Taylor v. Sartorious , 130 Mo. App. 23 ( 1908 )

GOODE, J.

(after stating the facts). — 1. An attentive study of the evidence has discovered none except what relates to the alleged alteration of the written authority of Texier, which tends to prove he attempted to perpetrate a fraud against appellant and her associates in business, and none at all that if a slip bearing the disputed words was attached to the writing, •empowering him to act as agent, and he subsequently ■detached it for a fraudulent purpose, either Turley or Bock knew these facts when they dealt with him, or other facts which would canse a prudent man to distrust the apparent grant of authority contained in the writing. It follows that the court properly instructed the jury there was no evidence that either Turley or Bock was connected with any fraud of which Texier may have been guilty in connection with the purchase of the property in controversy.

2. We are of the opinion that the first instruction for respondent is erroneous in making appellant liable if she and her associates did business in coal in St. Louis pending the formation of the proposed corporation, and in the conduct of such business Texier signed the hill of sale in the name of the contemplated Sorento United Coal Mining Company. The complaint counts on express authority from appellant and her associates to Texier to sign the bill of sale, and not on his apparent authority, as a member of the alleged partnership, to bind the other members. The complaint says, ■“defendants by their dutly authorized agent, signed the agreement.” This statement shows the pleader had in mind and meant to declare on, the writing under which Texier assumed to act and not on a constructive agency. Moreover the written authority of Texier was exhibited to Turley and Bock, and they relied on it in dealing with him instead of on any implied authority he might have as a partner. The so-called power of attorney was shown to Turley and Bock and, according to their own testimony, they deemed it conferred power on Texier to make the purchase. Hence, even if he was a copartner of appellant, Turley and Bock had no right, when dealing with him, to rely on his constructive authority as such, when the precise extent of his actual authority was known to them. The power conferred by law on one partner to act as the agent for a firm, may he limited by the other members of the firm, just as the authority incident to any other agency may be restricted by the principal and the restriction become binding on all who are apprised of it. [Midland Bank v. Schoenberg, 123 Mo. 650, 27 S. W. 547; 1 Bates, Partnership, sec. 315.] If a person relies on an express authority to one.member of a partnership to act’ for the firm, he must deal with the member within the terms of the authorization, as in other sorts of agencies. [Bates, sec. 368.] The case Avas submitted to the jury on two inconsistent hypotheses; that appellant was liable if the express written authority exhibited by Texier and relied on by the sellers, was genuine, and liable, too, even if it was false, provided appellant and Texier were partners and he bought the property in dispute in the name of the firm. The latter proposition is equivalent to holding that a party knowing an agent is acting under an authority of definite scope, nevertheless may make contracts within the scope of the apparent powers the agent, may be presumed to possess by one ignorant of his actual powers. This is not the law as was ruled in a ease where the point was raised on facts analogous to those before us. [Mechanics Bank v. Schaumberg, 33 Mo. 228.]

3. In the third instruction for respondent, the jury was directed to give a verdict for him, if appellant and her associates so loosely attached the slip containing the words “subject to the approval of all parties concerned” to Texier’s power of attorney as originally drawn, that the slip could easily be detached and it was detached before the document was shown to Turley and Bock, who Avere ignorant of the change of the document when they dealt with Texier. This instruction permitted a recovery on the ground that appellant’s carelessness in the preparation of the instrument, enabled. Texier fraudulently to make a showing of authority beyond what he possessed. We suppose the idea is that she is estopped to dispute his power to bind her. A principal is responsible for the acts of one who is bis agent, or appears to be, if responsibility is asserted on tbe ground of apparent authority in the agent to do the acts, only in case the principal himself has clothed the agent with the appearance of power and not when the agent’s own conduct creates the appearance. [Edwards v. Dooley, 120 N. Y. 540; Leu & Sons v. Mayer, Sells & Co., 52 Kan. 419.] It is true that this false appearance may sometimes be traceable to the negligence of the .principal; that is, to such conduct as a principal of ordinary prudence would have avoided, and which would suffice to induce one of ordinary prudence to believe the agent’s power is of a given scope.- But we know of no decision, the principle of which would render Mrs. Sartorius answerable for an act done by Texier outside the grant of power conferred on him by the document as it was when signed by her, merely because a part of said document could be easily detached' from the rest. If, in truth, Texier detached the words “subject to the approval of all parties concerned,” thereby leaving his powers apparently unrestricted by the signers, his act was akin to forgery, and he alone responsible for it. It is hardly possible for a principal to prevent an agent from increasing his appearance of authority by forgery or other fraudulent practices. Attaching the slip to the rest of the instrument so loosely that it could easily be separated, would facilitate a fraudulent attempt by Texier; but the like danger would be entailed by a written authority to an agent containing blank spaces which he could fill in with words enlarging his authority. Nevertheless it is not the law that a principal is liable simply because such spaces are left and fraudulently filled in by an agent so as to enlarge his powers. The case is different from that of printed forms of negotiable instruments containing blanks which are usually filled by writing words in them, like the rate of interest. Some decisions bold, that when blanks of this character are left in an instrument by the maker, and subsequently filled by the payee, the maker is bound. [3 Randolph, Com. Paper (2 Ed.), secs. 708, 1768, 1770.] This rule, in so far as it exists, refers to customary blank spaces which are habitually filled, and not ¡to every blank space which may be left between lines in drawing an instrument. [Capital Bank v. Armstrong, 62 Mo. 59; Mechanics Bank v. Valley Packing Co., 4 Mo. App. 200; s. c., 70 Mo. 643; McGrath v. Clark, 56 N. Y. 39; Franklin Life Ins. Co. v. Courtney, 60 Ind. 134.] .Texier was not authorized to alter the so-called power of attorney in any respect, and if he altered it so as to change its sense, this was a fraud for which the signers cannot be held. [State v. Kroeger, 47 Mo. 552; Puffer v. Smith, 57 Ill. 527; Strough v. Gear, 48 Ind. 100; Robb v. Insurance Co., 40 Atl. 969.] As a general proposition the alteration of an instrument after delivery vitiates it. [Kelly v. Thuey, 143 Mo. 422, 45 S. W. 300; Mockler v. St. Vincent Inst., 87 Mo. App. 473.] Both parties have briefed the case on the theory that the words on the slip were sufficient, if in fact they were part of the power of attorney, to withhold from Texier the power to buy the property in dispute, without first obtaining the approval of his associates; and we shall ádopt this theory in disposing of the appeal. Accepting* it as the proper interpretation of the words on the slip, we hold that if, Avlien Mrs. Sartorius signed the power of attorney, the limiting words were attached to it, she cannot be held liable for Texier’,s contract merely because the slip could be detached easily.

4. The next question for determination is whether or not the court erred in excluding the petition, proceedings and judgment in the case brought by respondent before a justice of the peace against Albert and Adolph Kahl, E. T. Gracey and L. Houser, who were originally defendants in this case. It is contended for appellant that tbe judgment of the justice of the peace is res judicata of the main issue involved in the present case; that is to say, whether-or not the authority of Texier was limited by the words “subject to the approval of all parties concerned.” In offering in evidence the judgment and proceedings in the other cause, counsel for appellant offered to prove the action against said other - parties was on a petition in all respects identical with the one in the case at bar, that the same defenses now urged were urged in said case, except the defense of res judicata, and that, after a full hearing, the justice gave judgment in said cause in favor of the defendants and against Taylor, from which judgment no appeal was taken; that the defenses urged in said cause were not personal to the defendants hut were ’common to all the parties to the action, as well as to the parties to the alleged power of attorney on which respondent relies to hold appellánt. As stated heretofore Kahl, et al., were originally sued in the present case, and later they were sued separately and the judgment obtained which is now pleaded in bar. Respondent contends it is no bar because the other action was not against appellant. In other words, that one of the elements essential to the defense of former adjudication, is lacking, inasmuch as the judgment in the action was' between different parties from the one in which it is pleaded. The general rule that a judgment is conclusive only between the parties to an action and their privies has a few exceptions not material to the present discussion, because the case does not fall within them. The written authority under which Texier acted, was joint and several, and hence the case is not controlled by the rule that a judgment for or against one of two or more joint obligors bars an action against the other obligors. [1 Herman, Estoppel and Res Judicata, sec. 4G9, p. 563.] Our statutes make such contracts both joint and several and give respondent the right to maintain separate suits against any one or more of the signers. [R. S. 1899, secs. 889, 892.] Because the contract is of this nature it is said the verdict and judgment against respondent in an action to which the appellant was no party, even if it was on the merits of the case, is no bar; and, indeed, this proposition is so analogous to the rules which ordinarily govern the plea of res judicata that argument to the contrary is at first view rather startling. But on attentive consideration, it will be found to be reasonable. What was determined in the other case according to the offer of proof, was that the power of attorney to Texier contained the words restricting his power to make contracts which should bind the signers. Apart from the defense of res judi-cata, this was precisely the issue which was to be determined in the present case; and inasmuch as determination of it against appellant and payment of the judgment by her, Avould entitle her to contribution from the Kahls and other signers of the instrument, it is apparent that the verdict in their favor might avail them nothing. If respondent recovers from appellant, the latter might recover contribution from her cosigners, thereby nullifying the verdict given in their favor in respondent’s suit against them. We are of the opinion that the statutes making contracts joint and several, were not intended to cause such a result. If there were, say six signers of a promissory note, who were sued separately by the payee and each pleaded the defense of payment, and in five actions their defense was upheld by verdicts, these verdicts would go for naught if, perchance, the sixth jury found against the defense — a manifestly unjust consequence. The purpose of the statutes making contracts joint and several, was to allow the promisee to sue the promisors separately and prevent a judgment obtained against one, but without satisfaction, being a bar to an action against the others. It was not the purpose to give the promisee as many trials of an issue going to the merits of liability on the obligation, as there are promisors, while denying the latter the benefit of verdicts given for them unless every possible verdict on the contract is in their favor. This question was gone into in the most exhaustive manner and discussed in every phase, in Spencer v. Dearth, 43 Vt. 98, and a conclusion reached in accord with what we have said. Our remarks are based on the opinion in that case, of which the gist is found in these words: “Where it has been determined in an action against one of two or more promisors, joint and several, that the note or other claim had been paid in full, such adjudication and judgment will constitute a full defense to a subsequent suit, brought on the same claim against the other prom-isor, grantor or surety, and be conclusive as against any one who was a party of record in the former action, though the party in the second suit pleading the former recovery in bar,. was not a party of record in the former action and had no notice of it before rendition of the judgment therein; and for want of such notice might hot have been bound, had the judgment been the other way.” It would not, of course, be contended that a judgment in favor of respondent and against one of the signers of the power of attorney, would be conclusive against the other signers. The reason is that the other signers would have had no opportunity to presents their case — would not have had their day in court and) a chance to examine and cross-examine the witnesses, or appeal. [Womack v. St. Joseph, 201 Mo. 467.] But it fairly may be presumed that the respondent, in endeavoring to make good his action against the Kahls and others brought forward all his evidence on the issue of what terms the power of attorney contained and cross-examined the witnesses produced against him. He could do this as well in an action against one signer, as in an action against all. In the Vermont case the issue alleged to have been adjudicated in a prior proceeding, was whether or not the note in question had been paid; but we can see no stronger reason for holding the defense of payment, when once determined against a payee, is res judicata in a subsequent action, than, for holding the same way regarding the issue of the alteration of an instrument. The essential fact is that the very question put in issue was tried before and determined against the suing party in an identical action except there is a different defendant; an action wherein the plaintiff had the opportunity to bring forward all his proof and to cross-examine the witnesses who swore to the alteration. The Vermont case has been followed in other jurisdictions and its doctrine adopted by text-writers. [Hill v. Morse, 61 Maine 541; Townsend v. Riddle, 2 N. H. 448, 24 Am. & Eng. Ency. Law (2 Ed.), 764; Hunt v. Terrell’s Heirs, 7 J. J. Marsh. (30 Ky.) 67.] The question of who is concluded by a judgment has been obscured by the use of the words “privity” and “privies,” which in their precise technical meaning in law, are scarcely determinative always of who is and who is not bound by a judgment. Courts have striven sometimes to give effect to the general doctrine that a judgment is only binding between parties and privies, by extending the signification of the word “privies” to include relationships not originally embraced in it; whereas the true reason for hold**) ing the issue res judicata, does not necessarily depend on privity, but on the policy of law to end litigation by preventing a party who has had one fair trial of a question of fact, from again drawing it into controversy. In the Vermont case the court found a certain shade of privity had existed between the signer of the note who-claimed the defense of payment was res judi-cata, and the other signer in whose favor that issue had been determined in a previous action. This was not privity in the ancient sense, but at most merely analogous to it. The fact wbicb ought to be controlling is that the signers of the power of attorney who were defendants in the first case brought by respondent and whose defense then prevailed, will be deprived of the benefit of the judgment in their favor, if plaintiff prevails in this case, as they will be answerable to appellant in contribution. We think the views expressed in Wo-mack v. St. Joseph, and other Supreme Court decisions, are not inconsistent with the conclusion that the adjudication in the first case should estop the plaintiff in this one.

The judgment is reversed and the cause remanded.