Wheeler v. McGuire, Scoggins & Co. , 86 Ala. 398 ( 1888 )

CLOPTON, J.

Appellees seek to recover the price of certain goods, which they allege were sold and delivered to appellant through T. A. Tatham. as his agent. The agency was not disputed; but defendant contends that Tatham was in his employ merely as a clerk, and was not authorized to purchase goods on a credit and bind him. The' plaintiffs contend, that Tatham was a general agent, having authority to transact all of defendant’s mercantile business, or was held out by defendant, or permitted to hold himself out as such, so as to justify the belief that he was clothed with the powers of a general agent. The question mainly controverted by the parties relates to the character of the agency, and the extent of his authority.

The general rule is, that one who deals with an agent is bound to ascertain the nature and extent of his authority; but, in the application of the rule, a distinction is observed between general and special agencies. The power to do every thing necessary to its accomplishment may be included in a particular agency, so that private instructions as to the particular mode of execution, which are not intended to be communicated, and are not communicated to the party with whom the agent may deal, will not be regarded as limitations on his power. But, with this qualification, a special authority must be strictly pursued. A general agent may exceed his express authority, and the principal nevertheless be bound. The scope and character of the business, which he is empowered to transact, is, as to third persons, the extent and measure of his authority. By his appointment, the principal is regarded as sayingjto the public, that he has the authority to transact the business in the usual and customary modes. Secret limitations on his power, or private instructions as to the mode of transacting the business, will not affect the rights of third persons, who have no notice of such limitations or instructions. When a general agent transacts the business intrusted to 1dm, within the usual and ordinary scope of such business, he acts within the extent of his authority; and the principal is bound, provided the party dealing with the agent acts in good faith, and is not guilty of negligence which proximately contributes to the loss. Louisville Coffin Co. v. Stokes, 78 Ala. 872. Third persons, dealing with a person as a general agent, are not acquitted of all duty to inquire and ascertain the character and extent of his agency; but if, on inquiry, it is ascertained to be general, actually or apparently, they are not bound to inquire whether there are secret limitations, or private instructions, unless they have knowledge of facts which should put them • on such inquiry. As to these issues, the burden is on the plaintiffs, to establish by proof that Tatham was the general agent of defendant, or that the latter, by acts, conduct, or negligence) justified the belief that he had authority to purchase goods on credit for the store. If these issues be found in favor of plaintiffs, no subsequent misconduct of the agent, misappropriating the goods or otherwise, will affect their rights.

After having given a general charge, which in the main is in accord with the foregoing principles, the court instructed the jury, at the instance of the plaintiffs, “that if defendant employed Tatham, and put him in charge of his retail store at Wheeler’s Station to conduct his mercantile business, and placed money to his credit in Louisville, Kentucky, and Nashville, Tennessee, and authorized him to use this money, and also that taken in from cash sales, to replenish the stock, and instructed him not to purchase on credit; he was, as to innocent third persons, the general agent of defendant in that business, and had authority to do whatever was usual or customary in conducting the same; and if plaintiffs sold to Tatham, as such agent, the goods for the price of which this suit is brought, their verdict must be for plaintiffs, unless they had notice that Tatham’s authority was limited to purchases for cash.” In considering the correctness of the instruction, any evidence, if there be such, tending to show that Tatham was apparently clothed with the powers of a general agent, can not be taken into consideration. The proposition of the charge is, that, as to third persons, the facts recited therein, of themselves, without the aid of extrinsic facts and circumstances,' constituted. Tatham a general agent, possessing authority to purchase goods on credit; in other words, that he was a general agent, as to plaintiffs, though they may have known the terms of his employment, including the deposit of money with which to purchase goods, except the instruction not to purchase on credit.

The most general powers that may be conferred on an agent are necessarily limited to the business or purpose for which the agency is created. The terms of the employment of Tatham- — -“in charge of his retail store at Wheeler’s Station to conduct his mercantile business” — in connection with the limitations on his authority to purchase, limit his powers as a general agent, to the transaction of the local mercantile business of defendant. In the matter of buying goods, his power was expressly restricted to the use of money specially deposited for that purpose, and to cash receipts. In appointing Tatham his agent, defendant withheld power to buy and pledge his credit under any circumstances. By the terms of his commission, Tatham may be regarded a general agent to conduct the local business of the. store, with special powers to purchase. To construe it otherwise, would be to establish the rule, that a merchant who furnishes his clerk with funds to purchase goods and make immediate payment, clothes him with power to buy on his principal’s credit, and that persons dealing with him are relieved of the obligation to ascertain the nature and extent of his warrant of authority. This would press too far the application of the doctrine of general agency. — Jaques v. Todd, 3 Wend. 83; Clealand v. Walker, 11 Ala. 1058; 1 Amer. Lead. Cases, 679; 1 Pars. Contr. 43.

When an express authority is given, the extent thereof must be ascertained from its terms; and another or different authority can not be implied, unless facts are shown from which such other authority may be presumed, or arises by implication of law. Therefore, proof of facts or circumstances from which the authority is presumed, or arises by implication of law — an appearance of authority, caused not by the agent himself, but by the defendant — is essential to his liability for Tatham’s acts, not within the scope of his commission. In such case, it is incumbent upon the plaintiff to prove that defendant, by ratification, assent, or acquiescence in previous acts, held out Tatham as clothed in the character in which he assumed to act, which fairly led the plaintiffs to believe that more extensive powers had in fact been given, than were conferred by the terms of the appointment. On this question, all the circumstances of the transaction, the previous conduct of the defendant, and the usages of the business, may be properly considered. It should, however, be remarked, that in order to bind the defendant by ratification, assent, or acquiescence in prior acts of his agent in excess of the authority actually given, knowledge of the material facts must be brought home to the defendant. And if, in the absence of authority to bind defendant in the manner in which, he is sought to be charged, his liability is rested on previous recognition of similar acts of Tatham as his agent, it is requisite to show that plaintiffs sold the goods to Tatham on the faith of such previous recognition. — St John v. Redmond, 9 Port. 428; Blevins v. Pope, 7 Ala. 371. In this aspect of the case, any evidence is relevant, which shows prior similar acts of Tatham, and tends to prove or disprove defendant’s knowledge, and plaintiffs’ reliance on his recognition of them.

The charge under consideration is objectionable in another respect. The authority, as hypothetically stated therein, was conferred in November, 1881, when the defendant was on the eve of leaving home; to be absent for months. There is evidence tending to show that on his return, in June, 1882, the authority to purchase was revoked. The transactions with the plaintiffs were in January, February, and March, 1883, and were the first transactions which Tatham had with plaintiffs as agent of defendant. An authority conferred is always revocable,.unless coupled with an interest, or founded on a valuable consideration; and may be revoked expressly, or by acts clearly inconsistent with its continuance. When third parties have dealt with an, agent clothed with general powers, the agency continues as to them, after revocation, until they have notice thereof. Also, the principal may be liable, for the acts of the agent after revocation, to third persons, who never dealt with him previously, if they, in common with the public at large, are justified in believing that such agency existed, and have no notice of its revocation. — Claflin v. Lenheim, 66 N. Y. 301; 1 Pars. Contr. 70. On the case as presented by the record, these questions should have been submitted to the jury. They were withdrawn from their consideration by the instruction to find a verdict for the plaintiffs, independent of the evidence in regard to the revocation of the authority of Tatham, and notice to plaintiffs.

The court also charged the jury, that if the defendant placed Tatham in charge of his retail store, with instructions to buy for cash only, it was the duty of defendant to keep himself posted as to the manner in which his agent conducted his business, and to see that his instructions were obeyed; and if he knew the agent was buying on credit, or could have known it by the exercise of ordinary diligence, he is estopped to deny the authority of Tatham to purchase on credit. The rulé is stated by Mr. Wharton as follows: “When a principal conducts his affairs so negligently, as to lead third persons to reasonably suppose that his agent has full powers; then, if the agent exceeds his authority, the principal must bear the loss. It is true that the principal is not chargeable with culpa levissvma. He is not chargeable, in other words, with the consequences of those slight negligences into which good business men are liable to fall. But, if he is negligent to an extent beyond what is usual with good business men in his department, and if, in consequence of his negligence, third parties repose trust on the supposed agent,, then the loss, if loss accrue, must fall on the principal.”- — Whart. on Agency, § 123. Though mere negligence, mere want of ordinary diligence, may furnish the agent an opportunity of undue assumption of authority, it does not, of itself, work an estoppel. A principal is not required to distrust his agent, nor to keep a vigilant watch over the maimer in which he exercises his authority, and to see that his instructions are obeyed. He may act on the presumption that third parties, dealing with his agent, will not be negligent in ascertaining the extent of his authority, as well as the existence of his agency. And negligence, to constitute a ground of liability, must have caused the plaintiffs to repose trust on the authority of Tatham, and the negligence of plaintiffs must not have proximately contributed to the loss. The charge exacts of the principal a degree of diligence not required by the law.

Many cases hold that notice to an agent is notice to his principal, though acquired before the relation is created, if present in his mind at the time of the particular transaction, and he can communicate it or act upon it, without violating a legal moral duty. It was, however, early settled in this State, that knowledge of an agent, to operate as constructive notice to the principal, must have been acquired after the relation of principal and agent was formed. This rule having been followed ever since, whatever might be our opinion were it an open question, it would not be prudent to disturb it now. Mundine v. Pitts, 14 Ala. 84; McCormick v. Joseph, 83 Ala. 401; Frenkel v. Hudson, 82 Ala. 158.

If the jury should find that the evidence as to any fact, essential to plaintiffs’ right of recovery, and as to which the burden of proof rests on them, is evenly balanced, or in equilibrium, their verdict must be for the defendant. — Vandeventer v. Ford, 60 Ala. 610.

We have not deemed it necessary to specifically consider tbe numerous exceptions to tbe rulings of tbe court on tbe evidence, and in instructing tbe jury, each of wbicb is assigned for error. We bave endeavored to select sucb as related to tbe issues properly made by tbe evidence in its different aspects, and involved tbe principles on wbicb tbe rights of tbe parties must ultimately depend, and wbicb should govern the court in putting tbe case before tbe jury. Evidence which proximately tenjis to prove or disprove these principal issues, should be received; and that excluded wbicb is incapable of affording a reasonable presumption of their truth or falsity. And charges based on partial facts, ignoring other material facts — sucb as a bare shipment of goods to defendant, and tbe appropriation of them to bis use by him or bis authorized agent, omitting reference to tbe fact of a prior purchase, and Tatbam’s authority — are calculated to mislead and confuse tbe jury, and should not be given.

Beversed and remanded.