The Planters Rice-Mill Company vs. Olmstead & Company

Supreme Court of Georgia1887-03-25

78 Ga. 586

Summary · law.co

Holding. The court reversed the trial court's judgment insofar as it held the rice-mill company liable for funds advanced to Owen, finding that Owen could not operate in dual capacities (individual borrower and corporate superintendent) to bind his employer. The court affirmed the portion of the judgment relating to funds advanced to Schley.

William T. Owen, superintendent of Planters Rice-Mill Company, approached Olmstead & Co. seeking a personal loan while claiming to have rice stored at the mill. Olmstead & Co. agreed to lend him money in exchange for a special receipt signed by Owen in his capacity as superintendent, purporting to acknowledge that rice belonging to Olmstead & Co. was stored there. In reality, neither Owen nor Olmstead & Co. had any rice in the mill.

The trial court held the rice-mill company liable for the borrowed funds despite the absence of any actual rice. The appellate court disagreed, finding that when Owen solicited the loan as an individual and misrepresented his ownership of rice, this placed Olmstead & Co. on notice to verify the claim before proceeding. Because Olmstead & Co. obtained the receipt from Owen in his official capacity while dealing with him personally, they could not later hold the company responsible. The court distinguished this transaction from a separate loan to a third party, George Schley, which it found properly enforceable against the company because it followed different principles addressed in a related decision.

Summary generated by law.co from the public-domain opinion. The opinion text itself is public domain.

Key issues

Whether a corporate officer can bind his company when borrowing money personally and obtaining a receipt in his official capacity
Duty of lender to verify representations about collateral before advancing funds
Distinction between transactions with officer as individual versus transactions with corporation in its official capacity

Procedural posture

Planters Rice-Mill Company appealed a judgment entered by the trial court in an action brought by Olmstead & Co. to recover on loans obtained through receipts and acknowledgments signed by the company's superintendent.

Authorities cited

No cited authorities resolved to law.co cases yet.

Opinion · public domain

majority opinion

Blandford, Justice.

This is one of a series of cases, the opinion in the others having just been delivered by the Chief Justice. In this case, one William T. Owen, the general superintendent of the Planters’ Rice-Mill Company, wishing to borrow money, applied to Olmstead & Co., representing to them that individually he wished to borrow money, and that he had certain rice on deposit in the mill of this company. Thereupon, Olmstead & Co. agreed with him to advance a certain sum of money, provided he issued a special receipt to them, by which the mill company acknowledged that it had in store a certain amount of rice belonging to Olmstead & Co., and also an acknowledgment on that receipt, signed by the superintendent, the person who got the money, that Olmstead & Co. held that receipt.

The court below, under these facts, held that, notwithstanding Owen had in fact no rice in that mill, and that Olmstead & Co. had none- in that mill, nevertheless the Planters’ Rice-Mill Company was liable to Olmstead & Co. for the money they had advanced to Owen upon that special receipt. In this view of the court below we do not concur. We think that when Owen, the superintendent, wished to borrow money on his own account, and represented that he had this rice in the mill belonging to himself, it put Olmstead & Co. on notice to inquire whether that was the truth or not. They were dealing with him individually, and when they got him, as the superintendent of the Planters’ Rice-Mill Company, to issue this receipt as superintendent, and to sign that acknowledgment as superintendent, they were bound to know whether there was any such rice in that mill or not. They were put upon notice. They were not dealing with the rice-mill company in its corporate capacity, nor with Owen as its agent; and we think this case is governed by the principle decided by this court in the case of the Savannah Bank and Trust Company vs. Hartridge, 75 Ga. 149. Owen could not deal with Olmstead & Company in two capacities, both as an individual and as superintendent of that company; and we do not think the company is bound by this receipt and acknowledgment of Owen; and we think the recovery by Olmstead & Co. for the money they advanced to Owen on the receipt and acknowledgment thus obtained, was wrong, and it should b,e reversed and set aside.

They also sued this company, at the same time and in the same action, for the money which they advanced to George Schley, upon a similar receipt and acknowledgment signed by Owen, the superintendent of the company. Schley had no rice in the mill at the time. This receipt was similar in all respects to that issued in the other cases in which the opinion has just been delivered; and for the reason stated by the Chief Justice, we think that that part of the recovery, viz. the amount of money which they advanced to Schley uponthat receipt, was proper and correct.

So we reverse this judgment, with directions that so much of the judgment as embraces the amount of money advanced to Owen be set aside, and that the balance of the judgment, for money advanced to Schley, be allowed to stand as the judgment of the court below.

Judgment reversed.