Terry v. International Cotton Co. , 138 Ga. 656 ( 1912 )

Lumpkin, J.

(After stating the foregoing facts.) The plain'tiff sued the defendant on a written contract dated July 12,-1909, by which the former agreed to purchase and the latter to sell fifty thousand pounds of cotton at twelve cents per pound, deliverable in the fall. The defendant pleaded that the contract was a wagering contract and unenforceable, the real understanding and agreement between the parties being that no cotton was to be delivered under the contract, but that it was to be a mere contract for “futures,” whereby the parties speculated on the market price •of cotton, and the losing party was to settle with the winner by paying to the latter the difference between the contract price and the market price. He admitted a prima facie case, and assumed the burden of proof. The jury found for the plaintiff; and a new trial having been refused, the defendant excepted.

1. It was contended that there was no evidence to authorize the submission to the jury of the question whether Wooten was the agent of the plaintiff and acting for it in the transaction, and that it was error to submit any such question to them. We can not agree to this contention. On cross-examination the defendant stated, that he and Wooten were good friends and were in the fertilizer business together; that during the year when this transaction occurred Wooten was either employed by him for wages or was his business associate; that Wooten conducted a warehouse; and that the defendant gave him authority to sell his cotton as it came in. The testimony of the manager of the plaintiff’s agency at Cuthbert was to the effect that he never employed Wooten to represent him or the company; that Wooten called him up by telephone and asked him if he could handle some cotton “over there” at twelve cents per pound. Another'witness testified that he heard Wooten tell the defendant “I have sold your cotton and got the contract here.” While there was evidence tending to show that the manager of the plaintiff made Wooten the plaintiff’s agent for the purpose of obtaining the signature of the defendant to the written contract of sale which had been prepared, there was enough to authorize the judge to submit to the jury the question as to whether Wooten was the agent of the plaintiff.

2. The jury being laymen, and not skilled in the rules of.law 'as to the extent of an agent’s authority, it was proper to inform them as to its extent and what it comprehended, under the law.

3. If Wooten was the agent of the plaintiff, he was a special agent, under the evidence. As matter of authority, he was limited by tbe terms of bis agency. Authority to obtain the signature of the defendant to a prepared written contract for the purchase and sale of cotton did not include any authority to make a parol agreement that the cotton should not be in fact delivered, but that the parties should settle on the basis of the difference between the agreed price and the market price at the time for delivery. If Wooten made such 'a contract, it was beyond the scope of his authority, under the evidence, and could not affect the rights of the plaintiff under the written contract, unless his conduct was ratified. Civil Code, § 3595. If such agreement was made and ratified, then the plaintiff was affected by it as if it had been originally authorized.

4. If both of the parties to the written contract for the purchase and sale of the cotton intended or understood, when the contract was made, that there should be no actual delivery, but a settlement on the difference between the agreed price and the market price, the transaction was invalid. Civil Code, § 4258. But a contract for actual sale and future delivery would be valid. Forsyth Mfg. Co. v. Castlen, 112 Ga. 199 (37 S. E. 485, 81 Am. St. R. 28); McCall v. Herring, 118 Ga. 522 (45 S. E. 442). There was no evidence that the company, or any agent authorized to bind it in that regard, had any understanding or intent that the contract should be a dealing in “futures,” or that the company was engaged in that character of business. If Wooten was the agent of the company, he was only a special agent. The written contract was prepared and signed and sent to him to have it signed by Terry, and perhaps to pay to the latter the $1 recited as a consideration. The evidence showed no authority on his part to have any additional understanding with 'Terry as to non-delivery. The question arises whether there was a ratification of his conduct. The presiding judge submitted generally the rule that ratification of an unauthorized act of an agent binds the principal as though there had been original authority. But it is contended that when the company brought suit on the written contract it necessarily ratified the conduct of Wooten in obtaining it. Terry was charged with notice that the agreement which he asserts he made with Wooten as the agent of the company was beyond' the scope of the latter’s authority, and one which would render the whole transaction invalid and constitute a misdemeanor. Civil Code, §§ 4258, 4259; Penal Code, § 403. Yet he says he made such an agreement. In its last analysis, the defense is, that a legal written agreement for the purchase and sale of cotton was signed by the buyer and sent to a special agent to obtain the signature of the seller; that the latter, with notice of the want of authority in the agent, nevertheless caused the agent to make in parol an additional criminal agreement which, if chargeable to the principal, would render the whole void; and that the principal can not set up the legal contract without ratifying the illegal one. This is no case of obtaining a signature from an innocent party by fraud or misrepresentation; nor is it one where an agent is authorized to make a contract and fix its terms. Terry was not an innocent or defrauded party. According to his defense, he caused a special agent to violate his authority and commit a misdemeanor, which he insists the principal must ratify for his protection. The doctrine that a principal can not ratify the acts of his agent in part, but must adopt the whole or none, has no application to such a case, so as to compel the principal to ratify the unlawful agreement of his special agent, made with one who had notice, if he seeks to set up the written agreement which is lawful on its face and authorized. The purchasing company desired to make a legal contract for the purchase of cotton. The seller signed such a contract. He now seeks to set up a supplemental j)arol agreement with the plaintiff’s special agent who presented the contract for his signature, which would make the contract illegal and invalid. The law declared that the seller could not make such a contract with the principal or the agent. He was charged with knowledge that it was criminal to do so, and that the agent was without authority to do it. Nevertheless the seller declares that he made such an illegal parol agreement with the special agent, and that the principal must ratify the crime if he attempts to set up the legal contract.

A similar rule to that now declared has been applied in a case where an agent for a lender charged a borrower a sum as a commission for making the loan, besides reserving the maximum legal rate of interest on the loan, but this was unknown to the principal and unauthorized by him, and no part of the commission was received by him. McLean v. Camak, 97 Ga. 804. In that case á deed was made to secure a debt, and in a suit to recover the land the defense was that the deed was void because tainted with usury. Civil Code, § 3442. In the opinion it was said (p. 808): “The borrower has no right to assume that even a general agent has power to bind his principal by such an agreement; for, the same being illegal and prohibited by law, the borrower is put upon immediate notice that the agent is transcending his general powers and going heyond the legal scope of his agency. Only by showing that the agent was in fact authorized by his principal to reserve the commission can the borrower claim immunity because of an act by the agent which he is bound by law to know was illegal and not binding upon the principal unless previously authorized, or subsequently ratified, by the latter,” Bringing a suit to. recover the land, based on the deed which the agent took for his principal, was not treated as ratification of the taking of commissions.

While that decision has been somewhat discussed, the leading principle announced in it has been adhered to and the language quoted has been copied with approval. Clarke v. Havard, 111 Ga. 242, 252 (36 S. E. 837, 51 L. R. A. 499), where suit was brought by the principal on the note taken for the loan.

The rule that notice to an agent of any matter connected with his agency is notice to the principal (Civil Code, § 3599) does not apply where an agent conspires with the other party. In such a case, the principal is not bound thereby, or charged with knowledge of the facts thus acquired by the agent. Civil Code, § 3600.. But really the question here involved is not one of charging the principal with notice of a fact, but whether outside of the written contract there was a parol agreement or understanding, not by one of the parties, but by both; and whether, if an unauthorized and unlawful collateral agreement was made by a special agent in parol, the principal was bound to ratify it, if he sued on the written contract.

If there were any errors committed, they were not such as to require a new trial. Judgment affirmed.

All the Justices concur.