1903 HAMBRO บ. BURNAND. Bigham J. and the nature and extent of the remedies against him, may securities valueless through the fraud of the masters of vessels, and this inconvenience was pressed in the argument of the case, but without avail, and apparently the commercial world has not found such inconvenience to be so great as was suggested in argument." The rules laid down in these cases of tort may not be strictly applicable to a case of contract, but they appear to me to support the principle that an agent who is not in fact acting for his principal cannot bind him by merely purporting so to act. Since the argument my attention has been called to a passage in Story on Agency, 9th ed. p. 91, s. 73: "If the written authority apparently justifies the act, it is no objection that the agent has secretly applied his authority to other purposes than those for which it was given; as if, having an authority to make notes in the principal's name in managing his business, the agent should make such notes for secret purposes of a different nature, which could not be known to other persons dealing with him." In support of that state ment there is cited the American case of North River Bank v. Aymar. (1) That case appears to be so much in point that I think I ought to refer to it in some detail. The facts are shortly stated in the head-note as follows: "P. gave J. a letter of attorney authorizing the latter, among other things, to draw and indorse notes in the name and for the benefit of the former; and the letter was deposited with a bank through which it was expected some of the business would be done. Various notes and indorsements were subsequently made by J., all of which purported on their face to have been executed for P. in conformity with, and in pursuance of, the letter of attorney. In truth however the notes had no connection with P.'s business, but were given for the accommodation of third persons, who indorsed them to the bank in which the letter of attorney had been deposited-the latter receiving them in the regular course of business, without notice, and for a valuable consideration: Held, that P. was liable to the bank on the notes, though as between him and J. they were unauthorized and fraudulent. Nelson Ch.J. dissented." The terms of the 1903 HAMBRO V. BURNAND. Bigham J. (1) (1842) 3 Hill, 262. 1903 HAMBRO V. BURNAND. Bigham J. authority are set out on p. 264, and are as follows: "Know all men, &c., that I Pexcel Fowler of, &c., have made Jacob D. Fowler of, &c., my true and lawful attorney, for me and in my name, place and stead, and to my use, to ask, demand, &c., all such sum and sums of money, debts, &c., which are, or shall be due, owing, &c., to me, &c. I do further authorize and empower the said Jacob D. Fowler to draw all checks or drafts upon any of the banks in the city of New York for all moneys deposited in my name, to indorse any promissory note or notes, bills of exchange or drafts, to accept all bills of exchange or drafts, or in my name to draw any note or notes." Both the principal and the agent took this document to the plaintiffs' bank and left it with the manager, the object of course being that the bank should act upon it. The case was tried before a jury, and the judge directed the jury that as Jacob Fowler had exceeded his authority the plaintiffs could not recover. On appeal to a Court of three judges it was held by Cowen J., in a judgment with which Bronson J. concurred, that the direction was wrong. The third judge, Nelson Ch.J., dissented. The reasoning of Cowen J. is to be found at p. 266, where he says: "The general rule, that when an attorney does any act beyond the scope of his power, it is void even as between the appointee and the principal, has always prevailed, and is indeed elementary in the doctrine of powers. The ground on which the rule rests is familiar. The appointee need not deal with the attorney unless he choose; and it is very reasonable that he should be bound to inspect the power, when in writing, or to learn its language in the best way he can, when it is by parol. On becoming acquainted with it he shall be holden to understand its legal effect, and must see, at his peril, that the attorney does not transgress the prescribed boundary in acting under it. I say in acting under it; for it is easy to compare the act with the words to which it must conform; and so far there is nothing unreasonable, nothing impossible or even difficult. In speaking of the attorney's acts I certainly mean to include his declarations made at the time or in the business which he transacts under the power; for his declarations are a part of the res gestæ, and bind his 1903 HAMBRO v. Bigham J. principal equally with the act to which they relate. They are always received as evidence against the principal. I authorize a man to borrow a sum of money for me. The power being BURNAND. limited he has no authority to borrow for himself or his neighbour. He goes to the lender and borrows in my name, shewing him my written power, and declaring at the same time that he takes the loan on my account. Both his acts and declarations are evidence against me." Now I think there is a mistake here. In my opinion the principal is not affected by the lie which the agent tells unless there was something done by the principal or properly imputable to him which led the other contracting party to believe that he might rely on the statement. In the absence of such conduct on the part of the principal, I do not think the declarations of the agent are evidence against the principal. Nor do I think that the authorities which Cowen J. cites in support of his proposition really bear it out. Many, if not all of them, will be found to turn upon estoppel by the conduct of the principal himself. The judgment of Nelson Ch.J. appears to me to be in accordance with principle and with authority. He says: "The attorney's power was limited, in express terms, to the business of the principal; and the use of his name for the benefit of D. Rogers & Son was without authority and therefore void. The plaintiffs are moreover to be deemed cognizant of the special limitation contained in the letter of attorney, for it was deposited with them and remained in their possession down to the time of discounting the notes in question; and even without this, as the notes were signed by an attorney, it was their duty to inquire into his authority. Being thus advised the plaintiffs must be regarded as having discounted the paper under the hazard of shewing, before they can charge Pexcel Fowler or his representatives, that it was made and negotiated by the agent within the precise limit of his authority; and they were therefore properly required to prove that the notes were given in the business of the principal. Having failed to do this I am of opinion that the direction of the Court below was right. It is insisted the bank was not bound to inquire further than to ascertain that the attorney was 1903 HAMBRO V. BURNAND. Bigham J. empowered to make and indorse notes for his principal. But .... |