceptance of my draft in favor of Oliver Ruggles, at sixty days from this date, for 4,500 dollars, which acceptance is wholly for my accommodation; and which I hereby agree to return to said Noyes Darling, to be cancelled on the 2d day of May next, or to pay him the amount of said acceptance, on said 2d day of May, and, as collateral security, for the return or payment of said acceptance, on said 2d of May, I have placed, and do hereby place, in the hands of said Darling, my three several notes of hand, &c. And I do agree, in consideration of the accommodation afforded by the Commission Company, to place in the hands of their said agent, for sale on commission, one month from the date hereof, 100 hogsheads of domestic distilled spirits." Ruggles neither paid the amount of the bill, nor delivered it up, nor were the spirits deposited pursuant to the agreement. An entry of this acceptance was made in the bill book of the company by their secretary, and it was offered for discount, at the Merchants' Bank, where it was refused. Ketchum, a broker, testified, that, in April, 1814, he received the bill from Oliver Ruggles to raise money upon. The broker took the bill to For & Leggett, and offered it to them *for sale: they retained it, under the pretence that they wished to examine into the state of their funds, and in the mean time gave it to another broker, Franklin, who sold it to the plaintiff for 4,362 dollars 75 cents, and paid the money to Fox & Leggett; out of this money they paid over to Ketchum the amount of the bill, deducting discount at a higher rate than had been taken by the plaintiff, and so making a profit on the transaction. Ketchum paid over the money which he had received, to Oliver Ruggles. It was proved that Darling had accepted a number of bills, in the same manner as the one in question, which were regularly paid by the company, but there were some acceptances which were never entered in the company's books, and the funds arising from them had never come into their hands. The president of the company was a director of the Merchants' 6 41 ALBANY. January, 1818, MUNN V.. COMMISSION Co [* 47 ] MUNN V. Co. ALBANY, Bank, and was present when the bill was offered for discount, January, 1818. and a few hours after caused a meeting of the directors of the company to be called, to inquire into the transaction; but, at the request of Darling, the business was postponed. On the 2d of COMMISSION May, when another meeting of the company was called, there was not a sufficient number present to form a board, and the next day Darling absconded. The company afterwards settled and compromised acceptances of Darling, which had not been entered in their books, for the purpose of preserving their credit. [*48] At the trial, Herman and Oliver Ruggles were offered by the defendants as witnesses, to prove that no rum had ever been deposited with the company, pursuant to the agreement, and that the bill was, in its inception, usurious; but they were rejected by the judge. A verdict was taken for the plaintiff, by consent, for the amount of the bill, with interest, subject to the opinion of the Court, on a case, of which such parts as appeared material are above stated. The cause was argued, at a former term, by Wells and Hoffman, for the plaintiff, and by T. A. Emmet, and D. B. Ogden, for the defendants, on the two points raised by the counsel for the defendants, to wit. 1. That the defendants were not bound by the acceptance of the bill by Darling. 2. That the transaction was usurious. At the last October term, the Court directed a second argument, on the second point. It *Arguments for the Plaintiff. 1. Whatever may have been the law formerly, it is now well settled, that a corporation may be bound by a contract, made by their authorized agent, without their seal; and that an action of assumpsit lies against a corporation. (Stafford v. Albany, 6 Johns. Rep. 1. Danforth v. Schoharie Turnpike Company, 12 Johns. Rep. 237. 10 Mass. Rep. 295.) It is fully proved, by one of the witnesses, (Jennings,) that Darling was the general agent of the defendants, and was in the habit of accepting bills for them, and that his acceptances had been regularly paid by the defendants. may be said, perhaps, that the defendants, by the act for their incorporation, (sess. 36. ch. 150. s. 1, 2.) had no authority to accept bills; but were restricted to making advances of money on goods sent to them for sale. Though the preamble speaks of advances on the deposit of goods, yet the enacting clause is silent on that point, and the practice of the company. had been different. They have not required the actual deposit of goods before making advances. The acceptance of a bill is nothing more than an agreement, in writing, to advance money on a certain day specified in the bill. It is enough, that the acceptance was in the ordinary course of the defendants' business. The object of the act was merely to give the defendants, as a corporation, the power to transact business as commission merchants. An actual deposit, or a reasonable expectation of a deposit of goods, on a certain day, was sufficient to authorize the acceptance to advance the money. The whole evidence goes to show that Darling was the gener al agent of the defendants; and he proves, also, that he acted within the scope of his authority or instructions. But whether he did so act or not, yet being the general agent of the defendants, his acts are obligatory on them. The particular instructions given to him for the regulation of his conduct may make him accountable to his principals; but the public, or third persons, are not bound to inquire into his authority; they know him only in his ostensible character as a general agent. To require that all persons dealing with such an agent should ascertain the extent of his power, would destroy all distinction between a general and.*special agent, and would render it unsafe to take even a bank note, without inquiring whether the president and cashier of the bank had any authority to sign it. It is enough that the general agent acts ostensibly within the scope of his authority This doctrine is more especially applicable to corporations, who can act only by their agents. The distinction between general and special agents is well settled in the books. (Fenn v. Harrison, 3 Term Rep. 757. Whitehead v. Tuckett, 15 East, 400. Runquist v. Ditchell, 3 Esp. N. P. Cas. 64, 65. Batty v. Caswell, 2 Johns. Rep. 48. Gibson v. Colt, 7 Johns. Rep. 390. Pothier, Trait. des Oblig. n. 79.) Again; on principles of the commercial law, the acceptance is binding, whether D. exceeded his instructions or not. This being a negotiable paper, the plaintiff, a bona fide holder, is not to be affected by any fraud committed in putting it into circulation. (Woodhull v. Holmes, 10 Johns. Rep. 231. Peacock v. Rhodes, Doug. 633.) Admitting, however, that D. exceeded his authority, yet the defendants have recognized and adopted his acts so as to give them validity. Where a principal is informed of the acts of his agent, and does not, in a reasonable time, express his dissent, he is presumed to assent to them, and will be bound by such implied adoption. (Cairnes v. Bleecker, 12 Johns. Rep. 300. Hodgson v. Davies, 2 Camp. N. P. Cas. 530.) 2. As to the objection of usury. To avoid an instrument, on the ground of usury, it must be shown that it was, in its inception, founded on an usurious loan of money. (Scott v. Brest, 2 Term Rep. 241.) Any subsequent taint which it may, afterwards, acquire, in being negotiated between third persons, will not destroy the original contract. The original party, maker, drawer, or acceptor, cannot object that there has been a subsequent usurious contract between the endorser and endorsee. Then, was not this a valid bill in its inception? It was advanced on an hypothecation or deposit of goods by O. Ruggles. There was no actual or implied agreement that the acceptance should be taken or used for the purpose of raising money in the market on usury. There were 400 shares, also, deposited as collateral ALBANY, January, 1818. MUNN v. COMMISSION Co [ * 49 ] |