Central Law Journal.

ST. LOUIS, MO., APRIL 17, 1896.

The question as to the title of a finder of lost property does not often arise and therefore the recent decision of the court of chancery of New Jersey in Keron v. Cashman is of novel interest. It is most peculiar in its circumstances. There it appeared that one of

a party of five boys found and picked up an old stocking in which something was tied up. He threw it away again and one of the others picked it up and began beating the others with it. It was passed from one to another,

and finally, while the second boy was beating another with it, it broke open and was found to contain money. None of the boys had attempted to examine it or had suspected that it contained anything valuable. The father of one of the boys took charge of the money and tried to discover the former owner. Afterwards one of the boys claimed the money and the others a division of it. On a bill of interpleader, it was held, that the money was not found in a legal sense until the stocking had come into the common possession of all the boys as a plaything, and that it belonged to all of them and must be divided equally between them. In Durfee v. Jones, 11 R. I. 588, 23 Amer. Rep. 528, 35 Cent. L. J. 417, the bailee for sale of a safe, while examining the bailee for sale of a safe, while examining it found a sum of lost money inside the casing and was held entitled to retain it as finder against the owner of the safe because the owner never had any conscious possession of the money.

The cases of Bowen v. Sullivan,

62 Ind. 281 and Merry v. Green, 7 M. & W. 623, not cited by the court in the New Jersey case, are also in point. All of the cases agree that some intention or state of mind with reference to the lost property is an essential element to constitute a legal finder of such property. In Goddard v. Winchell, 35 Cent. L. J. 365, the question arose before the Supreme Court of Iowa as to the ownership of an aerolite which had fallen from the sky. The court held that it belonged to the owner of the land rather than to the person who saw it fall and secured it.

The case of Bratton v. Ralph, 42 N. E. Rep. 644, while establishing the law of Indiana, upon the liability of the land upon Vol. 42-No. 16.

which any building subject to a mechanic's lien has been destroyed, to satisfy the claims of the lienor, does not, in any respect lessen the conflict of authority which exists upon the question or supply any means by which a true rule may be evolved. In that case a subcontractor sought to foreclose a mechanic's lien upon the appellant's land for work done and materials furnished in plastering a house in process of erection. Before its completion and before the notice of the lien was filed the building was destroyed by fire, and the question was presented to the court whether the right to the lien was lost with the building or continued against the land. The statute provided that "the entire land upon which any building, erection or other improvement is situated, including the portion not covered therewith, shall be subject to the lien ;" and the court allowed the lienor to foreclose his lien and obtain satisfaction from the land, after the building had been demolished, upon the ground that the general purpose of the legislature in passing the statute was to protect laborers and material-men, and the lien should, therefore apply to the land directly, if a recovery from the building itself should become impossible.

As to the question here at issue, the authorities are at variance. Pennsylvania early led off with the holding that the lien was given largely because the land was benefited by the erection of the building, and the lien on the building was the principal thing, while that on the land was merely the incident, it being superadded by the legislature because it was essential to a full enforcement of the lien against the building which had become attached to and a part of the realty. Therefore it was held that, with the destruction of the building, the lien on the land was lost. This holding was also deemed more politic, as favoring future improvements. Other cases take the same view. Presbyterian Church v. Stettler, 26 Pa. St. 246; Wigton & Brooks' Appeal, 28 Pa. St. 161; Goodman v. Baerlocher (Wis.), 60 N. W. Rep. 415; Schukraft v. Ruck, 6 Daly, 1; Coddington v. Beebe, 31 N. J. Law, 477; Shine's Ex'x v. Heimburger, 60 Mo. App. 174. Other courts have been disposed to construe the law liberally in favor of the mechanics and material men, regarding their protection as the principal object of the law, and consid

ering the right to take the lien to apply equally to the land and building, special priorities of lien, however, being given as to the building by some statutes. Clark v. Parker, 58 Iowa, 509, 12 N. W. Rep. 553; Freeman v. Carson, 27 Minn. 516, 8 N. W. Rep. 764; Steigleman v. McBride, 17 Ill. 300; Schwartz v. Saunders, 46 Ill. 18. The cases of Sontag v. Brennan, 75 Ill. 279, and McLaughlin v. Green, 48 Miss. 175, have also been looked upon as lending some support, although really but slight, to this position. In most, if not indeed in all, of this latter class of cases, it may be admitted that the statutes reserving the right of lien are quite capable of the interpretation placed upon them by the courts, if one is prepared to adopt the rule of construction which is applied by them. While no entirely harmonious rule may be possible, inasmuch as the right of lien in each State is dependent upon distinct legislative enactments, yet since the general object of such acts is the same, and, as the cases admit, the statutes are, in fact, conflicting in no material particulars, one would suppose that in such case as the one presented the courts would reach similar results. That under such circumstances one class of cases should reach a conclusion diametrically opposed to that reached by other courts would seem to indicate that a different rule of construction had been applied, some of the courts adopting a liberal and others a more strict construction of the statute.

NOTES OF RECENT DECISIONS.

LIABILITY FOR INJURIES THROUGH ELECTRICAL APPLIANCES.-In Girardi v. Electric Imp. Co., 28 L. R. A. 596, decided by the Supreme Court of California, it was held that placing electric light wires over the metallic roof of a hotel where persons may come in contact with them, without running them high enough to prevent such contact, is sufficient proof of negligence in case of injury to a person by an electric shock from such wires; and that want of ordinary care of an employee of an hotel, in going out on the roof in a dark night with his employer to secure signs which were threatened during a heavy rain, and coming in contact with the

electric wires, which he knew were above the roof but which he may not have known to be dangerous, was a question for the jury. A substantially similar case on the facts in New York is Ennis v. Gray, 87 Hun, 355. The plaintiff was a roofer by trade, and, while at work on the roof of a building was injured by coming in contact with electric wires put up and maintained by a corporation not the owner of such building, and it was held that such company was liable in damages. A case was recently reported in the newspapers in which an appellate court of a neighboring State affirmed a judgment for personal injuries sustained through coming in contact with electric wires, where the defense was that the wires were strung high enough for a person of ordinary height to pass under them, but that the plaintiff came in contact with them because he was an unusually tall man. It was held that the defendant had not exercised proper care for the protection of the public, and that plaintiff's failure to observe extraordinary caution because of his unusual stature did not constitute contributory negligence.

FOREIGN CORPORATION STATUTORY REQUIREMENTS.-It is held by the Supreme Court of Oregon, in Commercial Bank v. Sherman, 43 Pac. Rep. 658, that a foreign corporation purchasing a note in the State, and having no purpose to do any other act in the State, is not transacting "business" in the State, within Hill's Ann. Laws, § 3276, providing that a foreign banking corporation, "before transacting business" in the State must record a power of attorney in each county, where it has "a resident agent," which, so long as the company has "places of business" in the State, shall be irrevocable. The following is from the opinion of the court:

The single inquiry presented by this record, therefore, is whether a foreign banking corporation purchasing a promissory note in this State, and with no purpose of doing any other act here, is "transacting business" in the State, within the meaning of the statute. It seems to us this question must be answered in the negative. In our opinion, the statute, when reasonably construed, was intended to prohibit certain foreign corporations coming into this State for the purpose of transacting their ordinary corporate business without first appointing some resident agent, upon whom service of summons could be had in case of litigation between them and citizens of the State, and was not designed or intended to prohibit the doing of one single isolated act of business by such a corporation, with no intention apparent to do any other act or engage in business here.

It will be noticed that the statute does not require the power of attorney to be recorded before "doing any business," but "before transacting business," and that it shall be filed in every county where the corporation has "a resident agent," and shall be ir revocable except by the substitution of another quali fied person for the one named therein so long as the corporation shall have "places of business" in the State. These provisions would seem necessarily to indicate that the statute was intended to apply to a corporation whose actual or contemplated business in the State is such as to admit of its having resident agents or places of business therein; and, to have a resident agent or place of business, it must be carrying on, or intending to carry on, its ordinary corporate business; for a corporation doing but a single act of business, with no intention of doing more, could not, in the nature of things, be expected to have a resident agent or place of business. To require a foreign banking corporation to execute and file the power of attorney required by the statute as a prerequisite to its right to purchase a promissory note, or take a mortgage to secure a debt, or to do any other single act of business, when there was no purpose or intention to engage in banking here, would be a very narrow, harsh, and, we think, an unwarranted, construction of the statute. The following authorities, although under statutes differing in detail from ours, tend to support this conclusion: Murfree, Foreign Corp. § 65 et seq.; Manufacturing Co. v. Ferguson, 113 U. S. 727, 5 Sup. Ct. Rep. 739; Dry Goods Co. y. Lester, 60 Ark. 120, 29 S. W. Rep. 34; Potter v. Bank, 5 Hill, 490; Gilchrist v. Railroad Co., 47 Fed. Rep. 593. There is nothing in the former decisions of this court or of the federal court construing our statute which, in our opinion, conflicts with these views. In Semple v. Bank, Re Comstock, and Bank v. Page, supra, the bank was regularly engaged in the transaction of its corporate business in the State. The case of Hacheny v. Leary, supra, involved the construction of a statute of the then territory of Washington as applied to a contract made in the territory. That statute differed in many respects from the one now before us, and, besides, the case discloses that the corporation had an agent in Washington actually engaged in the business of soliciting and receiving applications for insurance. For these reasons, the case is distinguishable from the one under consideration.

CONFLICT OF LAWS-DRAFT PAYABLE IN ANOTHER STATE-ASSIGNMENT OF FUND.-The Supreme Court of Illinois decides, in Abt v. American Trust & Sav. Bank, 42 N. E. Rep. 856, that a draft drawn in Illinois on a New York bank and payable in New York is governed by the laws of New York and that such draft will not operate as an assignment pro tanto of the drawer's funds in said bank, though the action is brought in Illinois by the payees against the assignee of the drawers to recover the amount of said draft. The court says in part:

It is not, of course, denied that petitioners are creditors of the insolvent firm, and entitled to share with the other creditors in the assets of the estate, but petitioners insist that, by drawing in their favor the drafts on the bank in New York, Schaffner & Co.

assigned to them the funds so on deposit in the New York bank-in other words, set apart and appropri ated said funds to or toward the payments of said drafts, and that the payees thereupon became entitled to it, and that it is the duty of the assignee to pay the same to the petitioners. It is settled law in this State that a check drawn for value by a depositor on a bank operates as an assignment pro tanto of the funds of the depositor on deposit in such bank in favor of the holder of the check. Brown v. Leckie, 43 III. 497; Union Nat. Bank v. Oceana Co. Bank, 80 Ill. 212; National Bank of America v. Indiana Banking Co., 114 Ill. 483, 2 N. E. Rep. 401. But it was admitted on the trial, and the decisions of the courts of New York show, that the rule is otherwise in that State. Attorney General v. Continental Life Ins. Co., 71 N. Y. 325; Etna Bank v. Fourth Nat. Bank, 46 N. Y. 82; People v. Merchants' & Mechanics' Bank, 78 N. Y. 269; Bank v. Clark, 134 N. Y. 368, 32 N. E. Rep. 38. The assignee, who is appellee here, contends that, as the funds on which the drafts were drawn were in New York, in the hands of the drawee there, the contract was to be performed in that State, and must be governed by its laws, and that by such laws there was no assignment or transfer of the funds to the holder of the drafts, and therefore that appellant did not, upon taking up such drafts, have any more right to such funds than the other creditors of the insolvent firm. In support of this contention, National Bank of America v. Indiana Banking Co., 114 Ill. 483, 2 N. E. Rep. 401, is cited. In that case it was held that a check drawn in Indiana on a bank in Illinois would operate to transfer the fund, on the ground that the law of the place where the contract was to be performed must govern-the law of Indiana being, as in New York, that checks do not operate to assign the deposit or a sufficient part to pay them. It is, however, insisted by appellants that as this is not a proceeding against the New York bank, but against the assignee to compel delivery to them of such funds in the hands of the assignee in this State, the laws of New York have no application. The case is doubtful on the facts. But be that as it may, we are of the opinion that the law is against the appellants. The drafts, though drawn in this State, were drawn on the New York bank, and were payable there. The contract was to be performed in New York, and it must be presumed that upon a question of this character the parties contracted with reference to the laws of the State where the contract was to be performed, rather than with reference to the laws of the State where the contract was made. Mason v. Dousay, 35 Ill. 424; Lewis v. Headley, 36 Ill. 433; Adams v. Robertson, 37 Ill. 45; Roundtree v. Baker, 52 Ill. 241; Davenport v. Karnes, 70 Ill. 465; Evans v. Anderson, 78 Ill. 558. Such being the law, and such being the contract we do not think that the payment of the funds by the New York bank to the assignee in this State, even if the facts showed such payment, would give appellant any right to the funds which he did not have before such payment.

its behalf, will not be presumed simply because they have prior thereto exercised the power. The court says in part:

Unless the authority is expressly conferred by the charter or given by the board of directors, it may be stated, as a general proposition, that the president and secretary of a corporation are not empowered to bind it by their signatures to commercial paper. They have no inherent power to execute negotiable notes in the name of the corporation. Tied. Com. Paper, sec. 121; Cook, Stock, Stockh. & Corp. Law, sec. 716; McCullough v. Moss, 5 Denio, 567; 4 Thomp. Corp. sec. 4619; Life & Fire Ins. Co. v. Me. chanic Fire Ins. Co., 7 Wend 31; Hyde v. Larkin, 35 Mo. App. 365; Pierce, R. R. 32-34; Walworth County Bank v. Farmers' Loan & Trust Co., 14 Wis. 325; 1 Mor. Priv. Corp., sec. 537; Titus v. Railroad Co., 37 N. J. Law, 98-102; Wait v. Association (N. H.), 23 Atl. Rep. 77, and authorities there cited; Bank v. Atkinson, 55 Fed. Rep. 465. Where the authority of the president and secretary to bind the corporation is challenged, as it has been by the answer in this case, that authority should be shown by the proof, and not be presumed as a matter of law. Turnpike Co. v. Looney, 1 Metc. (Ky.) 550; Bacon v. Insurance Co., 31 Miss. 116; 4 Thomp. Corp. 4619; Craft v. Railroad Co., 150 Mass. 208, 22 N. E. Rep. 917; Bank v. Hogan, 47 Mo. 472; Dabney v. Stevens, 40 How. Prac. 341; 1 Wat. Corp. 445; Bank v. Hamlin, 14 Mass. 180; Railway Co. v. James, 22 Wis. 187; Bliss v. Irrigation Co., 65 Cal. 504. We are aware that there are authorities contra, and counsel for appellee have cited us to American Exch. Nat. Bank v. Oregon Pottery Co., 55 Fed. Rep. 265, where it is held that, "if the president and secretary sign" a negotiable promissory note, "their authority is inferred from their official relation." This case is analogous, the question being presented (as in the case at bar) on demurrer to an answer which negatived the authority of the president and secretary to issue such paper. But the court, to sustain its position in that case, cited only two cases, viz.: Merchants' Bank v. State Bank, 10 Wall. 644; and Crowley v. Mining Co., 55 Cal. 273. In the case in 10 Wall. supra, the court use this language: "It should have been left to the jury to determine whether, from the evidence as to the powers exercised by the cashier, with the knowledge and acquiescence of the directors, and the usage of other banks in the same city, it might not be fairly inferred that the cashier had authority to bind the defendant." True, it is also said, "that if the contract can be valid under any circumstances, an innocent party in such a case has a right to presume their existence, and the corporation is estopped to deny them." But we submit that the broad dicta of the latter quotation, in view of the fact that there was a usage of other banks, and a usual course of dealing, with the knowledge and acquiescence of the directors shown, were unneces sary for the determination of the question before the court. It was the very language doubtless which caused the learned circuit judge in American Exch. Nat. Bank v. Oregon Pottery Co., 55 Fed. Rep. 265, to hold, as a matter of law, that the authority of the president and secretary would be presumed from the fact that they had exercised it. So, also, in the California case cited to support the ruling in 55 Fed. supra, it was admitted that the president, whose authority was being questioned, "was the superintendent and general managing agent, having full control of the business of the corporation."

The difference, therefore, between those cases and the one at bar, and the one in which they were cited, is too obvious for further notice. The facts of the case of Gelpcke v. City of Dubuque, 1 Wall. 175 (where the language above quoted from Judge Swayne in 10 Wall. was first used by him), and in Supervisors v. Schenck, 5 Wall. 772; City of Lexington v. Butler, 14 Wall. 296; Tod. v. Land Co., 57 Fed. Rep. 47-53, and Bank v. Young, 41 N. J. Eq. 531, 7 Atl. Rep. 488,-also cited by counsel for appellee, where this dictum has been repeated, did not justify such a sweeping dec. laration of law. For an examination of these will show that, in some of the cases, municipal or county bonds were in controversy, which showed upon their face authority for their issue; and in other cases, that the contracts or transactions made or performed by the agent of the corporation where such as had been frequently or usually made or performed by him before, in the course of the business of the corporation; or that the corporation had received some benefit from the unauthorized act. But the doctrine announced in American Exch. Nat. Bank v. Oregon Pottery Co., 55 Fed. Rep. 265, is unsound, and not supported by the weight of authority. Besides, the principle it seeks to establish is in conflict with the doctrine announced by the Supreme Court of the United States in Bank v. Armstrong, 152 U. S. 346, 14 Sup. Ct. Rep. 572, where it was held "that the vicepresident of a bank, however general his powers, could not exercise such a power unless specially authorized so to do, and that persons dealing with the bank were presumed to know the general powers of the officers." Mr. Morawetz, in speaking of these dicta in those cases where they have been incautiously used, said: "They must be considered in view of the facts of the particular cases in which they were made, Taken alone as statement of a principle or rule of law, they are certainly not in accordance with the decisions, and cannot be supported upon any sound principle." 2 Mor. Priv. Corp. sec. 608. The rule that, "if the president and secretary sign, their authority is in ferred from their official relation," provided they might have had power under any circumstances to issue such paper for the corporation, is begging the question where the authority itself is challenged. This rule, too, ignores a fundamental principle of the law of agency, whether applied to natural persons or corporations; for corporations can only act through agents. It is said by Mr. Mechem, in his work on Agency (section 289), that “every person dealing with an agent is bound to ascertain the nature and extent of his authority. He must not trust to the mere presumption of authority, nor to any mere presumption of authority by the agent." Judge Miller, of the Supreme Court of the United States, in the Floyd Acceptances, 7 Wall. 666, said: "The person dealing with an agent, knowing that he acts only by virtue of a delegated power, must, at his peril, see that the paper on which he relies comes within the power under which the agent acts." And this applies to every person who takes the paper afterwards; for, said he, "it is to be kept in mind that the protection which commercial usage throws around negotiable paper cannot be used to establish the authority by which it was issued."