
    
      The Bank of Hamburg v. Addison Wray.
    
    If one sign a note, or endorse a bill, as agent, when he is not agent, he is person-' ally liable, although he do so bona, fide, and does no other act to deceive or mislead the person with whom he deals, except by the assumption of agency when he is not agent.
    Falsehood and deceit are not necessary to charge an agent personally with a contract he had no authority to make.
    The endorser of a bill of exchange, who, with a full knowledge of the failure of the drawee, and of all the circumstances which might affect his own liability, gave his note for the amount of the bill, interest and damages, can, when sued, take no exception to a want of demand and notice.
    Where judgment was confessed upon a note with a stay of execution which expired before the time when, in the regular progress of a suit against the principal, execution might have been recovered, this was not such an extension of the time for the payment of the note as would release the endorser.
    
      Before Evans, J. at Edgefield, Spring Term, 1849.
    This was an action of assumpsit. There were two counts; one as endorser of a bill of exchange and the other as drawer of a promissory note:
    One H. G. Johnson set up a large grocery business in the town of Hamburg. By an advertisement, in the newspaper, Johnson gave notice that the defendant Wray would conduct the business “ and act as my duly authorized agent, in the purchase of goods and every thing appertaining to my business, in the mercantile line.” On the 15th May, 1841, one Wm. Holmes drew a bill of exchange on Holmes & Sinclair. of Savannah, for $>3,400, payable to H. G. Johnson, or order, at 30 days. The defendant endorsed the bill by writing the name of H. G. Johnson, per A. Wray, agent. The bill was negotiated by Holmes at the Bank of Hamburg, and the proceeds of it passed to his credit. The bill was the evening of the same day, (which was Saturday,) forwarded by H. Hutchison, the Cashier of the Bank, to Savannah, where it was presented and accepted. But before it was payable,. and anterior to the 9th June, Holmes & Sinclair, the acceptors, failed. The bill was noted for non-payment on the 17th and protested on the 18th June; but it did not appear that any notice had been given to either the drawer or endorser. The answer returned when payment was demanded was, that it had been adjusted by the parties at Hamburg, or something to that effect.
    In consequence of the failure of Holmes & Sinclair, on the 9th June a note was given to H. Hutchinson and endorsed by him to the Bank of Hamburg, for $3,435, the amount of the bill before mentioned and expenses, signed by Wm. Holmes, as principal, and H. G. Johnson, per A. Wray, agent, as security, payable one day after date. Simultaneously with this it was agreed that Holmes should confess a judgment for this debt and other debts, which he owed the Bank, and for which one Britton Mims was liable. On the 12lh June, the confession was given for $10,925, which included both this debt and that for which Mims was liable, with a stay of levy and sale, to the 1st of December; which was followed by entering up the judgment and lodging execution. Holmes’ property was sold in January afterwards, but not bringing enough to pay the whole amount, the plaintiff brought an action to recover the deficiency, about $ 1,441, against Johnson. On the trial of that case, the plaintiff was non-suited, on the ground that Wray’s agency did not extend to the endorsement of an accommodation bill or note. The plaintiff then brought this action against Wray. On the trial, the facts above stated were given in evidence. It was also proved by Holmes, that in May, 1841, he was engaged in buying Cotton, at Hamburg. Wray was his disbursing agent. Before the 15th May, he had made an arrangement with the bank, to discount his bills on Holmes & Sinclair, for $10,000, on Britton Mims’ endorsement. That he had bought a lot of cotton from Wray, some days before, who wanted the money, but Mims was absent from Hamburg. To raise it, and to pay for other purchases, the bill above described was drawn, under an understanding between them, that another bill was to be substituted, endorsed by Mims. The amount of the bill was passed to Holmes’ credit, and he gave Wray a check for what he owed him. The bill was endorsed by Wray, for his, Holmes’, accommodation; the balance was laid out in the purchase of cotton. No other bill was ever offered as a substitute, because, as Holmes said, the bill had been sent off.
    Britton Mims said he was spoken to by Holmes, to endorse a draft, as a substitute for the one drawn by Wray. He had agreed to endorse Holmes’s drafts, bat was out of town at the time this bill was drawn. He saw Holmes the Monday after the bill was drawn. It was a week after that the application was made to him to endorse the substitute. He met Holmes coming out of the bank, who said the draft had been sent off. Hutchinson said he sent the draft off the night after it was drawn. He was in Hamburg when the note was given — looked upon it as collateral security. Would have preferred a confession to himself, but Hutchinson said the bank would manage its own affairs.
    Holmes’ evidence was taken in writing. From which it appears that Hutchinson was cognizant of the arrangement between Holmes and Wray, that another bill, endorsed by Mims, was to be substituted.
    His Honor charged the jury—
    
      1. That if one sign a note or endorse a bill, as agent, when he is not agent, he is personally liable, although he do so bonajide, and does no other act to mislead or deceive the person with whom he deals, except the assumption of agency, when he was not agent.
    2. That the knowledge of the failure of Holmes & Sinclair, and that the bill would not be paid, with the' giving the note to secure the biH, dispensed with the necessity of giving notice to Wray of the non-payment of the bill. He was therefore not discharged from the payment of the note, by the subsequent omission to give him notice of non-payment of the bill, although the note was only a collateral security.
    3. That the stay of execution, to the 1st of December, did not discharge Wray as security; because it had not varied the original contract, and that the plaintiff had thereby, as well for the defendant as the bank, acquired an enforceable execution much sooner than could have been done by the ordinary process of the law.
    4. That if Hutchinson was cognizant of, and assenting to, the arrangement between Holmes and Wray, that another bill was to be substituted, and in violation of this had sent off the bill and put it out of his power to perform .the agreement, and that had operated to the injury of the defendant, he might he discharged from liability on the bill, and consequently on the note. But that fact was not very clear, and if it were, the evidence was, that no offer had been ever made to substitute, and no application made to Mims, until more than a week after, to sign the substituted bill.
    The Jury found for the plaintiff the sum claimed, $1441, with interest.
    On the foot of the bill was this receipt:
    “June 9th, 1841, Received of Wm. Holmes and H. G. Johnson, their note for the debt, interest and expense of this draft, which when paid will be in full.
    H. Hutchinson, Cashier.”
    The confession of judgment by William Holmes was as follows :
    “ H. Hutchinson, Cashier, ) vs. > “William Holmes. )
    Declaration in Assumpsit.
    “ I confess judgment in the above case, for $10,925, with interest from the 10th June, 1841, until paid. Stay of sale til] December 1, 1841. This 12th June, 1841.
    William Holmies.”
    The defendant appealed, and renewed his motion for a non-suit, or new trial, upon the grounds:
    1. That the plaintiff was not misled or deceived, as to the defendant’s authority to execute the note or endorse the draft in the name of H. G. Johnson, by any untruth or wilful mis-statement proceeding from the defendant; but that / these acts were performed by the defendant in innocent mistake of his authority in the premises, and at the instance of the plaintiff.
    2. That the note in question was executed by way of collateral security, for the discharge of the liability incurred by Holmes,- as the drawer of the draft upon Holmes & Sinclair, and such liability having ceased for want ■ of due notice of the dishonor of the draft, the consideration of the note thereby wholly failed.
    3. That the draft was endorsed by the defendant upon the express condition, that another draft of like amount and tenor, drawn by Holme's and payable to and endorsed by Brit-ton Mims, should be substituted.in its stead; that this substitution of securities was prevented by the act of the plaintiff, in sending the -draft by mail, to its agent in Savannah, on the afternoon of the very day it was executed, therefore the action upon the note cannot be maintained against defendant.
    4. That there was no sufficient consideration to uphold the note as against the defendant, or if there was originally, that the same has failed.
    6. That if the defendant was ever liable upon the note, he was discharged from such liabilty, because of the extension of the time of payment, by agreement between the plaintiff and Holmes, without the consent of the defendant, who was ’ the mere surety of Holmes.-
    
      Carroll, for the motion.
    Bauskett, contra.
   Curia, for Fe,ost, J.

The rule affirmed in Edings v. Brown, is stated by the Circuit Judge with precision in its application to this case, when he instructed the jury that “if one sign a note or endorse a bill, as agent, when he is not agent, he is personally liable, although he do so bona fide, and does no other act to deceive or mislead the person with whom he deals-, except by the assumption of agency, when he is not agent.” In an action by the plaintiff against Johnson as endorser of the draft, which is the subject of this action against the defendant, it was decided that Wray had no authority to endorse Johnson’s name to a draft, for the accommodation of Holmes. It was on' the security of that endorsement the plaintiff discounted the draft of Holmes.

By the first ground of appeal, the defendant would exempt himself from personal liability, on account of his unauthorized endorsement, because he says he acted under an innocent mistake, and that Hutchinson was not misled by any untruth or wilful misrepresentation, proceeding from him.

As to the excuse of innocent mistake, it cannot be credited that Wray was ignorant that the authority confided to him to use Johnson’s name, was given only for Johnson’s benefit in the course of his business; and not for the convenience of Wray’s friends, or for his own. It may be true that inson was not misled by any misrepresentation of Wray; nor is that material. But was he not misled? Holmes says that, having bought cotton from Wray, as agent of Johnson, and Wray wanting the money, he applied to Hutchinson to pay his check, on the deposit" of the cotton bills and receipts, until Mims, his endorser, should return to town. Hutchinson replied, if Wray wants the money, let him endorse your draft, as the agent of Johnson, and he shall have it. This was a legitimate transaction and within Wray’s agency. But Holmes drew a bill.for the amount due to Wray and for other parcels of cotton also. Wray put Johnson’s endorsement on this bill, for the accommodation of Holmes, until Mims should return, when a bill, with Mims’ endorsement, was to be substituted for it. Hutchinson discounted the bill. There is no evidence that Hutchinson was informed the bill was drawn for more than was due to Wray.

Under these circumstances the void endorsement of Johnson was imposed on the plaintiff. The injury proceeded from the act of the defendant. He would evade liability under the plea of innocent mistake. In a moral sense, the act of the defendant may have been innocent; for he had no design or apprehension of mischief to his principal. But in its practical effect it was not innocent. The defendant acted with culpable inadvertence and incautiousness in the use of the power confided to him, and thereby caused an injury to the plaintiff. The law is well stated in Smout v. Ellery, which was a case reserved and decided after careful consideration. When the agent has no authority, and knows it, he is plainly liable for the consequences of the act he had no authority to do. This is, in fact, Wray’s case. But even when the agent, bona, fide, believes he has authority to contract, and has not, he is still personally liable. In such case, it is true, the agent is not actuated by any fraudulent motive, nor has he made any statement which he knows was" untrue. But his liability depends on the same principle as in the first case. It is a wrong, differing only in degree, and not in its essence, to state as true, what the individual, making such statement, does not know to be true, even though he does not know it to be ialse; and if that wrong produces injury to a third person, who is ignorant of the grounds on which the belief of the supposed agent is founded, and who has relied on the correctness of his assertion', it is equally just that he who makes such assertion should be personally liable for the consequences. The case of Polhill v. Walter is also an authority show that falsehood and deceit are not necessary to charge an agent personally with- a contract he had no authority to

^ ^ acti°n were on th2 bill of exchange alone, the defendant could take no exception to a want of demand and notice, which he waived when, with a full knowledge of the failure of Holmes & Sinclair, and of all the circumstances which might affect his liability, he gave his note for the amount of the draft, interest and damages,

But bill was> hi ^act) taken UP and the note substituted for it. A receipt for the note was endorsed on the draft, and Holmes confessed judgment on the note to secure the endor-The 0pjeC(; 0f notice to parties, secondarily liable on a bill, that they may take measures for their protection, was accomplished, when Hutchinson and defendant and Holmes agreed that the note should be given and Holmes confess judgment on it for the security of the endorser.

Although the plaintiff was under no legal obligation to present the bill immediately for acceptance, the doing so was a use of diligence beneficial to the parties to it. If the bill were accepted, the security of another and the principal party would be added to the instrument; and if the drawees should refuse to accept, early notice of non-acceptance would give the other parties a better opportunity to protect themselves. By forwarding the bill for acceptance the plaintiff did not obstruct the substitution of another bill, with Britton Mims’ endorsement. If it had been offered, the plaintiff might have procured the draft from the agent in Savannah, to be surrendered according to agreement. But the bill never was tendered; and that is conclusive of any defence which may be rested on the agreement for substitution.

The last ground of appeal is unfounded. The time for tho 0f the note was not extended when judgment was confessed, with a stay of execution which expired before the time when, in the regular progress of a suit against Holmes, execution might have been recovered,

The motion is refused.

The whole Court concurred.

Motion refused.  