Opinion
November 10, 1915.
Carter, Ledyard Milburn [ Walter F. Taylor and Edwin D. Bechtel of counsel], for the appellant.
J.F. Thompson, for the respondents.
The complaint states a cause of action against the defendant, as administrator of the estate of Alexander McDonald, upon a promissory note alleged to have been made and delivered by the said Alexander McDonald in his lifetime. The answer denies on information and belief the making and delivery of the note, and the issue presented upon the trial was whether the note in question for $20,000 was authorized by the decedent, it being concededly made and delivered by Edmund K. Stallo, claiming to act as attorney in fact for the said Alexander McDonald in the purchase of certain bank stocks at Oneonta, N Y
There is no question here that Mr. Stallo made and delivered the note in the name of Mr. McDonald, signing the same as attorney in fact; and the only question on this appeal is whether the evidence is sufficient to support the judgment in favor of the plaintiffs. The power of attorney issued to Mr. Stallo in 1903, and in practically the same words in the month of October, 1907, is in evidence, and the question presented is whether this power of attorney issued in 1907, is sufficient to justify Mr. Stallo in purchasing shares of the stock of the First National Bank of Oneonta in the month of January, 1910, and in issuing the note in suit in payment of such purchase. The only evidence bearing upon the relation of Alexander McDonald to this transaction, outside of the power of attorney and the note, is found in the testimony of Mr. Stallo, who testified as follows: "Q. Of course, Mr. McDonald knew about this transaction or you would not have signed your name to the note? * * * A. Mr. McDonald did not know of this particular transaction. Q. Had you ever talked with him about it at all? A. I had not. He was in California at the time I executed the note and died before I saw him. Q. Had you in any way communicated with him in reference to the purchase by him through you of an interest in the First National Bank of Oneonta? * * * A. I had mentioned it to him before that. Q. And what did he say when you mentioned it to him? * * * A. That he was willing to take an interest."
Obviously this testimony does not throw any light upon the issue. It does not indicate when the alleged mention of the proposed purchase was made; it does not disclose that there was any understanding reached as to what interest, if any, was to be acquired, and it certainly does not indicate any intention on the part of Mr. McDonald to enter into the particular transaction underlying the giving of the note in suit. The most that may fairly be inferred from the meager testimony adduced is that at some time the matter of purchasing some stock of the First National Bank of Oneonta was mentioned, and that Mr. McDonald had at that time said that he was "willing to take an interest." But what the circumstances were under which he was willing to take an interest, and whether before or after the issuing of the power of attorney, nowhere appears; and the attempt to argue that Mr. McDonald construed the power of attorney as adapted to the situation which developed while he was in California, is decidedly farfetched, and entitled to little consideration. The record shows that the power of attorney last issued was made in the year 1907, on the twenty-second day of October, while the note in suit was not made until the 11th day of January, 1910. It was not, therefore, made with reference to this particular transaction, of which Mr. McDonald knew nothing, and as a mere casual conversation, such as is disclosed by the record, could not have added to the authority of Mr. Stallo in the premises, we are to look exclusively to the language and intent of the power of attorney under which the note was executed. If that does not authorize the transaction which was entered into between the plaintiff and others on the 11th day of January, 1910, the note had no valid inception, so far as Mr. McDonald was concerned, and his estate cannot be charged therewith. We are not concerned with the question of the competency of Mr. Stallo as a witness; we are going to assume that he could properly testify to the matters above quoted, but with that testimony in the case it can serve no useful purpose to the plaintiffs if the power of attorney was lacking in authority over the particular transaction.
What was the true intent and purpose of the power of attorney when it was made and delivered on the 22d day of October, 1907? That is a question of law to be determined by the court, and the testimony above quoted does not aid us in the slightest degree; it does not purport to tell us what were the surroundings of the parties when the power was executed, or whether there had been any change in the situation, and we must look to the language used, in the light of established rules of construction of such instruments, to determine the scope of the power. The note in question was given for the purchase of stock in the First National Bank of Oneonta, in connection with a scheme on the part of certain persons, among them one Herbert T. Jennings, to secure control of such bank; and the evidence indicates clearly that the plaintiff took the note with a full understanding of the transaction, for Mr. Jennings gives him a certificate to the effect that he has a certified copy of the power of attorney in his office under which Mr. Stallo assumed to act. He had no evidence of the contents of the power of attorney; he relied entirely upon what Mr. Stallo did and what Mr. Jennings assured him in reference to the same, so that the contention that the plaintiff construed the power of attorney as authorizing the transaction is without merit. He took the chances of the power being broad enough to cover this transaction, and if he has lost in the deal he has only his own negligence to blame for the result.
Coming down to the power of attorney, it provides: "That I, Alexander McDonald, of the State of New York, U.S.A., have made, constituted and appointed, and by these presents do make, constitute and appoint Edmund K. Stallo, of the same place, my true and lawful attorney in fact, for me and in my name, place and stead, to collect all debts due or to become due to me; to collect and receive all dividends on stock of incorporated companies owned or held by me; to collect and receive all rents due or accruing to me for real estate owned by me in said county and State, or in any part of the United States, and to give valid receipts and acquittances for all money received by him for me and in my behalf; to make, sign, execute and deliver for me and in my name all bills of exchange, promissory notes and other evidences of indebtedness; to sell, transfer and assign all personal property of whatever description which I own or to which I have any right or title; * * * to guarantee the payment of promissory notes, obligations and debts of any company in which I may be or become a stockholder, especially of the Kingston Lumber Company, a corporation under the laws of New Hampshire, and the Mobile, Jackson Kansas City Railroad Company; and generally in the sale and management of my personal property and in other matters above mentioned, to do and perform everything which I could do and perform if personally present, giving and guaranteeing unto my said attorney full power and authority to do and perform all and every act and thing whatsoever requisite and necessary to be done in and about the premises as fully, to all intents and purposes, as I might or could do if personally present, with full power of substitution and revocation, hereby ratifying and confirming all that my said attorney or his substitute shall lawfully do, or cause to be done, by virtue hereof."
Great stress is laid upon the fact that the power of attorney provides for the making, signing, execution and delivery of promissory notes, but we are of opinion that the spirit of the clause is not the promissory notes but "evidences of indebtedness." That is, Mr. Stallo is to "make, sign, execute and deliver for me and in my name all bills of exchange, promissory notes and other evidences of indebtedness;" he is to have power to pay or adjust the existing indebtedness of Mr. McDonald, but we look in vain for any suggestion that he is to create any such indebtedness for the purpose of performing this function. Mr. Stallo is given power of attorney "for me and in my name, place and stead, to collect all debts due or to become due to me; to collect and receive all dividends on stock of incorporated companies owned or held by me; to collect and receive all rents due or accruing to me for real estate" anywhere in the United States; and having thus deprived himself of all apparent sources of revenue he provides, not unnaturally, that this same Mr. Stallo is to "make, sign, execute and deliver for me and in my name all bills of exchange, promissory notes and other evidences of indebtedness." That is, Mr. Stallo is to pay or provide for the present indebtedness of Mr. McDonald by making, signing, executing and delivering "for me and in my name all bills of exchange, promissory notes and other evidences of indebtedness," in conjunction with the previously given power of collecting in his name all of the revenues of the estate. This provision is followed by the further power, not to purchase, which is most significant, but "to sell, transfer and assign all personal property of whatever description which I own or to which I have any right or title; * * * and generally in the sale and management of my personal property and in other matters above mentioned, to do and perform everything," etc. It is in the "sale and management of my personal property," excluding real estate, that Mr. Stallo is to have these powers, and the management referred to is clearly the collection of the debts due and to become due, the collection of dividends upon stocks, the collection of the rents of the real estate wherever found, and the making, signing, executing and delivering "for me and in my name all bills of exchange, promissory notes and other evidences of indebtedness," as well as in the guaranteeing of the "payment of promissory notes, obligations and debts of any company in which I may be or become a stockholder." There is no general power to manage given, in the sense of conducting an active business; it all relates to the collection of income and the distribution of the same or in continuing existing evidences of indebtedness. The management is limited to the enumerated matters; there is no general power of attorney, as the real estate is especially excluded from consideration, except in the matter of collecting rents, which excludes, no doubt, the making of repairs, or the leasing of the same without the approval of Mr. McDonald. These considerations, taken in connection with the special power given to "sell, transfer and assign all personal property," must, by necessary implication, deny the right to purchase other property, under the well-known maxim of Expressio unius est exclusio alterius. And while this maxim will not be permitted to defeat the obvious intent where it conflicts with the letter, such intent must, nevertheless, be discernible in the context of the instrument itself. ( Aultman Taylor Co. v. Syme, 163 N.Y. 54, 57.) There is no clearly expressed intention of giving power to Mr. Stallo to purchase any property whatever; he may sell, but the authority to purchase is not given; and, as the note in question was not made, executed and delivered in pursuance of any power expressly delegated to him, it was not authorized by the power of attorney in evidence, and the same is not a valid obligation against the estate. (See Lesem v. Mutual Life Ins. Co., 164 App. Div. 507.)
But it is claimed that Mr. Stallo, while acting as administrator of the estate of Mr. McDonald, recognized this note as a subsisting obligation of the estate, and that it has thus become a charge against the estate. But the action is brought to recover upon the note given by Mr. Stallo, assuming to act as the attorney in fact of Mr. McDonald, and the question is not one of ratification but of authority to incur the obligation. The pleadings state a cause of action upon the note and the defense is that the note had no valid inception, and these are the issues in this case. There is, however, no merit in the contention that Mr. Stallo, as administrator, has recognized this note as a valid obligation of the estate. He made what he terms a "list of the assets of the estate of said McDonald" which had come into his hands as administrator, and "a complete list of the liabilities of said estate direct and contingent," and by way of explanation he says: "Mr. McDonald and the undersigned (Edmund K. Stallo) were for many years, just prior to the death of Mr. McDonald, partners in various transactions, especially in the construction of what is known as the New Orleans, Mobile and Chicago Railroad. No settlement of the partnership affairs had been made at the time of Mr. McDonald's death. This fact has made it necessary to prepare separate schedules of both assets and liabilities; one set showing the individual assets and liabilities of Mr. McDonald and the other showing the assets and liabilities of McDonald Stallo." He then includes the stock of the First National Bank of Oneonta in the assets of the firm of McDonald Stallo and charges that firm with the amount of the note involved in this litigation. This obviously is not an individual liability of Mr. McDonald's estate until the assets of the partnership have been exhausted. Mr. Stallo, as surviving partner, becomes the owner of the assets of the copartnership and personally liable for the indebtedness of such copartnership. ( Pope v. Cole, 55 N.Y. 124; Potts v. Dounce, 173 id. 335; Williams v. Whedon, 109 id. 333, 338.) He may have an action for contribution against the estate of Mr. McDonald, after he has discharged the duties of a surviving partner (authorities above cited), but if the note in question was given for a copartnership obligation, it did not come within the powers conferred by the instrument delivered to Mr. Stallo in 1907, and it can in no wise aid the plaintiffs in this action because Mr. Stallo erred in supposing that it was his duty to inventory the alleged assets and liabilities of the copartnership in connection with the estate of Mr. McDonald. That estate has no relation to the copartnership assets and liabilities; in law they are all vested in and become the obligations of Mr. Stallo as the surviving partner, subject to the duty of Mr. Stallo to account to the personal representatives of Mr. McDonald for any excess of assets over liabilities, and to a contingent liability on the part of the estate to contribute if there are insufficient assets of the copartnership to meet its obligations. ( Williams v. Whedon, 109 N.Y. 333; Potts v. Dounce, 173 id. 335; Pope v. Cole, 55 id. 124.) It must be entirely obvious, therefore, that the inclusion of these assets and liabilities in an inventory of the estate of Mr. McDonald was error on the part of Mr. Stallo, and that it can give no possible character to the note made in January, 1910.
The judgment appealed from should be reversed and a new trial granted, with costs to appellant to abide the event.
All concurred, except SMITH, P.J., not voting.
Judgment reversed and new trial granted, with costs to appellant to abide event.