Wise v. Texas Co. , 166 N.C. 610 ( 1914 )

Walker, J.,

after stating the factsThis case, in one material aspect of it, turns upon the point whether there is any evidence of ratification by defendants of the unauthorized act of its agent, in contracting for them to sell the gasoline below the market price, and in positive violation of express instructions not to do so. In order to decide this question, we must consider the evidence in the most'“favorable light for the plaintiffs; but when it is thus viewed, we are of the opinion there was no ratification, and the nonsuit should have been granted.

We start out with the fact admitted that the plaintiffs knew, when the contract was made, that C. C. Clark, the agent, had no authority to make it in behalf of his principal. He so stated to them, and told them of his recent instructions, and they knew well why the defendants had withdrawn the authority to sell from him, because the price of gasoline w;as rapidly advancing, having risen to a point quite a full cent per gallon over the price mentioned in the alleged contract, and still advancing, and reaching within the ensuing year a price nearly double that at which they proposed to buy. The contract was made under very suspicious circumstances, sufficient to warrant the inference, or even to produce the conviction, that it was intended to deceive the defendants and to induce them, unsuspectingly, to believe that their agent had made the contract at a time when he was authorized to do so, by antedating it and making it appear, on its face, to be within his authority as agent, and, therefore,. valid as against tbe defendants. Tbe entire evidence shows tbat defendants were, at tbe time, and remained ignorant'of tbe real nature of tbe transaction, and tbat, believing it to be regular in all respects and to bave been made on tbe day of its date, tbey naturally concluded tbat tbey were bound by it, and for tbat reason shipped 79 barrels of' gasoline, from time to time, upon tbe orders of tbe plaintiffs. “No doctrine is better settled, both upon principle and authority, than this: tbat tbe ratification of an act of an agent previously unauthorized must, in order to bind tbe principal, be with full knowledge of all tbe material facts. If tbe material facts be either suppressed or unknown, tbe ratification is treated as invalid, because founded on mistake or fraud.” 1 Clark & Skyles on Agency (1905), sec. 106; Owings v. Hull, 9 Peters (U. S.), 607 (9 L. Ed., 246); Mechem on Agency (1889), sec. 129; Eeinbardt on Agency (1902), sec. 109. Tbe rule has been thus stated: “Unless tbe party undertaking to ratify knew tbat be was not liable without such ratification, be will not be bound.” P. & S. R. R. v. Gazzam, 32 Pa. St., 340; Reinbardt on Agency, supra. 31 Cyc., 1253, states tbe rule in this way: “In order tbat a ratification of an unauthorized act or transaction of an agent may be valid and binding, it is essential tbat tbe principal bave full knowledge, at tbe time of tbe ratification, of all material facts relative to tbe unauthorized transaction. And in order to make'this rule operative, tbe principal must know tbe actual facts and not merely what thé agent supposed were tbe facts. If tbe material facts bave been suppressed or are unknown, there is no ratification, and tbe principal is at liberty to repudiate bis assent and assert bis rights in other ways, and it matters not whether tbe principal’s want of knowledge was due to designed or undesigned concealment, or whether tbe question arises between tbe principal and tbe agent or as to third persons.” And this statement of tbe rule has met with tbe approval of this Court in Brittain v. Westall, 137 N. C., 30. "We, therefore, find it to be of tbe very essence of ratification, as of an election, tbat it be done advisedly, with a full knowledge of tbe party’s rights. Baldwin v. Burrows, 47 N. J., 199, 211. In Thorndike v. Godfrey, 3 Me. at p. 432, tbe Court, in. applying the rule, said: “We can never consider consent and ratification as implied, in those eases where there is no knowledge of the facts, to which it is said consent and ratification extend. This would be an effect without a cause.” The authorities are uniformly to the same effect.

Applying the principle to this case, we find no evidence of ratification of Clark’s unauthorized act by the defendants. It is true, the defendants shipped 79 barrels of gasoline, but this is perfectly consistent with their ignorance of the facts at the time of the shipment.

It has been said that the act which is claimed to be a ratification must be with knowledge of the facts and. “inconsistent with the existence of an intention not to adopt, and hence conduct which would have been within the principal’s right in casé he repudiated the transaction will not amount to ratification. And if the principal is ignorant of material facts, as where he accepts moneys from an agent without knowledge that they are the proceeds of an unauthorized sale, intention to ratify cannot be implied.” Tiffany on Agency, p. 66.

The cases are numerous where the courts have held that the sale or acceptance of goods, or the doing of other acts, under an unauthorized contract made by an agent, when the principal proceeds without knowledge of the facts, is not a valid ratification ; otherwise where the principal acts with knowledge or with what is equivalent to it. “If an agent, having unwritten authority to make leases of real property, execute a lease for more than three years, the knowledge of his principal that the tenant is in possession and paying rent is not sufficient to work either ratification or estoppel.” Clement v. Young, 70 N. J. Eq., 677. The 'same was held in a case where the wife paid interest on a note of her husband and her mortgage to secure it, under the belief on her part that the mortgage was’ binding upon her, the Court saying that there was no ratification. Brown v. Rouse, 104 Cal., 672. So in Nichols v. Bruns, 5 S. D., 28, it was decided that one cannot be held liable for the fraudulent representations of an unauthorized agent by accepting the benefits without knowledge of the fraud, and where the court charged tbe jury if tbe principal accepted tbe benefits be was liable for tbe representation, beld error, as tbe mere acceptance of benefits did not imply knowledge of tbe facts. Where bailiffs dis-trained for rent in a manner not authorized by tbe landlord, be was said not to be liable, tbougb be received tbe proceeds of property taken and sold to pay tbe rent, unless be bad knowledge of tbe unauthorized acts of bis agents. Lewis v. Read, 13 M. and W., 834. See, also, Freeman v. Rosher, L. R., 13 Q. B., 780; Combs v. Scott, 94 Mass. (12 Allen), 493; Wheeler v. N. S. Co., 39 Fed., 347, in which many cases of tbe same kind are collected.

Tbe principle was strongly and clearly stated by tbe Court in Bell v. Cunningham, 3 Peters (U. S.), 69: “If tbe principal, after a knowledge that bis orders have been violated by bis agent, receives merchandise purchased for him contrary to orders, and sells tbe same without signifying any intention of disavowing tbe acts of tbe agent, an inference in favor of tbe ratification of tbe acts of tbe agent may be fairly drawn by tbe jury. But if tbe merchandise was received by tbe principal under a just confidence that bis orders to bis agent bad been faithfully executed, such an inference would be in a high degree unreasonable.” And tbe doctrine is well stated in Roberts v. Rumley, 58 Iowa, 306, 307: “It does not appear that tbe defendants ever bad any intimation of tbe agreement which tbe plaintiff now alleges to exist, and which be is seeking to enforce, until tbe commencement of this suit. They could not have ratified and adopted an act about which they knew nothing. . . . To bold that tbe principal is bound by agreements between tbe special agent and tbe person with whom be contracts, not authorized by tbe agent’s appointment, and of ’which be bad no knowledge when be accepted tbe benefits of tbe contract, would be entirely subversive of tbe whole doctrine of special agency, and instead of requiring tbe persons dealing with tbe agent to ascertain, at bis peril, that tbe agent has kept within bis special authority, would require tbe principal to inquire, at bis peril, whether tbe agent bad gone beyond it.” Here plaintiffs bad full notice of tbe lack of authority.

Ratification of an unauthorized act of the agent to be binding must not only be made with full knowledge of all material facts, but the burden is upon the party relying upon it to prove adoption of the agent’s act with such knowledge. Tiffany on Agency, p. 73; Moore v. Ensley, 112 Ala., 333; Combs v. Scott, supra; Wheeler v. N. S. Co., supra.

In this case there is no evidence that defendants had knowledge of the fact that his agent and the plaintiffs had wrongfully antedated the contract, which, of course, was calculated to mislead and deceive the plaintiffs, unless we should hold, contrary to principle and authority, that the mere shipment of the gasoline was sufficient to show such knowledge. On the contrary, the only evidence upon the question tends strongly to show that the defendants had no knowledge of the facts until the first trial of this case, when one of the witnesses testified that the contract had been incorrectly dated. If there was such prior knowledge on the part of the. defendants, the plaintiffs, upon whom rested the burden of proving it, had the means of doing so by the agent himself, who was not called to the stand. They should have known the facts, as a man would hardly ratify an unauthorized act, which was not binding upon him, and thereby entail a heavy loss upon himself, when he could so easily escape the liability by repudiating the wrongful act.

• The case does not present a favorable aspect for the plaintiffs in any view we may reasonably take of it. It has not the right complexion. There is no satisfactory explanation of the order for 350 barrels of the oil, sent in just before the expiration of the year fixed by the alleged contract, when they had only- ordered during the nine preceding months 79 barrels as fully sufficient to supply their wants for that period, and supposed (why, is not clear) that they had already ordered 150 barrels. The whole ease shows that defendants were ignorant of the facts from the beginning to the end of this transaction.

It is perfectly evident that when the agent promised to “get the contract through” he expected to do so, and did do so, by a deception practiced upon his principals, and plaintiffs must have been cognizant of this purpose. There was no use at all in mis-dating the contract i£ such was not the object, because if a fair submission of the matter to the defendants for the purpose of having an exception made, in this instance, to the agent’s instructions was the intention of the parties, there would have been a full disclosure of the facts -and no suppression of the true date, or, to speak more accurately, no misrepresentation of it. The transaction would have been a normal one and would not have taken so unusual and deceptive a form. The principal was entitled to know what his agent had done, if beyond- the limit of his authority, and especially if directly in violation of his instructions, and there should have been no concealment of the facts under the guise of a false date.

The plaintiffs, having the burden of proof upon them, have not met the requirement of the law in such cases. The agent “put the contract through,” but in disobedience of positive instructions, and, as the case shows, by imposition upon his principal, who was ignorant of the real transaction. ' It is hardly reasonable or conceivable to suppose that defendants would have assented to a losing contract, or that plaintiffs could have believed that they would do so. That would be presuming too much upon their charity and benevolence; and besides, if a fair and honest request for such a contract was intended, why falsify the date, instead of proceeding according to the natural and ordinary course of business dealings where the parties.are inspired by perfect good faith? The whole trend of the evidence produces the conviction that the defendants were the victims of the deception, and there is nothing to relieve the transaction of the taint which, in law, vitiates it. As Chief Justice Wilmot said in Collins v. Blanton, 1 Wilson, 341 (1 Smith’s Leading Cases (9 Ed.), 646): “The manner of the transaction was to gild over and conceal the truth, and wherever courts of law see such attempts made to conceal such wicked deeds, they will brush away the cobweb varnish, and show the transactions in their true light. . . . All writers upon our laws agree in this: no polluted hand shall touch the pure fountains of justice. . . . You shall not have a right of action when you come into a court of justice in this unclean manner.” Ex dolo malo non oritur actio.

E. E. Wise testified: “Mr. Clark told me be bad instructions from tbe company not to take tbe contract (not to sell after 19 August), and it was dated back so tbat tbe company would furnish tbe oil. . . . Tbe only way be could make tbe contract was to date it back, and I agreed to take it witb tbat understanding.” And again: “Q. Tbe only way be could get tbat to you was to date tbe contract back? A. Tbat was tbe only way to get-it through, so be said.” This is a fair specimen of tbe evidence, which shows tbat plaintiffs participated in tbe wrong of tbe agent. Tbe law will not countenance any such transaction.

Tbe nonsuit should have been allowed.

Reversed.