
    Commonwealth Trust Company of New York, Respondent, v. John W. Young, Defendant, Impleaded with Pierre Calvet Rogniat, Appellant.
    First Department,
    December 6, 1907.
    Principal and agent — when third party bound by limitation of authority— when unauthorized sale of bonds by agent does not pass title.
    One who deals with an ■ agent, knowing him to be such, is bound to know the limitation placed upon his authority.
    One who with knowledge contracts with the agent of a trust company t'o procure underwriters for bonds of a proposed ship-building syndicate and to procure the public issue of the bonds, or their withdrawal from public issue by the underwriters, in consideration of certain commissions to be payable in bonds, does not acquire a good title to “interim certificates” representing the bonds by a transfer thereof from the agent to whom they were delivered to carry out the arrangement, if the transferee has failed to perform his part of the agreement.
    The same is true as to “interim certificates” purchased by him from the agent, for he had knowledge, that they were delivered to the agent for the specific purpose of carrying out the scheme, and could not be sold for any other purpose.
    Appeal by the defendant, Pierre Oalvet Rogniat, from a judgment of the Supreme Court in favor of the plaintiff, entered, in the office of the clerk of the county of Few York on the 17th day of June, 1907, upon the decision of the court, rendered after a trial at the Mew York Special Term, dismissing'the said defendant’s counterclaim upon the merits, with notice of an intention to bring up for review upon such appeal an order entered in said clerk’s office on the 18th day of March, 1907, granting the plaintiff an extra ■ allowance of costs.
    
      Frederic R. Coudert, for the appellant.
    
      D. Cady Herrick, for the respondent.
   Per Curiam :

The attitude of the appellant respecting the subject-matter of ’his claim is unmistakably indicated in the contention of his counsel that such claim is not based upon a contract for commissions, but upon the possession of the “ interim certificates ” which entitled him, irrespective of antecedent relations, to the possession of the bonds called for by them; or in other words whatever may have been his situation before those “ interim certificates ’’ were delivered, when they were given into his possession there was a termination or severance of antecedent relations, a recognition of his perform-' anee of all that-was incumbent upon him to perform to entitle him-to such certificates, and consequently his rights reposed upon the ownership of the certificates which, although not negotiable, were quasi negotiable.

The contention is based upon the consideration that -the transaction respecting the certificates and the antecedent matters was one between the appellant and Young as principals. The fallacy of this is in the assumption that Young and the appellant were dealing together as principals. It is plain that Young was an agent and not a principal, which fact the appellant knew and understood when he dealt with him and,, therefore, was bound to know the limitation placed upon his authority. When the “ interim certificates ” were delivered to Young they were not delivered free from all.conditions ; on the contrary, they were delivered for a specific purpose. The evidence is satisfactory that Young applied for them in order that they might be used in Paris simultaneously with the. carrying out of the subscription agreement made by the Rogniat syndicate, for Young in applying for them stated to the trust company issuing them that it was necessary to settle with the appellant his commission account at the same time the bonds were issued or withdrawn in Paris, and with that understanding and for that, purpose alone the certificates were issued and forwarded to Young. There was thus a limitation placed upon Young’s right to use the certificates, and the present contest being between the original parties to the transaction, the appellant' is bound by this limitation. He, therefore, holds them not independently of, but-still connected with the terms of his agreement respecting the subscribers procured *by him in France to the shipbuilding scheme. By the terms of his agreement his duty was not fulfilled in simply procuring the names of subscribers,'of whom he was one to a large amount; he was not only to procure subscribers, but the fair, import of -the terms of liis agreement is that he undertook to procure, in addition to that, either the public issue or withdrawal of the bonds. The several things he was obliged to do. before he became entitled to his commission were: (1) To procure the underwriters; (2) procure the public issue of the bonds; or (3) their withdrawal from public issue. Thus it would appear that the claim of the appellant must stand upon his right to compensation for services, ivhich right has not accrued because he has not performed his contract, and it' does not stand upon the possession of the “ interim certificates ” which, as the facts are shown in the record, gave him no additional or other rights than he possessed under his agreement with Young acting as agent.

Nor does' the appellant stand in any better position with reference to the “ interim certificates ” which he claims to have purchased ' from Young. As already said,-the certificates Were delivered to Young, acting as agent for the trust company, for a specific purpose, viz., to settle with the appellant his commission account when he had fully performed the agreement entitling him to such commissions. He was bound to know that Young could not use the certificates for any other purpose, and that he had no right to purchase- them from him.

The judgment appealed from is affirmed, with costs.

Present —Pattebson, P. J., McLaughlin, Laughlin, Houghton and Lambebt, JJ.

Judgment affirmed, with costs.  