McAllister v. Budd

Bills of Exchange — Agent.—An agent who draws a bill of exchange upon his principal in settlement of a debt due by the principal to the payee, does not thereby mate himself liable to the payee as drawer of the bill upon protest for nonpayment. If the bill had been negotiated he might have been bound to an innocent holder.

Appeal from St. Louis Court of Common Pleas. No principle of law is better established than that an agent, acting within the scope of his authority, cannot be held personally liable. That where an agent, by his contract, makes the principal liable, he is not held individually; especially where a corporation is principal, which can act only by agents. The insurance company was bound by the act of Budd in drawing the bill, and parol evidence was admissible to charge them upon the note in an action at law. (3 Am. Jur. 78 & 79; Spittle v. Lavender, 8 Mees & W. 452; Conro v. Port Henry Iron Co. 12 Barb. 54; Robinson v. City of St. Louis, 28 Mo. 488 ; Smith v. Alexander, 31 Mo. 194; McTyer v. Steele, 26 Ala. 488.) Certainly the company was liable in equity. (Baker v. Gregory, 28 Ala. 545 ; Story on Ag. ( 162 ; Baykin v. Mc-Lauchlin, 35 Ala. 288.) The subsequent ratification of the insurance company relates back and binds the company. (Chitty on Bills, p. 31-2 & n.; Conro v. Port H. Iron Co. 12 Barb. 54 ; Spittle v. Lavender, 8 M. & W. 452.) The adjudged cases are mostly cases of absolute promises made by agents, as by promissory notes, &c.; and even in these cases the tendency of late years has been to inquire into the real intention of the contracting parties — such has been the evident tendency in this State. (Smith v. Alexander, 31 Mo. 194.) But the distinction between the liability of the drawer and the maker of a note should be kept in mind. A note contains a positive, absolute promise to pay; a bill is a mere assignment of funds in the hands of the drawee, and at most imports a conditional obligation to pay. An endorsement of a note is also a conditional liability to pay, but not necessarily so. An endorser may show that the endorsement was merely a transfer of his interest in the bill as agent. (Moot v. Hicks, 1 Cow. 518 ; Babcock v. Beman, 1 Keen. 200.) ¡ A drawer of the bill, after acceptance, stands in the same relation to it that an endorser holds to a note. The same rules of law apply to him, and none other; his liability is no greater. (Hicks v. Hinde, 9 Barb. S. C. R.; Lefevre v. Lloyd, 5 Taunt. 749; Leadbeter v. Farrow, 5 M. & S. 345 ; Mayhew v. Prince, 11 Mass. 54 ; Smith v. Spalding, 13 Mo.; Roherts v. Austin, 5 Whart. 313 ; overruling same case in 2 Mills, 254; Wolff v. Jewitt, 10 La. 389; Krumbar v. Lubslung, 3 Martin, 644; Hicks v. Hind, 9 Barb. 528; Smith v. Alexander, 31 Mo. 194.) The defendant was an agent only. The court held that the party claiming to have acted as an agent was liable as principal. This was erroneous. (Smith v. Alexander, 31 Mo. 194; 10 Wend. 271; 1 Am. L. O. 449 ; Brockway v. Allen, 17 Wend. 40 ; Dyer v. Burnham, 25 Maine, 10 ; Campbell v. Nicholson, 12 Rob., La., 428 ; Key v. Parkman, 6 Har. & John. 418; Andrews v. Estes, 11 Maine, 267; Robertson v. Pope,Rich., S. C., 501; Sto. on Agency, § 154 ; F. 6 M. Bank v. Troy City Bank, 1 Doug., Mich., 457 ; Men. Bank v. Bank of Columbia, 5 Wheat. 326 ; Bank of Utica v. Meagher, 18 John. 341; Mott v. Hicks, 1 Cow. 513 ; Miles v. Q’Harra, 1 Sarg. & R. 32; Wyman v. Gray, 7 Har. & J. 409 ; Lazarus v. Shearer, 2 Ala. 719 ; Underhill v. Gibson, 2 N. Hamp. 352 ; Cleveland v. Stewart, 3 Kel. 283 ; Kean v. Davis, 1 Zab. 683 ; A. & M. RR. Co. v. Middleton, 20 111. 629; Hicks v. *M«U)Sk, 6 How. Prac. R. 1.) On the trial, two questions were raised by appellants. 1. That by the bill on its face, they were not drawers, or individually liable thereon, as they made the bill only as agents; and, 2. That appellants, in making the bill, acted as agents of said insurance company ; that respondent knew that fact, and that it was competent for them, by parol evidence, to explain and alter the nature of their liability as drawers of the bill. By the terms of the bill, it purported to be, and was, the bill of the appellants. (See Sto. Ag., § 155-9, 269-274 6 278, as to the legal effect of bills and notes drawn, endorsed or accepted, showing that by such signature a personal liability attaches; Lefevre v. Lloyd, 5 Taunt. 749 ; Jones v. Little-date, 6 Ad. & El. 486 ; Smythe v. Spalding, 13 Mo. 530; Eorster v. Fuller, 6 Mass. 58 — there the note was made as guardian of Ed. Scott; Duvall v. Craig, 2 Wheat. 56, and n. a., and authorities there cited; Tippetts v. Walker, 4 Mass. 597 ; Stone v. Wood, 7 Cow. 453, and cases there cited.) As to the second proposition, it is as well settled as any other principle or maxim of the law that parol evidence is not admissible to alter, explain, enlarge or contradict a writing, or to vary the liability of the parties thereto from what is the legal effect and construction of the instrument itself; and that a person who, on the face of an instrument in writing, appears to contract, will not be permitted to show by parol evidence, with a view to exonerate himself, that he contracted as agent of another. (2 Phil. Ev., Cow. & H. Notes, p. 681 and following; 1 G-reenl. 275, 364 and following; Hunt v. Adams, 7 Mass. 518 ; Jones v. Jeffries, 17 Mo. 577.)