Quinn v. Sewell , 50 Ark. 380 ( 1887 )

Cockrill, C. J.

The judgment in this cause must be reversed. The court charged the jury that if they found from the evidence that “ the defendant, Sewell, purchased the notes from S. M. Quinn, the plaintiff’s husband, and paid the purchase money therefor, not knowing that he was acting as agent for the plaintiff,°the defendant was not liable.” This was a correct enunciation of the law, •but it is not applicable to the facts of this case.

There was evidence tending to show that S. M. Quinn was indebted to Sewell when he bought the notes, and that the latter undertook to adjust the matter by stating an account in which he charged himself with the purchase price of the notes, and took credit for the amount which he claimed S. M. Quinn owed him. There was no agreement on the part of either of,the Quinns that this should be done. No allusion was made to the Quinn indebtedness in the correspondence between the parties until Sewell had received the notes, in pursuance of the terms of the sale. Then he wrote S. M. Quinn about it for the first time, saying he had “ taken the privilege of paying” himself what was due him by deducting the amount from the purchase nioney he had agreed to pay for the notes. At the same time he rendered a statement of the,account as before stated, showing also some other items, which, it is not material to mention in this •connection, and.enclosed a postoffi.ee money order paya-■lile to the plaintiff for the balance struck. The money-order was retained by the Quinns, but the husband replied to Sewell,without unusual delay, refusing to accede to his mode of payment, asserting that he had discharged the debt mentioned in Sewell’s statement, and demanded the residue of the purchase price. This suit by Mrs. Quinn followed.

1. payment: Not effected by cross-demand without agreement Instruction: Now, there is nothing in the record that tends to prove more than a partial payment on the amount which Sewell agreed to pay; but'that was credited, and the object of this suit was to recover the balance. Unless with Quinn’s consent, Sewell could not extinguish any part of the demand against himself by applying Quinn’s indebt•edness to him as a credit on it. Hill v. Austin, 19 Ark., 230. Our law unmoved does not operate to extinguish cross-demands, even when the indebtedness is undisputed.

There was nothing, therefore, upon which to base the instruction about Sewell’s payment of the demand. The jury, doubtless, understood fiom the charge that they were warranted in concluding that Sewell’s mode of stating the account was, in effect, payment. But that conclusion cannot be justified,

2. Pleading and Practice: Set-off pleading indeb edness of agent. If Sewell desired to base a defence-upon the fact S. M. Quinn was indebted to him at the time he made the purchase, he should have pleaded the indebtedness L as a set-off. It is familiar law that when a principal •entrusts the possession of his goods with an agent, and one deals with the agent as the principal, without knowledge of the agency, he may set off any claim he has against the agent before he is undeceived in answer to the demand of the principal. Wharton Agency, secs 405, 466; Ewell’s Evans Agency, *397 et seq.; 2 Kent’s Com., 632; George v. Clagett, Smith’s Leading Cases, vol. 2, P’t. 1, *118 and notes; Read v. MeIlroy, 44 Ark., 348.

The doctrine rests upon the ground that the principal who has permitted an agent to deal with his goods as his own must not only take the contract as the agent made it, but is virtually estopped from alleging that the agent,,, is not the real plaintiff in his (the principal’s) suit. Smith’s Lead. Cases, sun., p. 123. The set-off must be pleaded just as if the suit were in the name of the appar'ent owner at the time of the sale — that is, the agent. The question of the agent’s indebtedness is then a fact for the jury to determine.. But when it is proved, the purchaser cannot have the benefit of it against the principal if he knew* or by the use of due diligence might have known of the agency before he entered into the contract.

Now, if we should treat the allegations of the answer as amended to conform to the proof, and so regard it as. pleading a set-off, the fatal error in the charge of withdrawing from the jury the consideration of the faet whether Quinn was indebted to Sewell would remain.

The error was not cured by any part of the charge^. Remand the cause for a new trial.