Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/196

 § 207.] THE LAW OF PRIVATE CORPORATIONS. [CHAP. VII. Assump- tion of un- usual facts unwar- ranted. the corporation will be liable to a person lending money to the agent in ignorance that the amount limited had already been borrowed. 1 § 206. The circumstances, however, the existence of which an outsider is protected in assuming, must be such as he has no ground to suppose not to exist ; they must not be extraordinary and unusual. Thus, an outsider is not justified in assuming that the cashier of a bank has authority to bind it as an accommodation indorser on his own individual note. 2 Nor is an outsider justified in assuming authority in corporate officers to issue negotiable paper in the name of the corporation, when the issuance of such a paper is altogether foreign to the purposes for which the corporation was organized. 3 § 207. If from the mere doing of the act by the corporate agent on behalf of the corporation, the person deal- ing with him is entitled to infer the existence of cir- curastances on which the agent's authority depends, then the case becomes stronger in favor of such per- son when the agent expressly affirms the existence of the circumstances in question. Here the person deal- ing with him has an express assertion to rely on, and not merely the implication arising from the presumption that the agent is not acting wrongfully. Accordingly, if it is within the power Certifica- tion by agent of facts on which his authority is condi- tioned. can Ins. Co.. 11 Paige, 635; Mechanics' Banking Ass'n v. White Lead Co., 35 X. Y. 505 ; Ex parte Estabrook, 2 Lowell. 547; National Bank v. Young, 41 N. J. Eq. 531; Credit Co. v. Home Machine Co., 54 Conn. 357. Com- pare McCullough v. Moss, 5 Denio, 507. See §§ 204, 284-28G, 329-332. 1 Ossipee M'f'g Co. v. Canney, 54 N. H. 295; see Gordon v. Sea Fire Life Assurance Soc'y, 1 H. & N. 599. In Garret v. Burlington Plow Co., 70 Iowa, 097, it was held that money loaned by directors to a corporation in excess of the statutory limit on the capacity of the corporation to borrow could be recovered, although the directors knew that the limit was exceeded. 176 2 West St. Louis Savings Bank ». Shawnee Bank, 95 U. S. 557. Cf. Cheever v. Railroad Co., 150 N. Y. 59. See § 241. It cannot be presumed that directors have authority to sell property of a corporation essential to its business. Rollins v. Clay, 33 Me. 132. 3 Bacon v. Mississippi Ins. Co., 31 Miss. 116. See § 329. An officer of a corporation has no authority to give its notes to take up the outstanding obligations of shareholders; and such notes will not bind the corporation in the hands of a person having knowl- edge of the facts. McLellan v. Detroit File Works, 56 Mich. 579.