UNITED STATES NAT. BANK v. HERRON La Grande (R. W. Swagler, of Ontario, Craw

"That said notes and said mortgage were given to secure a loan of $5,000, which sum in cash, Action by the United States National Bank, lawful money of the United States of America, a corporation, against Charles E. Herron, was on the execution and delivery of said instruCatherine L. Shehan, and others. From a ments paid over to the said Charles E. Herron, and the whole thereof was thereupon by said judgment for plaintiff, the second named de- Herron applied wholly to the use and benefit of fendant appeals. Reversed.

*For other cases see same topic and section NUMBER in Dec. Dig. & Am. Dig. Key-No. Series & Rep'r Indexes

ments in her business pursuits and to the payment of her just debts and liabilities all in Malheur county, Ore., all of which benefits she, the defendant Shehan, then and there accepted and retained, and she does now still have and retain the same."

Catherine L. Shehan filed an answer to said complaint denying each and every allegation thereof, except paragraphs 1, 2, 4, 10, and 11. She denies paragraph 16 of the complaint set out supra.

trust, to said Garrett, and said note and mortgage or deed of trust, so executed and acknowledged to said Garrett shall be in all respects as binding on me as though I had personally executed and acknowledged the same.

"In witness whereof, I have hereunto set my hand and seal this third day of September, 1910. "Catherine L. Shehan. [Seal.] "Signed, sealed and delivered in the presence of us as witnesses:

"Alexander H. Galt,
"M. A. Ballinger."

Said instrument was properly executed, acknowledged, and certified.

The following is a copy of one said promissory notes:

"No. 2. $3,000.00.

Vale, Oregon, September 6, 1910. "On or before one year after date, for value received, I promise to pay to the order of Harapry R. Garrett, at the United States National Bank of Vale, Oregon, the sum of three thousand dollars ($3,000.00) in gold coin of the United States, at the present standard value, with insix per cent. per annum, from date until materest thereon in like gold coin at the rate of turity, interest to be paid semiannually, and if not so paid, the whole sum principal and interest, to become due and collectible at the option action is instituted to collect this note or any of the holder of this note, and in case suit or part thereof, I promise to pay, in addition to the costs and disbursements provided by statute, an additional ten per cent. of the amount sued upon for attorney's fees.

A decree was rendered in favor of the plaintiff and against Charles E. Herron, Estey A. Herron, and Catherine L. Shehan for the recovery of said $5,000 and interest thereon at the rate of 6 per cent. per annum from September 6, 1910, and for costs and disbursements, and foreclosing said mortgage, etc. The defendant Catherine L. Shehan appeals from the whole of said decree; the other defendants do not appeal. In form, said promissory notes are joint and several. The defendant Shehan makes several points upon which she relies for a reversal of said decree. 1. She contends that she did not authorize her attorney in fact, Charles E. Herron, to execute either of said promissory notes or said mortgage, and she bases this contention upon the terms of the power of attorney, which she executed to him. Said power of attorney was received at Vale the day that said notes and said mortgage were made, and all of the parties to said notes and mortgage and the plaintiff bank knew the contents of said power of attorney before said notes and mortgage were executed and before any part of the consideration for the execution of said notes and mortgage was paid or delivered. Said notes and said mortgage show on their faces that the name of Catherine L. Shehan was subscribed thereto "by her attorney in fact, Charles E. Herron."

The following is a copy of said power of attorney:

"Charles E. Herron. "Estey A. Herron, "By Her Attorney in Fact, Charles E. Herron. "By Her Attorney in Fact, Charles E. Herron. "Catherine L. Shehan,

"Witness:

"J. R. Weaver.

"John W. Corson."

The note for $2,000 is just like the foregoing copy, except as to the amount of the principal.

2. The main question for decision is: Did the power of attorney, set out supra, authorize Charles E. Herron to subscribe the name of the defendant Catherine L. Shehan to said promissory notes? The said power of attorney confers upon said Herron the following power to execute a promissory note:

"He is hereby authorized and empowered to execute and sign my name to a negotiable promissory note and deliver the same to Harry R. Garrett, said note to be dated September 6, 1910, for the sum of five thousand dollars ($5,000.00), payable to the order of said Garrett, on or before one year after date, and bearing interest at six per cent. per annum, and payable at any bank at Vale, Oregon."

"Know all men by these presents, that I, Catherine L. Shehan, a widow, of Washington City, in the District of Columbia, do hereby make, constitute and appoint Charles E. Herron of Vale, in the state of Oregon, my true and lawful attorney, in and for the purposes hereinafter mentioned, to wit: He is hereby authorized and empowered to execute and sign my name to a negotiable promissory note and deliver the same to Harry R. Garrett, said note to be dated September 6, 1910, for the sum of five thousand dollars ($5,000.00), payable to the order of said Garrett on or before one year after its date and bearing interest at six (6) per cent. per annum It will be observed that said instrument and payable at any bank at Vale, Oregon. And the said Herron is further authorized to execute makes Herron the special agent of Mrs. Shein my name a mortgage, or deed of trust, to se- han for certain stated purposes: (a) He was cure the payment of said note and interest, upon not authorized to borrow money; but he was and covering four hundred and eighty (480) acres of land owned by me in Malheur county, empowered to execute and sign her name to a Oregon, that being all the land owned by me in promissory note having certain stated qualisaid county, and also all my right, title and in- ties. (b) He was authorized to execute one terest in and to all water rights and surveys (c) lt and reservoir and dam sites owned by me in said note, and it was to be for $5,000. county. Said mortgage or deed of trust to be was to be dated September 6, 1910, and to in the ordinary form, used in said county and be a negotiable note, and payable to the orthe said Herron is authorized to sign my name der of said Garrett on or before one year to said note and mortgage, or deed of trust, and after its date at any bank in Vale, and it was to acknowledge for me and in my name the execution of the said mortgage, or deed of trust, to bear interest at the rate of 6 per cent. per and to deliver said note and mortgage or deed of annum. The power does not state anything

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In 1 Clark & Skyles on the Law of Agency, etc. § 266, the authors say:

"Power to draw and indorse negotiable paper, like all other powers of attorney, will always be strictly construed, and will not be held to have been conferred upon an agent, unless the intention to give such authority plainly appears; and where it has been given it must be strictly pursued and will not be extended beyond the limits specified in the power."

Section 267 of the same work illustrates the rule, stated supra, as follows:

"Thus an agent who is authorized to draw and indorse bills of exchange in the name of the principal has no power to draw and indorse them in his own name, or in the joint name of himself and principal, or of his principal and third parties; nor can he draw or indorse them in the name of his principal, when authorized to draw them in his own name," etc.

ferent authority cannot be implied. The extent | terms of this power that the maker thereof of the authority is to be ascertained from the intended to authorize the agent to execute a instrument itself, and it cannot be enlarged by promissory note only of the kind described parol evidence. A power of attorney given by a principal to his agent, to execute, sign, draw and indorse notes and bills in the business of the principal, will not import an implied authority to use the name of the principal in joint transactions with other persons and for their bene

interest at a stated rate, and it was required also to be "payable on or before one year after its date." If the note had been drawn In Harris v. Johnston, 54 Minn. 177, 55 N. as required by the power, both the principal W. 970, 40 Am. St. Rep. 312, the syllabus is: and the interest would have become due and "Each of several tenants in common of real payable at the end of a year from its date, estate executed a several and separate power of and an action for the recovery of either the attorney authorizing the agent to sell the land principal or any of the interest could not, and execute warranty deeds of his interest in the property, and 'to sell and indorse any prom- under any circumstances, have been mainissory notes that may be taken and secured by tained until the expiration of a year from mortgage' on the property. Held, that the pow- the date of the note. The authority delegater did not authorize the agent to bind his princi-ed to Herron authorized him to execute a pal as indorser, jointly with the other cotenants, of a note taken payable jointly to them note of that character and no other. all."

Mrs. Shehan had a right to require that the $5,000 for which she intended to make herself liable should be included in one note, and not in several, and she seems to have done so by the power that she executed; but we do not find it necessary to decide whether the [5] 5. Herron was, by the power of attor- execution of the two notes instead of only ney, authorized to execute and sign the name one, or having said notes signed by Charles of Mrs. Shehan to a negotiable promissory E. Herron and Estey A. Herron as makers note and deliver it to Garrett. This note thereof jointly with Mrs. Shehan, was such was to be dated September 6, 1910, for the a departure from the powers vested in said sum of $5.000 and payable to the order of agent as to invalidate said notes as to Mrs. said Garrett on or before one year after its Shehan. date. It was to bear interest at the rate of 6 per cent. per annum. It was to be payable

of at the end of the year, and the principal | his part, if it appears that he was misapprehendwas made collectible at the end of six months, at the option of the holder thereof, if the interest should not be paid semiannually as required by said notes. We do not find it necessary to decide whether the telegrams offered in evidence were so identified as to

be entitled to be admitted in evidence. The power of attorney was in the possession of the parties when the notes and mortgage were executed, and the bank plaintiff had notice of its contents when it obtained title to the notes. The telegrams did not add anything to the powers of the agent, Herron.

[6] 7. The plaintiff alleges in the complaint that the $5,000 which was loaned when the notes and mortgage were executed was paid to Charles E. Herron, and that said Herron used the whole thereof for the use and benefit

of Mrs. Shehan by improvements in her business in Malheur county, and that she accepted and retained, and that she does now accept and retain, said benefits.

ed or was mistaken as to material facts. But in sustaining the burden of proof cast on the one seeking to enforce a liability by ratification, arising from silence or a failure to repudiate an unauthorized act after knowledge thereof, it is not necessary for him to show that by such silence he has been misled to his prejudice."

We find that the court below erred in rendering a decree in favor of the plaintiff and against the defendant Catherine L. Shehan, upon said promissory notes and said mortgage; and we find, also, that said notes and said mortgage are utterly void as to her.

The decree of the court below is reversed so far as it relates to the defendant Catherine L. Shehan, and as to her this suit is dismissed.

BEAN, J. (dissenting). I am unable to give my assent to the conclusion reached by Mr. Justice RAMSEY in the opinion in this case.

It appears from an agreement executed on the 30th day of July, 1909 (Plaintiff's Ex. No. Although it is not so stated, we presume 5), that Catherine L. Shehan and Charles E. that this allegation was set forth in the com- Herron were about to engage in acquiring, plaint to show a ratification of the acts of improving, and promoting an irrigation projthe said Herron in obtaining said money ect in Malheur county, Or. Herron repreupon said notes. This allegation was denied sented that he had procured deeds to certain by Mrs. Shehan, and the plaintiff failed to lands and water rights to be placed in escrow sustain it by proof. There was a complete in the plaintiff bank at Vale, Or., taking title failure to prove the facts necessary to show a in his own name. By the agreement made beratification. There was no evidence to show tween Catherine L. Shehan of Washington, that Mrs. Shehan had knowledge of the con- D. C., party of the first part, Charles E. Hertents of the notes to which Herron subscribed ron of Vale, Or., party of the second part, her name until this suit was commenced. and M. A. Ballinger of Washington, D. C., The evidence shows that she resides in the party of the third part (who was to act as city of Washington. There is no evidence trustee in the matter), Mrs. Shehan executed that she was ever in Oregon. The evidence to Herron and delivered a promissory note fails to show what was done with the $5,000. for $13,500 to the trustee for herself and The plaintiff produced evidence that Charles Herron as a promotion fund, and the latter E. Herron had deeded his land to Mrs. She- transferred the title to the lands and water han and that she had given him an agree- rights to Mrs. Shehan, which title she was ment that he was to have the land back on to hold until such time as the stock and bonds paying her a certain amount of money; but of a corporation to be formed should be ready there was no evidence to prove that Mrs. Shefor delivery. The capital stock of the han received any part of said money. The evidence shows that Herron was trying to of a million dollars and bonds to the amount corporation to be issued was of the par value borrow the money and that he obtained it, of $300,000 were to be issued and sold. When but it does not appear what he did with it. this was done, Mrs. Shehan was to deed the In addition to the exhibits put in evidence, property to the corporation and receive all the plaintiff had but one witness that gave the capital stock except $950,000 which was evidence concerning the facts in issue. It is to be delivered to Herron. The bonds were a well-settled principle of law that a party to be transferred to Ballinger in trust to be who relies on ratification of unauthorized sold to pay a $13,500 note executed by Mrs. d to acts of an agent has the onus of proving the Shehan to Herron and to be discounted by necessary facts to show such ratification. Ballinger, and to pay $3,000 to Herron. The remainder of the bonds were to belong to the corporation.

31 Cyc. 1647, states the rule thus:

"A party relying on a ratification of the unauthorized act of an agent has the burden of proving it. To meet the burden it is necessary to show that the ratification was made under such circumstances as to be binding on the principal, especially to see to it that all material facts were made known to him, or, as is sometimes stated, to see to it that there was an adoption of the act by the principal, with full knowledge of what had been done in his name and on his behalf; and it does not suffice to show that the principal omitted to make inquiries and that facts might have been learned by diligence on

It is seen that Mrs. Shehan did not buy the land and water rights, but held the record title as a mortgagee as security for having signed the note given to obtain money to be used in promoting the irrigation project. The lands were embraced in what was known as "Bully Creek Reservoir Site," and the water rights were the Bully Creek water rights. In 1910 Herron applied for more