Opinion of the Court.

his note for $5000, with which money his bank was repaid the amount of Pickett's overdraft on it when the last of these notes was paid.

When this debt matured, Pickett testifies that he informed Holmes that he was going to deposit the notes with the complainant, to raise money, and requested him to give his consent in writing to the extension of time on the notes, which he did. Holmes does not deny that he knew the notes were being deposited with the complainant, to raise money, and, from all the circumstances, we infer that he must have known also that their chief value as collaterals consisted in the security supposed to exist for their payment.

The record of the trust deed, as well as the deed itself, was destroyed by fire-but the abstracts showed its existence; and Lowenthal says that he had the abstract examined before the loan was made. The release of Ketchum was not then put on record, but was retained, either by Holmes or his bank, so that any notice that it might have afforded of the payment of the notes was withheld.

If Holmes desired to protect his interest in the land against future liability on account of the Bowen notes, it was his duty, instead of encouraging and aiding in obtaining loans of money on them, to put the release on record, so that parties dealing in reference to them would have notice of their actual condition.

Our conclusion is, that Bowen, Pickett and Holmes are estopped from interposing the defense that the notes were paid. But this can only be so far as the $5000 loan is concerned. As to the other indebtedness in favor of the complainant, against Pickett, the evidence entirely fails to show that it was contracted on the faith of any representations or statements of Holmes or Bowen with regard to the Bowen notes; and in determining that the doctrine of estoppel is applicable to the case at all, we necessarily exclude the idea that there was a mutual agreement by which extinguished notes and a released security were revived.

It is, however, insisted that the People's Bank obtained the

Syllabus.

$50,000 of Pickett's notes, and the deed of trust to secure their payment, having notice that the Bowen notes had been paid, and that the Ketchum trust deed was thereby discharged, and, without notice of any superior claim in the complainant, Pickett did not execute and deliver his notes and the deed of trust directly to the People's Bank. His transaction, he says, was either with Holmes or with his bank, and he explains that Holmes was the actor, and he supposed the money came from his bank. The People's Bank obtained the notes from the Manufacturers' National Bank. The notice it had was derived from the officers of that bank. These officers knew-certainly one of them, its president, knew-that the release of Ketchum was not placed on record, and of every fact which existed with regard to the deposit of the Bowen notes with the complainant, as collateral security for the loan by it to Pickett of $5000, and which we have held estopped him from setting up as a defense that the notes had been paid. As assignee, the People's Bank occupy no better position than would the Manufacturers' National Bank, were the controversy with it, instead of with the People's Bank. Olds v. Cummings, 31 Ill. 188; Kleeman v. Frisbie, 63 Ill. 482.

The decree of the court below is reversed and the cause remanded.

Decree reversed.

THE UNITED STATES LIFE INSURANCE COMPANY

V.

THE ADVANCE COMPANY.

1. AGENCY-acts of agent, how far binding. The acts of a general agent, or one whom a man puts in his place to transact all his business of a particular kind, will bind the principal so long as the agent keeps within the scope of his authority, though he may act contrary to his private instructions.

2. CONTRACT-affected by general custom. Where a general custom exists, the presumption is, that the parties to a contract are acquainted with it, and contract in reference to it.

Opinion of the Court.

3. SAME-custom as affecting agent's authority. Where a party contracts with a general agent of an insurance company, with knowledge of a custom prohibiting the agent from making such a contract, he can not hold the company bound under the contract.

4. AGENCY-defined and limited by custom and usage. Where an agency is exercised in respect to matters governed by known usage, it will be presumed, in the absence of proof to the contrary, that the agency is to be conducted in the manner and according to the practice which are allowed and justified by such usage.

APPEAL from the Superior Court of Cook county; the Hon. JOSEPH E. GARY, Judge, presiding.

Messrs. SHELDON & WATERMAN, for the appellant.

Mr. JOHN A. OWEN, for the appellee.

Per CURIAM: This was an action brought by appellee, to recover from the United States Life Insurance Company, appellant, an account for advertising, contracted by one Greene, who was at the time general agent for appellant.

A jury having been waived, a trial was had before the court, on the following agreed facts:

"In November, A. D. 1871, one Samuel Greene was general agent, for the State of Illinois, for the United States Life Insurance Company of New York, having his headquarters in Chicago; that upon his order the plaintiff's advertised said insurance company in their paper, incurring a just bill of one hundred and twenty dollars ($120), and charged the same, on their books of original entry, to the United States Life Insurance Company; that subsequently said Greene was removed from his position as general agent, the same being known to the plaintiffs, and said advertising bill being unpaid; that the plaintiffs frequently called upon said Greene for payment of said bill after his removal, and he as often promised the bill of $120 should be paid; that, after much dunning, Greene agreed to obtain for said plaintiffs, in payment of the bill, a partially paid up life policy, upon the life of a person designated by said plaintiffs in said company, said Greene being in the habit, notwithstanding his removal, of soliciting insurance

Opinion of the Court.

for said company, like any other street broker, and having no other connection with the company; that said Greene made application for such a policy, in the usual course of business. and the same was drafted, but the company officers in Chicago then first finding that said advertising bill was to be turned in to pay the premium, refused to deliver the same; that several months afterwards said Greene became a defaulter to the Evanston school fund, and absconded; that it is the general custom with life insurance companies not to allow their general agents any discretion about contracting advertising bills, except as hereinafter stated, but that in each case they must get the consent of the company before contracting any bill.

"And further, that in advertising, the general agents pay bills ordered by them, and settle with their companies themselves; for instance, in case of the company allowing a stipulated sum per annum towards the advertising, as is sometimes done, the agent settles the bills, and may turn the receipts in to the home office, as vouchers for so much money, in their settlements with their company, to the stipulated amount.

Sometimes the home office orders special advertising done, through the agent, and he has it done, and sometimes it is dane directly from the home office."

The court, upon the agreed state of facts, rendered a judg ment in favor of appellee for the amount of the account, and the question presented by the record, therefore, is, whether the judgment was authorized by the agreed state of facts.

It is conceded that Greene was the general agent of appellant, and the debt was contracted by him, and charged to appellant, while he was acting in that capacity.

The acts of a general agent, or one whom a man puts in his place to transact all his business of a particular kind, will bind the principal, so long as the agent keeps within the scope of his authority, though he may act contrary to his private instructions. 2 Kent, 620.

If this case rested upon the fact, alone, that Greene was the general agent of appellant, and as such contracted the advertising for his principal, appellee's right of recovery could not

Opinion of the Court.

be questioned or denied. But, under the stipulation, appellee concedes that, at the time the advertising was contracted, there existed a general custom with life insurance companies not to allow their general agents any discretion in contracting advertising bills.

Where a general custom exists, the presumption is that the parties were acquainted with it and contracted in reference to that custom. If, then, appellee contracted with Greene with full knowledge of the custom, and with reference to it, then the conclusion is irresistible that it knew Greene had no power to bind appellant, and, knowing that fact, it can not hold appellant for a debt contracted by Greene without authority, although he was the general agent of appellant.

It is said by Story on Agency, section 96: The known usages of trade and business often become the true exponents of the nature and extent of an implied authority; for in all cases where such usages exist, and an agency is to be exercised touching such matters, the natural presumption, in the absence of all controverting proofs, is, that the agency is to be conducted in the manner and according to the practices which are allowed and justified by such usages.

It can not be claimed that appellee was misled by the fact that Greene was a general agent, because it knew, while he was acting in the capacity of a general agent, that he had no authority to incur the debt on the credit of his principal, and hence the rule that would ordinarily apply to the acts of a general agent, has no application here.

It is urged by appellee that the last clause in the stipulation shows that no uniform custom existed. We can not give the stipulation the construction contended for. When appellee stipulated that there was a general custom that Greene was not allowed to contract the indebtedness, the effect of this admission was not destroyed by the last clause of the stipulation. Under the agreed state of facts, we are of opinion appelles was not entitled to recover.

The judgment will be reversed and the cause remanded. Judgment reversed.