Township of Wexford v. Seeley , 196 Mich. 634 ( 1917 )

FELLOWS, J. (after stating the facts). The findings of fact are abundantly supported by the testimony. The treasurer, Mr. Seeley, and assistant cashier, Mr. Brown, agree in their testimony as to the making of the arrangement whereby, in consideration of the signing of the bond sued upon, a portion of the township funds were to be deposited with the Buckley Bank. The two other banks had already signed the bond when it was presented to Mr. Brown; his principal was in California; and it was apparent to him, as appears by his testimony, that unless he signed the bond for the partnership the Buckley Bank would get none of the township's funds. He had been given no authority to sign bonds for the partnership; indeed, the testimony would indicate that his authority to act for the partnership was very limited. Nevertheless, he signed this bond; he did not thereby bind the partnership, unless his acts were subsequently ratified. He was an adverse witness called by the plaintiff, and it was only under pressure that he gave some of the testimony above set forth. Under the circumstances, the trial court was fully justified in finding that the arrangements between Seeley and Brown were made, and that David W. Walker was made cognizant of the facts immediately on his return. Mr. Walker had not authorized the signing of this bond; neither he nor the partnership was then bound by the arrangement made by Brown; he could decline to carry it out, and no action could be maintained against him, or the partnership. But he could not take the fruits of the contract, its benefits, and not be bound by its terms. If he appropriated the contract and ratified it, it was the same as though he had authorized it in the first instance. Did he impliedly ratify this contract as found by the court? We think he did.

"Ratification takes place when one person adopts a contract made for him, or in his name, which is not binding on him because the one who made it was not duly authorized to do so. Ratification is a question of fact; and, in the great majority of instances, turns on the conduct of the principal in relation to the alleged contract or the subject of it, from which his purpose and intention thereabout may be reasonably inferred." Story on Agency, §§ 253-260. "And, generally, deliberate and repeated acts of the principal, with a knowledge of the facts, that are consistent with an intention to adopt the contract, or inconsistent with a contrary intention, are sufficient evidence of ratification."Oregon R. Co. v. Navigation Co., 28 Fed. 505.

Mr. Walker personally continued to receive deposits with full knowledge of the contract under which they were made, knowing full well that the township relied upon the bond signed in the name of the Buckley Bank. For the period covered by the bond — the term of the treasurer — the Buckley Bank had the funds of the township deposited there pursuant to the contract made with Brown in Walker's absence, but communicated to him immediately on his return about May 1st. No claim was ever made by Walker, or any one in his behalf to the obligee, that the bond was invalid, no claim that he and the copartnership were not bound by its terms. Every act of Walker's was consistent with ratification, no act of his was inconsistent with ratification; every act of his was inconsistent with repudiation of the contract, no act of his was consistent with its repudiation. The court below correctly found that he had impliedly ratified the contract. We must therefore determine the case as if David W. Walker had actually signed the partnership name to the bond in question.

Is the partnership bound? Fred R. Walker took no part in the management of the bank; that was left entirely with David W. There is no testimony that Fred R. authorized or had any knowledge of this transaction. His liability in this action must depend on whether he is responsible for the action of David W. The rule is too well established to need citation of authorities that one partner cannot bind his co-partner by any contract without the scope of the partnership, that each partner is the agent for his co-partners in the transaction of the business of the co-partnership, but not as to matters foreign to such business. Was this transaction within the scope of the partnership business? The business of the co-partnership was banking; the purpose of this contract, the obtaining of a deposit of public funds with this copartnership. There was nothing illegal about the contract, nothing that contravened the public policy of the State. On the contrary, the public policy of the State contemplates the giving of bonds by banks to secure the deposits of public funds. Section 1408, 1 How. Stat. [2d Ed.] (1 Comp. Laws 1915, § 2134), which provides for deposit of township funds in banks and the giving of bonds to secure such deposits; section 9912, 4 How. Stat. [2d Ed.] (2 Comp. Laws 1915, § 5693), which makes similar provisions with reference to the deposit of school funds; sections 1049-1057, 1 How. Stat. [2d Ed.] (1 Comp. Laws 1915, §§ 2377-2385), which provides for the deposit of county funds in banks, the giving of bonds to secure such deposits, requires competitive bidding for the deposit, and is made applicable to "any institution doing a banking business, whether incorporated or not"; section 808, 1 How. Stat. [2d Ed.] (1 Comp. Laws 1915, § 289), requiring bonds of banks for State funds deposited with them.

All of this legislation indicates the policy of the State that public funds shall be deposited in banks, and recognizes the giving of bonds by banks to secure such deposits, as a proper incident to the banking business. With what force can it be urged that obtaining the deposit of public money with a banking copartnership and signing a bond to insure its safe return is foreign to the banking business? A deposit of public money is a desirable one for any banking institution; it is usually larger in amount than private deposits and continues through the year. In the instant case, it bore no interest; whatever benefit there was from the deposit was a benefit to the copartnership. The contract was as clearly within the scope of the business as would be a contract to pay interest to secure the deposit, or to pay for advertising in the village paper to secure the same results. The contract was within the scope of the banking business, and the copartnership was bound by it.

We have examined the other assignments of error and find them without force.

The judgment is affirmed, with costs to plaintiff.

KUHN, C. J., and STONE, OSTRANDER, BIRD, MOORE, STEERE, and BROOKE, JJ., concurred.