a bill of exchange for the corporation. A fortiori, the president has 624, 2 Ann. Cas. 519, 10 Det. L. N. 561, 96 N. W. 576; McLellan v. Detroit File Works, 56 Mich. 579, 23 N. W. 321. Minnesota. Bloomingdale v. Cushman, 134 Minn. 445, 159 N. W. 1078. Mississippi. Bacon v. Mississippi Ins. Co., 31 Miss. 116. Nevada. Edwards v. Carson Water Co., 21 Nev. 469, 34 Pac. 381. New York. Columbia Bank v. Gos-. pel Tabernacle Church, 127 N. Y. 361, 28 N. E. 29; People's Bank of City of New York v. St. Anthony's Roman Catholic Church, 109 N. Y. 512, 17 N. E. 408; National Bank of Newport v. H. P. Snyder Mfg. Co., 107 App. Div. 95, 94 N. Y. Supp. 982; Hitchings v. St. Louis, N. O. & O. Canal &. Transportation Co., 68 Hun 33, 22 N. Y. Supp. 719; Dabney v. Stevens, 40 How. Pr. 341; Stalleup v. National Bank of Republic, 15 N. Y. St. Rep. 39. Oregon. Crawford v. Albany Ice Co., 36 Ore. 535, 60 Pac. 14. Pennsylvania. Monongahela Nat. Bank v. Harmony Land Co., 226 Pa. 440, 18 Ann. Cas. 727, 75 Atl. 687; Worthington v. Schuylkill Elec. Ry. Co., 195 Pa. St. 211, 45 Atl. 927. Washington. Elwell v. Puget Sound & C. R. Co., 7 Wash. 487, 35 Pac. 376. West Virginia. Flanagan v. Flanagan Coal Co., 88 S. E. 397; Williams v. S. M. Smith Ins. Agency, 75 W. Va. 494, Ann. Cas. 1917 A 813, 84 S. E. 235; Third Nat. Bank of Cumberland v. Laboringman's Mercantile & Manufacturing Co., 56 W. Va. 446, 49 S. E. 544. It is the general rule that the president of a corporation is without implied power to bind the corporation by his signature to negotiable paper. "There should be proof of the specific authority to affix the corporate name to the note as its obligation, or that the corporation received the avails of the note or that there was a course of business which justified the bank in accepting it as the obligation of the corporation." National Bank of Newport v. H. P. Snyder Mfg. Co., 107 N. Y. App. Div. 95, 94 N. Y. Supp. 982. "Our attention has not been directed to any case, and we have been unable to find any, holding that the authority of the president of a private corporation to execute a promissory note in its name, when specifically denied, may be inferred from his official station and the doing of the act in question." Elkhart Hydraulic Co. v. Turner, 170 Ind. 455, 84 N. E. 812. The president of a bank has no power to draw checks against the account kept with another bank. Putnam v. United States, 162 U. S. 687, 713, 40 L. Ed. 1118. It is beyond the implied power of the president of a building association to determine the amount to which a holder of a matured certificate is entitled and to execute a note of the association for such sum. Bohn v. Boone Building & Loan Ass'n (Iowa), 108 N. W. 1025. Burden is on plaintiff to show the authority of the president to execute a note. Elkhart Hydraulic Co. v. Turner, 170 Ind. 455, 84 N. E. 812. As to the province of the court and jury, see Fifth Nat. Bank of Providence v. Navassa Phosphate Co., 119 N. Y. 256, 23 N. E. 737. 3 Lazarus v. Shearer, 2 Ala. 718, 724. no authority to give the note of the corporation for his individual debt, or for money to be used in his private business, and one who takes it under such circumstances, with knowledge, does so at his peril. Thus, he has no power to make a corporate note payable to his own order.5 And a custom whereby the president executed notes in behalf of the company in order to carry on the company's business does not tend to show a custom to execute notes in the name of the company for his own benefit.6 On the other hand, the power of the president, or at least a presumption of power, is recognized in some jurisdictions, especially in Illinois, where the rule is well settled that the president is presumed 4 Third Nat. Bank v. Marine Lumber Co., 44 Minn. 65, 46 N. W. 145; Wilson v. Metropolitan El. R. Co., 120 N. Y. 145, 17 Am. St. Rep. 625, 24 N. E. 384. 5 Capital City Brick Co. v. Jackson, 2 Ga. App. 771, 59 S. E. 92; Porter v. Winona & D. Grain Co., 78 Minn. 210, 80 N. W. 965. Apparent power, see § 2039, infra. "Such a note is a danger signal, which the discounter or purchaser disregards at his peril. Capital City Brick Co. v. Jackson, 2 Ga. App. 771, 59 S. E. 92. 6 C. L. Kraft Co. v. Grubbs, 116 Ark. 520, 174 S. W. 245. 7 Dexter Sav. Bank v. Friend, 90 Fed. 703; American Exch. Nat. Bank v. Oregon Pottery Co., 55 Fed. 265. See Gold Glen Mining, Milling & Tunneling Co. v. Dennis, 21 Colo. App. 284, 121 Pac. 677; Bacon v. Montauk Brewing Co., 130 N. Y. App. Div. 737, 115 N. Y. Supp. 617. Where a note is signed by the president, secretary or treasurer, however, it has been held in New York that proof of their specific authority is necessary. National Bank of Nevport v. H. P. Snyder Mfg. Co., 107 N. Y. App. Div. 95, 94 N. Y. Supp. 982. In New York, however, in a recent case, it was held that the production of a note signed by the president in behalf of the corporation makes out a prima facie case without proving the authority of the president to make the note, except in the case of a nonbusiness corporation. Westchester Mortgage Co. v. Thomas B. McIntire, Inc., N. Y. App. Div. 161 N. Y. Supp. 390, rev'g on rehearing 171 N. Y. App. Div. 518, 157 N. Y. Supp. 725. In Arkansas there is no presumption of authority. City Elec. St. Ry. Co. v. First Nat. Exch. Bank, 62 Ark. 33, 31 L. R. A. 535, 54 Am. St. Rep. 282, 34 S. W. 89, distinguishing Crowley v. Genesee Min. Co., 55′ Cal. 273, and explaining American Exch. Nat. Bank v. Oregon Pottery Co., 55 Fed. 265, as based on dicta in Merchants' Bank v. State Bank, 10 Wall. (U. S.) 604, 644, 19 L. Ed. 1008. "Those cases which hold that the president and secretary, or any other officer, of a corporation, will be presumed to have authority where they have exercised it, provided, under any circumstances, it might have been conferred upon them, proceed upon the theory of a usage or custom from which authority will be implied. But such a theory cannot be maintained as to electric street railways in this state, for the reason that no such usage as to them exists." City Elec. St. Ry. Co. v. First Nat. Exch. Bank, 62 Ark. 33, 41, 31 L. R. A. 535, 54 Am. St. Rep. 282, 34 S. W. 89. to have such power. Of course, such acts may be ratified, in which case the question of inherent power becomes of no importance.9 It seems, however, that even if it should be held that the president of a trading corporation has such power, the power should not be extended to the president of a corporation not for pecuniary profit, such as a college for instance.10 Thus it has been held that the president of a college or other nontrading corporation has no power, in any event, to issue notes for money borrowed.11 So in New York there is no presumption of authority in case of a religious corporation.12 Furthermore, even if the power to execute notes is implied, the president has no authority to execute notes for a large sum not in the ordinary course of the corporate business.13 Thus, it would seem that the president of a college has no inherent power to issue notes running from five to forty thousand dollars, since not a transaction in the ordinary course of the business of a college.14 Moreover, whatever may be the presumptive authority of the president of a corporation to execute notes for its ordinary business transactions, there is no such presumption in favor of a payee who knows that the notes were given for other purposes.15 §2039. Express or apparent authority or where president is in effect general manager. The president may be expressly authorized 8 George E. Lloyd & Co. V. Matthews, 223 Ill. 477, 7 L. R. A. (N. S.) 376, 114 Am. St. Rep. 346, 79 N. E. 172, aff'g 119 Ill. App. 546; Consolidated Perfume Co. v. National Bank, 86 Ill. App. 642; Fisk v. Carbonized Stone Co., 67 Ill. App. 327. Compare St. Vincent College v. Hallett, 201 Fed. 471, reviewing Illinois decisions and concluding that the presumption is rebuttable. V. 9 United States. Blanchard Commercial Bank of Tacoma, 75 Fed. 249. California. Illinois Trust & Savings Bank v. Pacific Ry. Co., 117 Cal. 332, 49 Pac. 197. Minnesota. Willis v. St. Paul Sanitation Co., 53 Minn. 370, 55 N. W. 550. New York. Martin v. Niagara Falls Paper Mfg. Co., 44 Hun 130, aff'd 122 N. Y. 165, 25 N. E. 303. Wisconsin. McLaren v. First Nat. to execute negotiable paper, such as notes, checks, and bills of exchange, on behalf of the corporation; and authority to do so for the legitimate purposes of the corporation may be implied where he has been accustomed to so act as to clothe him with apparent authority, and such power is also generally held to exist where he is intrusted with the management of the corporation,16 although it is sometimes 16 United States. Fitzgerald & Mallory Const. Co. v. Fitzgerald, 137 U. S. 98, 34 L. Ed. 608; Dexter Sav. Bank v. Friend, 90 Fed. 703; United States Nat. Bank v. First Nat. Bank of Little Rock, 79 Fed. 296; American Exch. Nat. Bank v. Oregon Pottery Co., 55 Fed. 265. Florida. Cotton States Belting & Supply Co. v. Florida R. Co., 69 Fla. 52, 67 So. 568. Illinois. McDonald V. Chisholm, 131 Ill. 273, 23 N. E. 596. Iowa. Shaver v. Hardin, 82 Iowa 378, 48 N. W. 68. Maine. Castle v. Belfast Foundry Co., 72 Me. 167. Michigan. Preston Nat. Bank of Detroit v. George T. Smith Middlings Purifier Co., 84 Mich. 364, 47 N. W. 502. Missouri. First Nat. Bank of Hannibal v. North Missouri Coal & Mining Co., 86 Mo. 125. New York. Fifth Nat. Bank of Providence v. Navassa Phosphate Co., 119 N. Y. 256, 23 N. E. 737; Marine Bank City of New York v. Clements, 31 N. Y. 33; Olcott v. Tioga R. Co., 27 N. Y. 546, 84 Am. Dec. 298; Martin v. Niagara Falls Paper Mfg. Co., 44 Hun 130; National Park Bank of New York v. German American Mut. Warehousing & Security Co., 53 N. Y. Super. Ct. 367. See also Davis Sewing Mach. Co. v. Best, 105 N. Y. 59, 11 N. E. 146. South Dakota. Merrill v. Hurley, 6 S. D. 592, 55 Am. St. Rep. 859, 62 N. W. 958. The president may execute notes where that has been his custom to the knowledge of the directors. Texarkana & Ft. S. Ry. Co. v. Bemis Lumber Co., 67 Ark. 542, 55 S. W. 944, holding it immaterial that proceeds of note were for his own use. * # "It is well settled in this state that, where a president of a trading or business corporation is given general management and control of its property, business, and affairs, the corporation is prima facie bound by contracts entered into by him in the name of the corporation, if the contracts are within the apparent power of the corporation to make, and third parties entering into such contracts are not bound by secret limitations of his authority contained in the bylaws. While it is true that, as between the directors or officers and the corporation or the stockholders, a fiduciary relationship exists, and at the suit of either the corporation, or in a derivative action by stockholders the directors, are accountable in equity as trustees, as between the corporation and third persons the officers are agents, and so long as they act within the actual or implied scope of their employment, or their acts are subsequently ratified, the corporation is liable. As between the corporation and third parties there is no obligation to inquire whether the act is advantageous or disadvantageous to the corporation. Nor are the obligations which are imposed upon one dealing with a trustee in relation to the property of a cestui que trust applicable to a person dealing with the officers of a corporation. The sole duty is that which rests upon one held that even a general manager cannot execute negotiable paper.17 If the president is expressly authorized "to incur indebtedness, negotiate loans, to enter into any contracts or agreements, and otherwise to act as the agent of the corporation," he has power to make promissory notes.18 Power to borrow money authorizes the president to execute the usual securities, such as bills or notes; 19 but power to borrow money and execute notes therefor does not include power to execute notes for existing debts.20 Express authority to borrow money and execute notes therefor does not include power to include in a note a contract for the payment of attorney's fees, unless such a clause is customary.21 Express power to sign notes "subject to the control of the board of directors" confers authority to so sign, it has been held, unless the board affirmatively directs. otherwise.22 But power conferred on the president to execute notes does not by implication confer power to execute liens to secure such notes.23 Furthermore, power to execute or indorse commercial paper does not include power to execute accommodation paper or to indorse for accommodation.24 Moreover, it is held that the president has no implied power to execute notes alone, where a by-law requires them to be signed both by the president and by the secretary.25 But a provision in the by-laws that notes signed by the president and secretary shall be binding on the company has been held not to prevent a note signed only by the president from binding the company, where he was expressly authorized to make contracts.26 Iowa 726, 6 L. R. A. 52, 43 N. W. 543. And see Pacific Rolling Mill v. Dayton, S. & G. R. Ry. Co., 5 Fed. 852. 22 Peek v. Skelley Lumber Co., 59 Ore. 374, 117 Pac. 413. 23 El Fresnal Irrigated Land Co. v. Bank of Washington, Tex. Civ. App., 182 S. W. 701. 24 Authority generally to make or indorse notes in the business of the company gives no authority to indorse or make a note for the accommodation of another person or corporation. Aetna Nat. Bank v. Charter Oak Life Ins. Co., 50 Conn. 167. 25 Bloomingdale v. Cushman, 134 Minn. 445, 159 N. W. 1078. 26 McCormick v. Stockton & T. C. R. Co., 130 Cal. 100, 62 Pac. 267. To the same effect, see Allison v. Hubbell, |
