New York Law Review

Tag: agency law

  • Judson v. Gray, 11 N.Y. 408 (1854): Attorney’s Authority to Bind Client for Litigation Expenses

    Judson v. Gray, 11 N.Y. 408 (1854)

    An attorney of record has the presumed authority to bind their client for necessary expenses incurred during litigation, such as printing costs, unless the attorney explicitly disclaims responsibility.

    Summary

    A law printer sought payment from executors for printing the record of an appeal in a negligence action. The executors argued that the insurance company, which managed the litigation and directed the appeal, should be responsible. The court held that the printer could rely on the presumption that the attorney of record had the authority to order the printing on behalf of their client, the party of record (the executors). Since the attorney did not disclaim responsibility and the insurance company’s role was not disclosed to the printer, the executors were liable for the printing costs. This case affirms the general rule that attorneys can bind their clients for necessary litigation expenses.

    Facts

    A law printer (appellant) was hired by the attorney of record for the executors of a decedent’s estate (respondents) to print the record for an appeal. The appeal stemmed from a negligence action originally brought by the decedent, then continued by the executors. An insurance company, which had insured the decedent, managed the litigation, retained the attorneys, and instructed them to pursue the appeal without consulting the executors. The printer was not informed that the insurance company was managing the litigation or that it was the true party in interest. The attorney did not personally guarantee payment for the printing services.

    Procedural History

    The case originated in the Surrogate’s Court, Kings County, where the printer sought payment from the executors for the printing costs. The executors objected, arguing the insurance company was responsible. The lower court presumably ruled against the printer (this isn’t explicitly stated, but implied by the appeal). The printer appealed to a higher court (likely the Appellate Division), which was then appealed to the New York Court of Appeals.

    Issue(s)

    Whether an attorney of record has the authority to bind their client (the party of record) for the costs of printing an appeal record, when the attorney did not disclaim responsibility and the printer was unaware of a third party (the insurance company) controlling the litigation.

    Holding

    Yes, because the printer was entitled to rely on the presumption that the attorney of record had the authority to order printing for the appeal on behalf of their client, the party of record. The attorney did not disclaim responsibility, and the insurance company’s involvement was not disclosed to the printer.

    Court’s Reasoning

    The court relied on the established principle of agency law, stating that “the party of record in the action in which the printing is furnished is a disclosed principal and the attorney an agent for such a principal.” The court emphasized the printer’s right to rely on the attorney’s presumed authority, especially since the insurance company’s role was not disclosed. The court cited prior cases to support its holding, stating that the rule extends specifically to printing costs for appeals. The Court relied on precedent cases like Bonynge v. Field (81 N. Y. 159) and Reporter Co. v. Murphy (283 App. Div. 1133).

  • Cohn v. Lionel Corporation, 21 N.Y.2d 559 (1968): Principal’s Duty to Indemnify Agent

    Cohn v. Lionel Corporation, 21 N.Y.2d 559 (1968)

    A principal has a duty to indemnify an agent for damages or expenditures incurred as a proximate consequence of the agent’s good-faith execution of the agency, provided the act was not manifestly wrong.

    Summary

    Cohn, an officer of Lionel Corp., guaranteed a financial condition for a transaction at Lionel’s request. When the condition failed, Cohn was forced to pay on the guarantee. He sued Lionel for indemnification. The New York Court of Appeals held that Cohn’s complaint stated a cause of action for indemnity because he acted as Lionel’s agent in providing the guarantee. The court emphasized that a principal must indemnify an agent for losses incurred while acting in good faith on the principal’s behalf, as long as the act wasn’t obviously wrongful. This case illustrates the scope of a principal’s duty to protect their agents from liabilities incurred during authorized activities.

    Facts

    Lionel Corp. negotiated to acquire stock from the Steinthals, who required $800,000 in cash upon completion of the deal.

    Lionel agreed to register 30,500 shares of Lionel stock for the Steinthals to sell, but the Steinthals then demanded a guarantee that the sale of these shares would realize $800,000.

    Lionel refused to provide the guarantee due to potential tax implications.

    Lionel’s management requested Cohn, an officer and director, to provide the guarantee to facilitate the acquisition.

    Cohn provided the guarantee, and the Steinthals executed contracts with Lionel.

    The market value of Lionel shares declined, causing the Steinthals to enforce the guarantee against Cohn, resulting in a judgment against Cohn.

    Procedural History

    Cohn sued Lionel for indemnification.

    Lionel moved to dismiss the complaint for legal insufficiency under CPLR 3211(a)(7).

    Special Term granted the motion, and the Appellate Division affirmed.

    The Court of Appeals reversed the lower courts, reinstating Cohn’s third cause of action.

    Issue(s)

    Whether a principal is required to indemnify an agent for losses incurred by the agent while acting on behalf of the principal, specifically when the agent provides a guarantee at the principal’s request to facilitate a business transaction?

    Holding

    Yes, because where one is directed by another to do an act in his behalf, not manifestly wrong, the law implies a promise of indemnity by the principal for damages resulting from the good-faith execution of the agency.

    Court’s Reasoning

    The Court of Appeals focused on the legal sufficiency of Cohn’s complaint, construing the pleadings liberally in his favor and assuming the truth of his allegations.

    The court cited the general rule that a principal must indemnify an agent for damages or expenditures incurred as a proximate consequence of the good-faith execution of the agency.

    The court stated: “The general rule is that, where one is employed or directed, by another to do an act in his behalf, not manifestly wrong, the law implies a promise of indemnity by the principal for damages resulting from or expenditures incurred as a proximate consequence of the good faith execution of the agency.”

    The court found that Cohn’s complaint unequivocally asserted that he executed the guarantee agreement as an agent for Lionel, acting at Lionel’s special insistence and request.

    The court also noted that the fact Cohn’s act helped Lionel maintain a favorable tax advantage did not, by itself, establish that Cohn participated in an illegal act.

    The court acknowledged that Cohn’s third cause of action (agency) contradicted the theory of his first cause of action (officer indemnification), but it affirmed that a plaintiff can advance inconsistent theories in alleging a right to recovery.

  • Spett v. Levine, 16 N.Y.2d 16 (1965): Admissibility of Agent’s Statements as Evidence Against Principal

    Spett v. Levine, 16 N.Y.2d 16 (1965)

    Circumstantial evidence can establish a prima facie case of negligence, and an agent’s statements made within the scope of their authority are admissible as evidence against the principal, especially when the agent has broad managerial responsibilities.

    Summary

    The plaintiff, Spett, tripped over a skid in a hallway outside his office and sued Rose Levine, doing business as Harvey Printing Co., alleging negligence. The trial court set aside a jury verdict for Spett, finding insufficient evidence linking Harvey to the skid’s placement. The Court of Appeals reversed, holding that circumstantial evidence supported Harvey’s responsibility. The Court also held that an alleged admission by Albert Levine, Harvey’s “general foreman” and Rose’s husband, regarding the skid was improperly excluded and should be admitted in a new trial, as his managerial role made his statements admissible against the principal, Rose Levine.

    Facts

    Spett tripped over a skid (a wooden platform) in the hallway outside his office, sustaining injuries. The skid was located between Spett’s office door and Harvey Printing Co.’s door, approximately 6 to 8 feet apart. Testimony indicated the skid contained cardboard used by Harvey but not by other tenants on the floor. Deliveries were typically left on a loading platform downstairs, and tenants were responsible for moving them to their premises. Albert Levine, Rose Levine’s husband and Harvey’s “general foreman,” allegedly made an admission of responsibility for placing the skid after the accident.

    Procedural History

    Spett sued Rose Levine (Harvey Printing Co.) in Supreme Court. The jury initially found in favor of Spett. The trial court set aside the jury verdict in favor of the defendant, Levine. The Appellate Division affirmed the trial court’s decision. The Court of Appeals granted leave to appeal and reversed the Appellate Division’s order, remitting the case for review on the facts.

    Issue(s)

    1. Whether the circumstantial evidence presented by the plaintiff was sufficient to establish a prima facie case that Harvey Printing Co. was responsible for placing the skid in the hallway.

    2. Whether the trial court erred in excluding testimony concerning an alleged admission of responsibility made by Albert Levine, the “general foreman” of Harvey Printing Co., shortly after the plaintiff’s accident.

    Holding

    1. Yes, because the circumstantial evidence, including the skid’s location, the type of cardboard on it, and the usual delivery procedures, was sufficient for a jury to reasonably infer Harvey’s responsibility.

    2. Yes, because Albert Levine’s broad managerial role and apparent authority to act on behalf of Harvey Printing Co. made his alleged admission of responsibility admissible against his wife, Rose Levine, the defendant.

    Court’s Reasoning

    The Court of Appeals reasoned that circumstantial evidence is sufficient if it reasonably infers causation or negligence, even if it doesn’t eliminate remote possibilities. The court cited prior cases such as Dillon v. Rockaway Beach Hosp., stating, “It is enough that he [plaintiff] shows facts and conditions from which the negligence of the defendant and the causation of the accident by that negligence may be reasonably inferred.” Here, the skid’s location, its contents, and the usual delivery practices created a reasonable inference that Harvey was responsible for its placement. The court also determined that Albert Levine’s alleged admission of responsibility was improperly excluded. The court stated that “Where an agent’s responsibilities include making statements on his principal’s behalf, the agent’s statements within the scope of his authority are receivable against the principal.” The court emphasized Levine’s broad managerial responsibilities, stating that he “ran” Harvey and was its “representative to the trade, others in the building, and the landlord.” Because Levine appeared to be more than just a general foreman, but rather the key decision-maker for the company, his statements about the skid’s placement should have been heard as evidence.

  • Savoy Record Co. v. Cardinal Export Corp., 15 N.Y.2d 1 (1964): Enforceability of Agent’s Guarantee Under Statute of Frauds

    15 N.Y.2d 1 (1964)

    Under the Statute of Frauds, an agent is not personally bound to a guarantee of a principal’s debt unless there is clear and explicit evidence, gathered from the writing itself, demonstrating the agent’s intention to be personally bound, even if the agent signs a contract containing a guarantee clause.

    Summary

    Savoy Record Company sued Cardinal Export Corp. to enforce a guarantee of royalty payments owed by Armonia E. Ritmo, an Italian company, under a licensing agreement. Cardinal, acting as Armonia’s agent, signed the agreement, which contained a clause stating that Cardinal guaranteed Armonia’s payments. Cardinal moved to dismiss, arguing the guarantee was unenforceable under the Statute of Frauds because it signed only as Armonia’s agent. The Court of Appeals reversed the lower court’s denial of the motion, holding that Cardinal’s signature as an agent was insufficient to establish a personal guarantee absent clear and explicit evidence of its intent to be bound, as required by the Statute of Frauds.

    Facts

    • Savoy Record Company entered into a licensing agreement with Armonia E. Ritmo, granting Armonia exclusive rights to manufacture and market Savoy’s records in Italy.
    • The agreement contained a clause stating that Cardinal Export Corp. was authorized to sign on Armonia’s behalf and that Cardinal guaranteed Armonia’s payments.
    • Cardinal signed the agreement as “Agent on Behalf of Armonia E. Ritmo.”
    • Armonia allegedly failed to pay over $13,000 in royalties.
    • Savoy sued Cardinal, alleging that Cardinal agreed to guarantee all payments due under the contract.

    Procedural History

    • Cardinal moved to dismiss the complaint, arguing that the purported guarantee was unenforceable under the Statute of Frauds.
    • Special Term denied the motion, concluding that Savoy intended Cardinal’s signature as agent to bind Cardinal as guarantor.
    • The lower court’s decision was appealed to the Court of Appeals of New York.

    Issue(s)

    Whether Cardinal Export Corp., by signing an agreement as agent for Armonia E. Ritmo, containing a clause stating Cardinal guarantees Armonia’s payments, provided sufficient evidence under the Statute of Frauds to demonstrate Cardinal’s intent to be personally bound as a guarantor of Armonia’s debt.

    Holding

    No, because the Statute of Frauds requires clear and explicit evidence of the agent’s intention to be personally bound, and Cardinal’s signature as an agent, without more, does not meet this standard, even if the contract contains a guarantee clause.

    Court’s Reasoning

    The court emphasized that, consistent with Mencher v. Weiss, an agent is not personally bound unless there is clear and explicit evidence of the agent’s intention to substitute or superadd personal liability. The court found the writing ambiguous because it required Cardinal’s signature to simultaneously bind the principal, establish the agency, and bind the agent as guarantor.

    Referencing its prior holding in Salzman Sign Co. v. Beck, the Court stated that Savoy’s intent was irrelevant; the crucial element was Cardinal’s intention to be personally bound. The Court reasoned that signing solely as an agent, even with a guarantee clause, could not be converted into a binding acceptance of personal liability as guarantor without “direct and explicit evidence of actual intent” on Cardinal’s part.

    The court distinguished the case from Mencher v. Weiss, where the defendant signed not only in a representative capacity but also individually. The court concluded that the Statute of Frauds requires protection for agents from plausible, but potentially false, claims of personal guarantees. It determined that absent unequivocal evidence of intent to assume personal liability, the obligation of a guarantor should not be imposed on a party signing merely as an agent.

    In dissent, Judge Bergan argued that no public policy prevents an agent from assuming personal responsibility, and the language of the agreement clearly showed an intention to superadd Cardinal’s responsibility. He contended the dual purpose of the signature—as agent and guarantor—satisfied the Statute of Frauds.

    The majority, however, found that the explicit expression of intent was not satisfied by the signature. “Cardinal Export Corp. for One Dollar ($1.00) and other good and valuable consideration agrees by its signature to guarantee the payment of all moneys.”

  • Farr v. Newman, 14 N.Y.2d 160 (1964): Imputation of Attorney’s Knowledge to Client Despite Dual Representation

    Farr v. Newman, 14 N.Y.2d 160 (1964)

    A principal is bound by the knowledge of their agent, even if the agent also represents the other party in the transaction, unless the agent is acting adversely to the principal and the third party is aware of the agent’s adverse actions.

    Summary

    Farr contracted to buy land from Newman. Hardy later bought the same land from Newman through an attorney who knew of Farr’s prior contract but believed it was unenforceable. Farr sued Hardy to enforce his contract. The court addressed whether Hardy was bound by his attorney’s knowledge of Farr’s prior claim, given that the attorney also represented Newman. The court held that Hardy was bound by his attorney’s knowledge because the attorney’s good faith belief in the unenforceability of Farr’s contract negated any argument of adverse interest or fraud, and the attorney was acting within the scope of his agency.

    Facts

    Farr entered into an agreement with the Newmans to purchase real property for $3,000. This agreement was not in recordable form. Subsequently, Hardy purchased the same property from the Newmans for $4,000. Hardy’s attorney was aware of Farr’s prior agreement. The attorney, although believing the agreement unenforceable, obtained this knowledge directly from Farr, who asserted his rights. The attorney did not disclose Farr’s claim to Hardy. Hardy then completed the purchase from the Newmans.

    Procedural History

    Farr sued Hardy to compel conveyance of the property upon payment of $3,000. The trial court initially held that the memorandum of agreement was insufficient under the Statute of Frauds, but the Appellate Division reversed this finding. The Appellate Division affirmed the trial court’s finding that the attorney acted in good faith. The case then reached the New York Court of Appeals.

    Issue(s)

    Whether defendant Hardy may avoid the effect of his attorney’s knowledge of plaintiff’s equity, and the consequent application of the familiar maxim that he who takes with notice of an equity takes subject to that equity, by proof that the attorney also represented the grantors, the Newmans, in the transaction through which Hardy acquired title.

    Holding

    Yes, Hardy is bound by his attorney’s knowledge, because the attorney’s good faith belief in the unenforceability of Farr’s contract precludes a finding that the attorney was acting against Hardy’s interest, and the attorney was acting within the scope of his agency.

    Court’s Reasoning

    The court emphasized that a principal is generally bound by the knowledge of their agent in matters within the scope of the agency, even if the information is not actually communicated to the principal. The court distinguished this case from situations where an agent is defrauding the principal or acting against their interest for the benefit of another. Here, the attorney, acting in good faith, made a judgment about the legal status of Farr’s claim. The court stated, “It is well-settled that the principal is bound by notice to or knowledge of his agent in all matters within the scope of his agency although in fact the information may never actually have been communicated to the principal.”

    The court rejected the argument that the attorney’s dual representation created a conflict of interest that should prevent imputation of knowledge, noting that this argument was raised for the first time on appeal. The court found that the attorney was employed to pass judgment on the state of the title by both parties, and his decision, even if debatable, could not be considered deceitful as a matter of law. The court explained that the attorney was held out as a proper person to whom notice of outstanding equities was to be given, and his receipt of such notice from plaintiff was within his authority.

    The court referenced the Restatement 2d of Agency, highlighting that notice given to an agent is binding on the principal, even if the agent acts adversely, unless the third party knows of the agent’s adverse purpose. The court noted that the relevant question is not about the presumption that an agent will communicate relevant matters, but about the substantive rule of equity requiring notice of outstanding equities. The court observed: “When a prospective purchaser of real estate engages an attorney as his agent in the negotiations, he clothes the attorney with the incidental authority to receive in his behalf notice of outstanding equities… If, under the circumstances known to him, the obvious consequence of the principal’s own conduct in employing the agent is that the public understand him to have given the agent certain powers, he gives the agent those powers.”

  • Marvin v. Brooks, 94 N.Y. 71 (1883): Equitable Accounting for Quasi-Trustees

    Marvin v. Brooks, 94 N.Y. 71 (1883)

    Equity jurisdiction extends to cases involving fiduciary relationships where an agent is entrusted with the principal’s money for a specific purpose, creating a quasi-trustee relationship that warrants an accounting.

    Summary

    Marvin sued Brooks seeking an equitable accounting related to the purchase of stock. The court addressed whether a fiduciary relationship existed between Marvin and Brooks. The Court of Appeals held that Brooks acted as Marvin’s agent in purchasing stock, thereby establishing a fiduciary duty, and entitling Marvin to an equitable accounting to determine if the funds were properly used. The court reasoned that an agent entrusted with a principal’s money becomes a quasi-trustee, justifying equity’s intervention to ensure proper handling of funds and transparency in transactions.

    Facts

    Marvin and Brooks agreed to jointly purchase a controlling interest in a mining company. Brooks traveled to Detroit to negotiate the purchase. He telegraphed Marvin requesting funds to cover Marvin’s share of the down payment, representing that it would secure one-half of the Ward interest in the company. Marvin remitted the funds. The stock-note and Ontario shares were not delivered with the other securities. Marvin claimed he had paid for property he did not receive. Brooks argued he had fully accounted for the stock and bonds.

    Procedural History

    Marvin sued Brooks seeking an equitable accounting. The referee found that Brooks had fully accounted for the stock and bonds. The trial court dismissed the complaint based on the referee’s findings. The General Term affirmed the dismissal. The Court of Appeals reversed the lower courts’ decisions, holding that Marvin was entitled to an equitable accounting.

    Issue(s)

    Whether a fiduciary relationship existed between Marvin and Brooks such that Marvin was entitled to an equitable accounting regarding the funds entrusted to Brooks for the stock purchase.

    Holding

    Yes, because Brooks acted as Marvin’s agent and was entrusted with Marvin’s money for a specific purpose, thus establishing a fiduciary relationship and creating a quasi-trustee situation that warrants an equitable accounting.

    Court’s Reasoning

    The court emphasized that while bare agency is insufficient for equitable accounting, a fiduciary relationship involving trust and confidence justifies equity’s intervention. The court distinguished between a simple debtor-creditor relationship and one where an agent is entrusted with funds for a specific purpose. In the latter case, the agent becomes a quasi-trustee, obligated to provide a full and transparent accounting of how the funds were used. The court noted, “[A]s between principal and factor the equitable jurisdiction attached, because the latter partook of the character of a trustee, and that ‘so it is with regard to an agent dealing with any property * * * and though he is not a trustee according to the strict technical meaning of the word, he is quasi a trustee for that particular transaction,’ and, therefore, equity has jurisdiction.” The court found that Brooks’s actions in purchasing the stock on Marvin’s behalf, coupled with the entrusting of funds, created a fiduciary duty, entitling Marvin to an equitable accounting. This accounting was necessary because Marvin could not independently verify whether Brooks properly applied all the funds or what securities were actually purchased.

  • Stringham v. St. Nicholas Ins. Co., 4 Abb. Ct. App. Dec. 315 (1866): Authority of Insurance Agents

    4 Abb. Ct. App. Dec. 315 (1866)

    An insurance agent’s authority is determined by the powers explicitly granted by the insurance company and the information available to the policyholder; an agent cannot create authority through their own actions, and policyholders are bound by the limitations on the agent’s authority when those limitations are apparent.

    Summary

    Stringham sued St. Nicholas Insurance Co. after a fire destroyed property covered by a policy originally issued to Spaulding and assigned to Wolfe and then to Stringham. The policy required written consent from the company for any assignment. Stringham argued that Brewster, an agent of the insurance company, had provided the required consent. The court found that Brewster lacked the actual authority to consent to the assignments. The court held that because the policy explicitly stated that assignments required the corporation’s written consent and the blank forms suggested the secretary’s signature, the plaintiff was on notice that Brewster, as an agent, likely lacked the authority to approve assignments.

    Facts

    L. Austin Spaulding obtained an insurance policy from St. Nicholas Insurance Company on his flouring mill and machinery. The policy stipulated that the interest of the assured was not assignable without the written consent of the corporation. Spaulding assigned the policy to U.H. Wolfe, who then assigned it to Joseph Stringham. Both assignments were purportedly consented to by H.A. Brewster, an agent of the insurance company, who altered the pre-printed consent form by replacing “Secretary” with “Agent.” After the property was destroyed by fire, Stringham sought to collect on the policy, but the insurance company refused, arguing the assignments were invalid without the company’s official consent.

    Procedural History

    Stringham sued St. Nicholas Insurance Co. The referee ruled that the consents given by Brewster were unauthorized and dismissed the complaint. The general term affirmed the judgment. Stringham appealed to the Court of Appeals.

    Issue(s)

    Whether Brewster, as an agent of St. Nicholas Insurance Company, had the authority to grant consent to the assignments of the insurance policy, thereby binding the company to the policy terms with the new assignee.

    Holding

    No, because Brewster’s actual authority was limited to receiving applications and premiums, and the policy itself provided notice that assignments required corporate consent, which was typically manifested by the secretary, not an agent.

    Court’s Reasoning

    The court reasoned that Brewster’s authority was limited to receiving applications for insurance and collecting premiums. He could bind the company for only ten days. The court emphasized that the policy language itself served as notice that assignments required the corporation’s written consent. “The policy carried on its face notice to all holders, that the interest of the assured was not assignable, unless by consent of the corporation manifested in writing, and the printed blanks on the back of the policy were like notice of the form of such consent, and the officer alone authorised to give it, and manifest the assent of the company. It was full notice to all that it must be done by its secretary, and the erasure by Brewster of the word ‘secretary,’ and writing in place thereof the word ‘agent,’ was an admonition to the parties that the authority to give the consent was in the secretary only.” The court rejected the argument that Brewster’s entries in his policy register, which was paid for by the company, constituted notice to the company of the assignments, as there was no evidence that the company ever reviewed the register or knew of its contents. The court cited New York Life Ins. & Trust Co. v. Beebe, stating that an agent’s declarations or representations bind the principal only when expressly authorized or within the scope of the agency. Here, consenting to assignments was outside the scope of Brewster’s limited agency.

  • Howard v. Ives, 1 Hill 263 (N.Y. Sup. Ct. 1841): Proper Notice for Negotiable Instruments

    Howard v. Ives, 1 Hill 263 (N.Y. Sup. Ct. 1841)

    When a negotiable instrument is sent to an agent for collection, the agent may forward notice of dishonor to their principal, and the principal then has a reasonable time to forward notice to the party to be charged, even if this process takes longer than direct notification.

    Summary

    Howard sued Ives on a dishonored promissory note. The note was endorsed to a bank for collection, and the bank notified Howard of the dishonor. Howard then notified Ives. Ives argued that the notice was untimely because it took longer than if the bank had notified him directly. The court held that the notice was sufficient because the bank acted as an agent for collection and Howard forwarded the notice within a reasonable time after receiving it from the bank. This case clarifies the permissible chain of notification for dishonored negotiable instruments when using collection agents.

    Facts

    1. Howard held a promissory note.
    2. Howard endorsed the note to a bank for collection.
    3. The note was dishonored (not paid) at maturity.
    4. The collecting bank notified Howard of the dishonor.
    5. Howard then notified Ives, the endorser of the note.
    6. Ives argued the notice was untimely.

    Procedural History

    The case originated in a lower court. The Supreme Court reviewed the lower court’s judgment concerning the sufficiency of the notice of dishonor provided to the defendant, Ives.

    Issue(s)

    Whether the notice of dishonor to the endorser (Ives) was timely, considering that the note was sent to a bank for collection and the notice was relayed through the bank to the holder (Howard) before being sent to the endorser.

    Holding

    Yes, the notice was timely because the bank served as an agent for collection, and Howard forwarded the notice within a reasonable time after receiving it from the bank.

    Court’s Reasoning

    The court reasoned that when a note is forwarded to an agent (like a bank) for collection, the agent can notify their principal (the holder), who then has a reasonable time to notify the party to be charged (the endorser). The court distinguished the present case from a prior one (Howard v. Ives) by stating: “Whether the note was forwarded under the indorsement of the plaintiff or that of the defendant, the transaction, when explained, amounts only to the creation of an agency for the purpose of collecting the note.” The court emphasized the agency relationship, holding that sending the notice through the agent (collecting bank) was acceptable as long as each party in the chain acted diligently in forwarding the notice. The court referenced prior case law, including its holding that “where the note matures on Saturday the notice need not be mailed until Monday; and, thirdly, that, in the case of a circuitous notice, it will be in time if the intermediate party forwards it the next day after he receives it.” Ultimately, the court concluded the defendant had been duly charged.