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THE EMMA MINE CASE. VERDICT was reached in the Emma Mine case on Thursday last, after a trial which had occupied the attention of the United States Circuit Court and a jury for seventy or seventy-one days. The case is noteworthy, not only from the length of time devoted to its trial, but also from the magnitude of the interests involved, and the difficulty and novelty of some of the questions of law which arose. Some of the best legal talent in this country was engaged in the case, and the company had also sent over an English barrister to aid in the prosecution. Judge Wallace presided at the trial with such ability and discrimination as to merit and to receive commendation from all sides.

the mine and property the company paid £1,000,000 - half in paid-up shares, half in cash.

The company took possession and continued to operate the mine until the ore gave out. It paid dividends of one and one-half per cent monthly for thirteen months, and then dividends ceased.

It appeared in evidence that Grant & Co. had paid Col. Sturt, an army officer, £10,000 for his influence in inducing some of the members of Parliament to become directors; that qualifying shares of the value of £500 had been presented to each of the directors, and that Jay Cooke, McCulloch & Co., whose names were referred to as the bankers of the company, received £25,000. Whether Park was a party to these payments was a point in dispute upon the testimony.

After Mr. Park's arrival in London, and before he arranged with Grant & Co. to bring out the company, he had entered into negotiations with Coats & Hankey, stock brokers, to bring it out. They re

Mr. Park proceeded to London and there made a contract with Albert Grant & Co., by which the latter were to organize a joint-stock company for the purchase of the mine at the price of £1,000,000 sterling. By this agreement Grant & Co. were to receive £100,000 for their services and expenses in "floating" the enterprise, besides commissions on sales of stock, from which they eventually received £100,000 more.

General Schenck, American Minister to England, was induced to consent to become a director in the proposed company. Largely through the influence of his name, several English gentlemen of official and social prominence also consented to become directors, and the Emma Silver Mining Company (limited), of London, was organized. Messrs. Park and Baxter were among the directors.

The directors issued a prospectus, setting forth all the material facts relative to the character, past history and value of the mine. All the stock was immediately subscribed for. The prospectus announced that monthly dividends of one and a half per cent would be paid, commencing on the first day of the month next ensuing. It contained extracts from the report by Prof. Silliman, of Yale College, and from a letter of Prof. W. T. Blake, describing the mine in glowing terms.

Besides the mine, the new company was to acquire upon the purchase 2,800 tons of ore, in transit from the mine to England for smelting, of the estimated value of £28 per ton, and £46,300 proceeds of ore recently raised from the mine and sold. The prospectus stated that this ore had all been raised within four months, and that the net yield of the mine within that period had been £231,000. For

selected by themselves, and they selected Prof. Silliman. He was to make an examination and report to them, but at the expense of the vendors. He did make the report, and was paid therefor $25,000 by the vendors.

After the mine had given out the corporation brought suit against Park and Baxter for fraud in the sale, alleging that it was a fraud from beginning to end. It was also alleged that it was effected by fraudulent suppression and misrepresentation of material facts. The misrepresentations relied on were the statements as to the past yield, character and condition of the mine as represented in the prospectus and in Prof. Silliman's report.

A vast mass of testimony was introduced upon the trial. The reading of depositions taken in Utah and in London occupied over a month. A large number of experts were examined upon geological and mineralogical facts; mining engineers, superintendents and assayers were examined and testimony was given relative to the local mining laws and customs of Utah, and as to the commercial usages in England, particularly those of the Stock Exchange of London.

The case presented a great many questions of law, some arising upon English statutes and decisions in construction, in regard to joint-stock companies; others upon mining laws and territorial decisions in regard to effect of location and scope of patents, but those of most general interest to the profession, involved the right of the corporation to maintain the action; the evidence by which it was to be made out and the effect upon the transaction of the relations of the vendors to the vendee, the former being directors of the latter.

The plaintiff was organized for the express purpose of purchasing the Emma Mine, and the defendants were made directors to carry out that purpose.

It was claimed that the corporation could not maintain the action-that while stockholders could recover upon proper proof, no right of action arose in favor of the plaintiff; that the prospectus issued by the directors was the act of the corporation and could not be the vehicle of fraudulent representations to the corporation; that as the defendants were directors, the corporation was chargeable with notice of all the facts of which they had notice and in regard to which they took official action.

The court held, that if the corporation was induced to part with the corporate funds by fraud or deceit, it could maintain an action for its damages; that this could only be shown by proof that its directors had been induced by deceit to purchase; that this was not shown by proof that a prospectus containing false representations had been issued; that although every stockholder might have subscribed on the faith of the prospectus and thus furnished the fund for the purchase, proof to such effect was not competent; that the sole question was whether the defendants had deceived their codirectors, and induced the corporation to make the purchase and part with its money; that in connection with evidence of the participation of the defendants in the preparation of the prospectus, the prospectus was admissible as evidence of representations made by or sanctioned by the defendants to their co-directors; and as it was approved by all the directors, was evidence that the co-directors relied upon the truth of its statements.

The court also held, that as the defendants occupied fiduciary relations toward the corporation, they were bound to the duty of full disclosure of all material facts, and were liable for fraud if they withheld information as to material facts, intending thereby to mislead their co-directors; that they could not shield themselves by silence, and if their co-directors were induced to purchase the property upon the assumption of the truth of material facts which defendants knew did not exist, the defendants were liable.

The court held that if the defendants misled their co-directors by fraudulent suppression or representation, the cause of action inured to the corporation, and it could recover damages for the fraud; that it could not recover upon proof that the

to show that the defendants fully believed the truth of the representations in the prospectus, and in Prof. Silliman's report as to the history, character and value of the property.

The jury undoubtedly concluded that, although illegitimate and dishonorable practices were used to organize the company and float the enterprise, the defendants were not guilty of any fraudulent intent in short, that they wanted the coöperation of men of prominence to give credit to the speculation, but did not expect them to lend themselves to any fraud, and fully believed that the property was all it was represented.

By reason of the great length of the trial, the counsel for both sides proposed that $5,000 additional compensation be given to the jury, but the court held that it could not sanction the proposition; that the law which exacts jury service of the citizen prescribes the compensation, and court had no authority to diminish or increase it because of the circumstances of a particular case; that it is to be assumed the law was passed upon full deliberation, and to increase the compensation it awards would be an imputation upon the justice and wisdom of the law, and, therefore, an impropriety; that under such circumstances the court should not sanction in the parties what it would not do of its own motion.

Further, that the action proposed would introduce a dangerous precedent. Similar action might be suggested by it in future cases, and it might happen that suggestions would proceed from parties or from jurors for extra compensation in cases far less meritorious than this; that its tendency would be to tempt parties to bid for the favor of juries by proposing extra compensation, knowing the adverse party might be unable or unwilling to assent.

In short, that it would open the door of the jury box to impure and demoralizing influences, and for that reason should be discountenanced.

THE LIABILITY OF PRINCIPAL AND AGENT UPON BILLS AND NOTES.

BY F. P. M.

III.*

E will now consider the question, as to the personal liability of authorized agents upon bills of exchange and promissory notes.

We deduce from the authorities this general rule: Where an agent draws, indorses or accepts a bill or note in his own name, without thereon indicating in any way the fact of his agency, and whether he disclosed his principal or not, he becomes individually liable, nor can evidence be introduced to discharge him from liability. To allow evidence to be given that the party who appears, on the face of the instrument, to be personally a contracting party, is not such, would

*For second paper, see ante, p. 117.

be to allow evidence to contradict the written nstrument, which cannot be done. Evidence is admissible to charge the principal, if the instrument is nonnegotiable, but not to discharge the agent, who is an apparent party to the contract. If there exists a legal consideration for the agent's promise, the fact that the principal was disclosed and received the exclusive benefit is immaterial. The same general rule applies, even though the words "agent," "treasurer," "secretary," "special committee," or words of similar significance, are annexed to the agent's signature; and evidence is not admissible to show that these words were used to indicate that the agent promised, with the knowledge of the plaintiff, only in his representative or official capacity. But the decisions of our State have made an exception to the rule, in cases of indorsements made by the agent, with such words in the indorsement. In such case, evidence is admissible to show that the indorsement was intended to be restrictive, or merely to transfer the legal title.

It is also held by courts of high authority that, in order to exempt the agent from personal liability, he must not only name his principal on the face of the instrument, but he must express by some form of words that the writing is the act of the principal, though done by the hand of the agent. That a mere description of the general relation or office which the person signing the paper holds to another person or to a corporation, without indicating that the particular signature is made in the execution of the office and agency, is not sufficient to exempt the agent from personal liability. The question, whether the agent is personally liable upon the instrument, is to be determined by the court from a construction of the terms in which it is expressed, without the aid of extrinsic evidence. If the agent fails to execute the instrument in the name and as the very act of the principal, he renders himself individually liable, nor cau evidence be admitted to discharge him from liability. If the instrument is not executed in the manner indicated, the words annexed to the agent's signature, as in the body of the instrument, will be considered as descriptio persona. The same rule applies, whether the instrument is negotiable or non-negotiable. On the other hand, it is held, that if the name of the principal and the relation of agency is stated in the writing, but it is doubtful whether the agent intended to bind only his principal, or to bind himself for his principal, it may be explained by evidence of extrinsic circumstances aud by proof of the position of the parties to one another at the time when the instrument was given, the object being to find out the intention of the parties, and, if possible, to give effect to it without doing violence to the words which have been used. And it seems that such evidence would be admissible even as against a subsequent bona fide holder, there being sufficient in the paper to put him upon inquiry. But the agent, in order to exonerate himself from liability, must show a right of action against the principal, upon the contract.

It will be seen that the New York decisions allow the admission of parol evidence to discharge the agent, who appears to be prima facie liable, where the name of the principal and the relation of agency is stated in the writing.

The principal and the agent may both be liable on the same instrument, if it is non-negotiable; but as to negotiable instruments, it is generally held that it

must be the contract of the one or the other, that it cannot be both. But a comparison of the decisions will show that both have been in effect charged on the same negotiable instrument.

We have seen that the principal may carry on business and execute notes and other written contracts in the name of his agent, and, in such case, the name of the agent is, in law, equivalent to the name of the principal, that is, it becomes his name by adoption, for the purposes of business. In such case, if the party whose name is thus adopted should sign his own name to a written contract, but, in fact, as the agent of the other party, he may discharge himself from liability by parol proof of the facts; but it would require very clear and strong proof to show that it was not designed to be his contract. But such evidence would not be admissible as against a subsequent bona fide holder, without notice, nor, it seems, as against an assiguee who took the instrument without notice of the facts Nor could the principal ratify and adopt the agent's name as his own, so as to exempt the agent from personal liability upon a contract previously executed in the agent's name, though the agent had authority to make the contract in the name of his principal. Though an agent may have authority to make a cuntract in his principal's name, yet, if he makes it in his own name, he becomes personally liable, nor cau evidence be introduced to alter his liability.

This article is a continuation of one on the same general subject, published in the LAW JOURNAL, at pages 210, 227, 242, 261, 274, of the last volume, and will be confined to the New York decisions. We have endeavored to collect all the cases on this question, and herewith present them for the consideration of those who are interested in this subject. We hope that the court of last resort will soon be called upon to establish certain definite rules upon this subject, for the guidance of the profession.

Rathbon v. Budlong, 15 Johns. 1, was an action by the payee of a negotiable note in this form: "I promise to pay S. R., or order, for the Susquehannah Cotton Manuf. Co. (Signed) S. Budlong, agent." The defendant gave in evidence a bill of parcels, headed as follows: "The Susquehannah Manuf. Co. bought of S. Rathbon," etc., at the bottom of which was the following receipt: "Received payment, by a note payable in ninety days, which, when paid, will be in full of the above." It was admitted that the purchase of the goods of the plaintiff and giving the note were simultaneous acts. Spencer, J., said: "It is perfectly manifest that the note, on which the suit is brought, was given by the defendant, as agent for the company, and that the goods for which the note was given were sold on the credit of that company. The general principie is, that an agent is not liable to be sued upon contracts made by him on behalf of his principal, if the name of his principal is disclosed and made known to the person contracted with, at the time of entering into the contract." Taking the note by itself, and without reference to the evidence, its language imports a personal contract. The words are, I promise to pay." "I" is not the language of a corporation or association; it is that of an individual signer. The fact that he promises to pay for the company does not indicate that it is the company's and not his own individual promise, for an agent may assume to pay the debt of his principal. Nor does the receipt make it the less the defendant's individual promise; it shows that the

goods were sold to the company, but it does not appear that the note received in payment was the company's note. Prima facie, therefore, the defendant is personally liable, and the burden of proof is cast upon him to rebut such liability; but there is no evidence stated in the case showing that he did not in fact promise to pay for the company. The court seems to assume that the note is the company's note because the goods were sold to the company. It may be that the defendant did not execute and deliver, nor intend to execute and deliver, the note as his; but, on the contrary, executed and delivered it as the note of the company, and was accepted and received by the plaintiff as such, with the understanding that the defendant was not to be personally responsible thereon. Evidence to this effect would hardly be consistent with the terms of the note, yet the repugnancy is not so strong as to require its rejection; reading the note in the light of these facts, it is sufficiently executed as the note of the company, and shows that the defendant did not promise to pay in his individual, but in his representative capacity as agent for the company. Notes are frequently executed by agents for their principal in this form, but with no intention of assuming a personal responsibility. If the plaintiff were an indorsee of the note, there was sufficient on its face to put him upou inquiry(?) We take this case as an authority for the admission of evidence of extrinsic circumstances for the purpose of exonerating from liability an apparent promisor, where it can be done consistently with the terms of the instrument-under a liberal rule of interpretation adopted by the courts in furtherance of justice, and in order to give effect to the real intention of the parties.

In Mott v. Hicks, 1 Cow. 513, the note was in this form: "The President and Directors of the Woodstock Glass Co. promise to pay I. Horsefield, or order. (Signed) W. Hicks, President," and indorsed, "I. Horsefield, agent," who was an agent of the company. The action was brought by the plaintiff as second indorser against Hicks, to charge him as the maker of the note. Sutherland, J., said that "if a person undertakes to contract as agent for an individual or corporation, and contracts in a manner which is not legally binding upon his principal, he is personally responsible. And the agent, when sued upon such a contract, can exonerate himself from personal liability only by showing his authority to bind those for whom he has undertaken to act. It is not for the plaintiff to show that he had not authority. The defendant must show affirmatively that he had. But as the authority of the defendant to act for the company on this occasion was not questioned at the trial, we are now, perhaps, bound to presume it." If the defendant had not authority to bind the directors or the company, he bound himself individually; the words of the instrument would bear that construction. Another question to be decided was, whether Horsefield was a competent witness for the plaintiff. If he was liable to the plaintiff, then he was an interested witness, and, therefore, incompetent. The question was, whether the plaintiff could sustain an action on the note against Horsefield as indorser. Woodworth, J., said: "As to personal liability to the plaintiff on the note, I apprehend he stands on the same ground as the defendant. To Roe, the holder, or any other third person, he might be holden; but here is a different state of facts. Horsefield acted as agent in this trans

action, and Mott knew it; he also knew that the note was given by the company for their proper debt. When the evidence of Mott is considered, I think it evident, as between Horsefield and the plaintiff, that the latter did not look to the former as a surety or liable to him; but that he trusted solely to the agreement [of the defendant] to deliver glass for his indemnity. This fact, connected with another, that Horsefield was agent of the company, and annexed the word agent' to his signature, seems to warrant the conclusion that it was never intended he should be answerable to the plaintiff in any event; and that the designation of the character in which he indorsed was a declaration to the plaintiff that he intended to incur no individual responsibility. The true question is, what was the meaning of the parties? Horsefield professed to act in the capacity of agent. It was analogous to a special assignment to the indorsee at his risk. He elected to indorse in the character of agent."

Sutherland, J. "Was Horsefield's indorsement upon this note conditional or absolute? There can be no doubt that it was not the intention of the parties that either Hicks or Horsefield should be individually liable upon the note. And this is apparent upon the face of it * * *carrying, upon the face of it, strong, if not conclusive evidence that it was a company transaction, and that Hicks and Horsefield acted in their official characters only. It is not necessary for us to determine whether a bona fide holder of this note, without notice of the original transaction, could recover upon it against the indorser or not; though I should be strongly of opinion that he could not, as enough appears upon the note to put him upon inquiry. But the plaintiff, with a full knowledge of all the facts, most clearly cannot recover against Horsefield, in his individual character, admitting the company to be bound by the note. Whether, if the contract was not binding upon the company, Horsefield would be personally responsible (as I have already shown Hicks would), it is not necessary to discuss." Savage, Ch. J., dissented, on the ground that the facts upon which the question must be decided, are such as appear in the case, independent of Horsefield's testimony; and that these showed nothing about the original execution of the note, nor tended to discharge him from his liability as indorser. This case has been considered as holding that the word "agent," added to an indorsement, is equivalent to an indorsement without recourse. If this were so, then no subsequent party could recover against the indorser, even though he were not in fact an agent, or, if an agent, had no authority to bind his principal. But this would be contrary to the whole current of authorities and opposed to well-established principles of law. The court did not hold that the indorsement was per se restrictive, but that evidence might be introduced to give it that effect. The rule to be adduced from this decision may be properly stated thus: Where an individual or a corporation makes a note payable to the order of his or its agent individually, and the latter indorses it in his own name, with the word "agent" added, extrinsic evidence is admissible to discharge him from liability as indorser, by showing that the indorsement was intended to be restrictive. But why was the note made payable to the agent individually, and indorsed by him, instead of being made payable to the company itself, which would have been the proper way, if it was not intended that he should assume a personal responsibility for the

debt of the company, which was "not in very good credit?" The court seem to hold that, because the plaintiff relied on the agreement of the defendant to deliver glass for his indemnity, he did not, therefore, rely upon Horsefield. But there is not sufficient evidence to show that Horsefield did not in fact intend to bind himself as indorser, and the burden of proof is cast upon him. It is said that he indorsed merely for the purpose of passing the title to the paper; but the facts do not sustain this supposition. The company was indebted to one Roe, who refused to accept the company's note without an indorser, and the plaintiff, at the request of Horsefield and Hicks, agreed to become such indorser, on the agreement of the latter to deliver glass for his indemnity; the note was accordingly made, and indorsed by Horsefield and plaintiff, and passed to Roe, who subsequently recovered of the plaintiff as indorser. However, the opinion of Bigelow, Ch. J., in Slawson v. Loring, 5 Allen, 344, which was an action against the agent as acceptor of a draft drawn upon him by his principal, gives very good reasons why such evidence should not be admitted: "The instruments purport to be bills of exchange, having a drawer and acceptor. By putting their contract in such form, the intention of the parties must have been to issue paper which should be received by those who took it in the usual course of business, according to the legal and ordinary effect which such form imports, as giving to the holder the security of the names of the parties. Otherwise, if they intended to bind one party only, it is reasonable to suppose the bills would have been drawn by the company on itself, in which case the direction and request to pay would have been on the company by its name, and not upon an individual described only as an agent. The argument urged in support of the defense would pervert the bills into a contract different from that which they import on their face. If they should be construed drafts by the company on itself, they would be in legal effect merely promissory notes, on which the holder would have only the security of one name, which would be contrary to the intent and purport of the instruments."

This language may be justly and forcibly applied to the case under consideration. Being liable as maker, could the company be also charged as indorser? How could the company be charged as indorser of a note which was made by itself payable to the order of its agent individually, and indorsed by him? No one but the payee is liable as first indorser, but the company was not the payee; therefore, it could not be charged as first indorser. Horsefield is the payee of the note individually, and he is therefore liable personally, or there is no liability attached to his indorsement. It is held, however, that "It seems," "I apprehend," "I think," the indorsement was intended to be restrictive.

In Hills v. Bannister, 8 Cow. 31, the defendants signed a joint and several promissory note, with the addition, "Trustees of Union Religious Society, Phelps," which was a corporation. The note was given for a church bell purchased of the plaintiff, but it does not appear whether they had authority, or whether the note was negotiable. Held, that the addition was descriptio personarum.

In Brockway v. Allen, 17 Wend. 40, the defendants pleaded that they were the trustees of a religious society, duly incorporated by the name of "The First Baptist Church and Society of Brockport," that the

society was indebted to the plaintiff for brick and other materials furnished to the society, and on account of such indebtedness they, the defendants, as such trustees, made and executed to the plaintiff a promissory note; and then set forth a note corresponding to the one declared upon, with the names of the defendants subscribed thereto, with the description of Trustees of Baptist Society" added to their names. Demurrer. Cowen, J., said: Prima facie they were personally liable. Their answer is, that they were trustees of, etc., and as such gave the note for a precedent debt due from the corporation. Trustees, as such, are a corporation. * * These trustees were themselves the corporation in contemplation of the statute, and the very act of giving the note operated as a corporate assent to or appointment of the defendants as agents, or which is the same thing, a declaration that they acted as such." The second plea averred that the defendants promised as trustees of the society, but did not allege that they called themselves trustees in the note; it was, therefore, held bad. This case has been misunderstood.

In Palmer v. Stephens, 1 Denio, 472, the note was in this form:

"We promise to N. Palmer $1,000. (Signed)

G. STEPHENS, W. G. S." Beardsley, J., said: "A person may execute an instrument and bind himself as effectually by his initials as by writing his name in full. But the initials might have been written, and so might the full name, to attest the execution of the note by the one who was maker, or to indicate that the one who wrote the initials had, as agent of the person whose name appeared as maker, executed the note for him and in his name. It is always competent, certainly between the original parties, to show that one whose name appears to a note or any other obligation, whatever may be the relative position which the name occupies, placed it there, not as a maker of the instrument, but to attest its execution, or for some other lawful purpose. This is involved in the question of the due execution of the instrument." Held, however, that W. G. S. was presumptively a joint maker.

In Stanton v. Camp, 4 Barb. 274, the agreement was plainly executed in the name of the corporation. In Moss v. Livingston, 4 Comst. 208, the action was against the acceptor of a draft in this form: "Pay to the order of C. E., Supt., and charge the same as advised, A. M., (addressed) to J. Livingston, Pres't Ronsendale Manuf. Co. Accepted, J. Livingston, Pres't Ronsendale Manuf. Co." The bill was drawn by one of the agents of the company in favor of another, and by the latter indorsed to the plaintiff, who received it on account of a debt due him from the company for wages. Hurlbut, J.: "The bill cannot be deemed the obligation of the company. It does not purport to have been drawn in their behalf, nor was it addressed to them, or accepted in their corporate name. They were not, therefore, bound by it. In order then to give it any legal effect, we must hold it to be the private act of the parties whose names are written upon it." Several of the judges concurred in the decision, upon the ground that defendant did not show himself authorized to bind the corporation by the acceptance. This fact is sufficient to affect the authority of the decision.