Laflin & Rand Powder Co. v. Sinsheimer , 48 Md. 411 ( 1878 )

Bobinson, J.,

delivered the opinion of the Court.

The appellant sued the appellee, as acceptor of the following bill of exchange:

“$728.00.” “Irontown, Nov. 18th, 1874.”

“Sixty days after sight, pay to the order of Laflin & Band Powder Co. seven hundred and twenty eight dollars, value received, and charge to account of

Lancaster Furnace and M. Co.

“ To L. Sinsheimer, per S. J. A. Jan. 20.”

Baltimore. ’ ’

Written across its face, “Nov. 20, 1874, accepted. L. Sinsheimer, Treas. of L. F. & Mining Co.”

It is insisted, that the bill on its face imports a personal liability of the appellee as acceptor ; and that parol evidence is inadmissible either to prove that it was accepted by him in his official character as Treasurer of the corporation, and for a debt due by it to the plaintiff, or to prove other facts and circumstances with a view of determining the personal liability of the appellee.

The construction of written instruments, signed by persons describing themselves as agents, or as officers of corporations, has been a fruitful source of litigation, and the decisions are conflicting and in many cases unsatisfactory. Not that there seems to be any difficulty in regard, to the rules of law, which ought to govern in the interpretation of contracts, but in the application of such rules to each particular case. The subject is fully considered by Parsons on Notes and Bills, Story on Promissory Notes, Byles on Bills of Exchange ; and we do not propose to examine in detail the many cases referred to by these writers, nor attempt the fruitless task of reconciling conflicting decisions.

After all, the question whether one signing a note or accepting a bill, as an officer of a corporation, means to bind bimself personally, is a question of intention between tbe parties to tbe instrument; and this intention, we admit, as a general rule, must be determined by the face of the paper itself. Where one having authority, accepts a bill in such a manner as manifests an intention not to bind himself, but to bind a corporation of which he is an officer, and to be paid out of the funds of the corporation, it is clear in such a case, the acceptance will not bind him personally.

But cases frequently occur, owing to the almost infinite variety in forms of expression and in the use of words, in which it is difficult to determine from the face of the paper itself, whether the party signing, means to bind himself, and adds his official character merely for the purpose of indicating the character in which he acts ; or whether the official character is added for the purpose of showing he does a mere ministerial act; and that the promise is made and the obligation incurred for and in behalf of the corporation. In other words, does he, in the language of the Court in Bradlee vs. Boston Glass Com’y, 16 Pick., 347: “Apply the executing hand as the instrument of another ; or the promising and engaging mind of a contracting party.” In such cases where there is such ambiguity on the face of the paper as to be consistent with either construction, whether one means to bind himself personally, or acts only in an official capacity, parol evidence is clearly admissible, to prove the circumstances under which the contract was made; or, in other words, to prove the true nature of the transaction. Haile, et al. vs. Pierce, 32 Md., 330; 1 American Leading Cases, marg. 633, Notes to Bathbon vs. Budding and Pentz vs. Stanton.

Parol evidence in such cases does not contradict, alter or add to the written instrument, but explains the intention of the parties, and which could not he ascertained with any degree of certainty from the face of the instrument itself.

The question then in this case is whether there is any such ambiguity on the face of this hill and acceptance, as to make parol evidence admissible to prove the circumstances under which it was accepted. Here is a bill of exchange, drawn by a corporation on the appellee in his individual capacity, to pay a certain sum of money to the appellant. It is returned accepted by him as Treasurer of the Lancaster Furnace and Mining Co.

How if it had been drawn on him as Treasurer, and so accepted, it certainly might be contended that the acceptance did not hind him personally.

But it is said having been drawn on him individually, he was hound to accept according to the tenor of the bill, or disclaim all personal liability by his acceptance. To this, however, it may he replied, that it was in the power of the appellant, as payee, to. insist upon an absolute and unqualified acceptance, and upon the refusal of the appellee so to accept, or upon a qualified or conditional acceptance, to have notified the drawer accordingly.

Be that as it may, no one can read this hill and acceptance and say that it necessarily or even clearly imports an agreement on the part of the acceptor to he individually liable, and if it be conceded that it is liable to such a construction, it is equally clear it may be construed as an acceptance by the appellee in his official character, as Treasurer of the Corporation. Being consistent therefore with either construction, parol evidence was admissible to prove the circumstances surrounding the transaction for the purpose of enabling the Court and jury to determine the respective liabilities of the parties.

In Mare vs. Charles, 5 Ellis & Black., 978, it does not appear that parol evidence was offered to explain the character of the acceptance, and the acceptor was held liable on the ground that where the words of an instrument will reasonably bear an interpretation making it valid, Courts will not so construe it as to make it void. Or as put. by Coleridge, J., in that case, it ought to be construed “ ut res magis valeat,” and not “ ut res magis per eat.”

But where the acceptance is so worded as to be ambiguous or susceptible of different constructions, the introduction of parol evidence to explain this ambiguity and the circumstances under which the acceptance was made, does not necessarily render either the acceptance or the bill itself void. The object of the proof in such cases is to determine the question of the personal liability of the acceptor.

The evidence therefore offered in this case being admissible, if it established the fact that the bill was drawn for materials furnished the Lancaster Furnace and Mining Co., and the appellee was authorized, and did in fact accept it as Treasurer of the Corporation, and it was understood between the payee, plaintiff below, and the acceptor, that the latter was not to be liable personally, then the plaintiff was not entitled to recover, and there was no error in granting defendant’s first prayer.

The defendant’s third prayer, however, was clearly erroneous. The Statute of Frauds has no application in suits on an acceptance, which as against the payee, conclusively admits funds of the drawer to be in hand. The drawer and acceptor are the immediate parties to the consideration, and if the acceptance be without consideration, the drawer cannot recover of the acceptor. But the payee holds a different relation ; he is a stranger to the transaction between the drawer and the acceptor, and is therefore in a legal sense a remote party. In a suit by him against the acceptor, the question as to the consideration between the drawer and acceptor cannot be inquired into. The payee or holder gives value to the drawer, and if he is ignorant of the equities between the drawer and acceptor, he is in the position of a bona fide endorsee., Robinson vs. Reynolds, 2 Queen’s Bench, 196; Raborg vs. Peyton, 2 Wheat., 385 ; Storer vs. Logan, 9 Mass., 60.

(Decided 26th March, 1878.)

For these reasons the judgment below must he reversed and a new trial awarded.

Judgment reversed, and new trial awarded.