Patten v. Moses

The opinion of the Court was drawn up by

Goodenow, J.

In Cabot v. Given, 45 Maine, 144, it was decided that, in a suit by an indorsee against the maker of a promissory note, payable to an insurance company, and indorsed and transferred for the company by the President, parol evidence that he was acting President at the time of the indorsement, is admissible, and sufficient, without producing the records of the company; and that proof of the handwriting of such President, is sufficient evidence of the indorsement and transfer of the note, without evidence that he had special authority for that purpose.

In a note to Miller v. Race, 1 Smith’s Leading Cases, 609, it is stated, that "it appears to be settled in the American cases, that the holder of a negotiable note is, prima facie, entitled to recover, upon merely producing the note; but that if the defendant prove the note was fraudulent in its inception, or fraudulently put in circulation, or stolen, or lost, or obtained by duress, there is thrown upon the plaintiff the burden of proving that he is a holder bona fide, or for a valuable consideration.”

The note in suit is dated Nov. 1, 1855, on fourteen months, signed by the defendants, and payable to the Com. Mutual M. Ins. Co., or order, for the sum of $321. And indorsed, "waiving right of demand and notice.

"Com. M. M. Ins. Co., by "George H. Folger, President.”

The deposition of Frederic S. Davis shows that it was discounted by Traders’ Bank, Boston, August 30, 1856, for the office.

From the deposition of Harvey Jewell, it appears that, on April 23, 1856, George H. Folger resigned his situation as President, but that he continued as one of the directors of the company, until May 5, 1857, when he resigned as director. The deposition of George H. Folger shows that he was a director during the years 1855 and 1856, and was President up to about the first of May, 1856, and ex officio Treasurer. That the note was indorsed by him to raise money at the Traders’ Bank, for the company, and that, in behalf of the company, he actually received the amount of the note, less the discount. That the company ceased paying losses about April, 1856 ; and that no one acted as President after him; that the finance committee authorized the discounts; that the negotiations of the paper were made by the President and sanctioned by the financial committee.

Folger was President in 1855, and was reelected on the first Monday of April, 1856, and resigned the office the 23d of the same month, but continued as director "until May, 1857.

But it is alleged that Folger indorsed the note after he resigned the office of President; and this is proved. But it is not proved, as alleged, that the plaintiff in fact, or the plaintiffs in interest, had any knowledge of such resignation. It may well be inferred that they had not. As prudent men, if they had knowledge of that fact, they would, probably, have declined to take the paper upon his indorsement as President. He had been President in 1855, had been recently reelected, was a director, and held himself out as President, with the knowledge of other directors and of the financial committee. Why should not strangers be justified in trusting him and negotiating with him, as President? It is like the case of a partner in a firm; he may bind the firm after a dissolution of the partnership, and before notice of the dissolution, express or implied.

The insurance company have placed Eolger in a situation to impose upon the plaintiffs, and they should be estopped to deny his authority to indorse the note, especially after having received the avails of it. The defendants will be safe against any future claim, by any other plaintiffs, when they have once paid the note to the present plaintiff, or had judgment against them in this case.

It is certainly reasonable that losses, resulting from the unfaithfulness of an agent, should be borne by the principal whose misplaced confidence has afforded the means of producing them, rather than by strangers, acting fairly in the ordinary course of business. 2 Story on Eq., § 1258. But here there is no loss. -

A default must be entered and judgment for plaintiff for the amount of the note and costs.

Davis, J.

The defendants, in argument, pressed mainly the first point, relying upon Bragg v. Greenleaf, 14 Maine, 395. But in that case the owner of the note did not bring the suit, or order it brought. The suit was brought by a nominal plaintiff, who had no interest in it.

Here the suit was brought by express direction of the Traders’ Bank, the owners, and is carried on by them, — Patten consenting to the use of his name, but taking no interest in the suit.

In regard to the transfer of the note, while it might not bind the insurance company upon the contract as indorsers, it was sufficient to pass the property, to the Bank. The insurance company are estopped by the acts of their officers from claiming the note. I concur in the opinion that judgment must be entered for the plaintiff.

Tenney, C. J.; Appleton, Cutting and May, JJ., concurred in the result.