Oxford Lake Line v. First National Bank , 40 Fla. 349 ( 1898 )

Carter, J.:

No question as to the measure of plaintiff’s damages is here involved or argued. It is conceded by all parties that the plaintiff’s declaration alleged a cause of action, but it is insisted by defendant in error that defendant’s pleas each presented defenses to the declaration, the effect of which was not avoided by the plaintiff’s replications thereto.

i. We think the plaintiff’s replication to the first plea presented a complete answer thereto. In the absence of any special instructions if a time bill of exchange with bill of lading attached be sent to an agent for collection, there is an implied obligation upon the agent to hold the bill of lading until the bill of exchange is either accepted or paid, according to circumstances. He can not deliver without requiring the one or the other. Commercial Bank of Manitoba v. Chicago, St. P. & K. C. Ry. Co., 160 Ill. 401, 43 N. E. Rep. 756; Bank v. Cummings, 89 Tenn. 609, 18 S. W. Rep. 115; National Bank of Commerce of Boston v. Merchant’s National Bank of Memphis, 91 U. S. 92; Dows v. National Exchange Bank of Milwaukee, 91 U. S. 618; Schoregge v. Gordon, 29 Minn. 367, 13 N. W. Rep. 194; Porter on Bills of Lading, § 523, et seq.; Daniel on Negotiable Instruments, § 1734b. In this case, however there were special instructions. Two bills — one at sight, the other at thirty days — were sent to defendant for collection and remittance, with instructions to procure acceptance of the time bill, and to “deliver attached documents” (the bill of lading) “only on 'payment of drafts.” If there is any ambiguity about these instructions, it consists in an uncertainty as to whether the bill of lading was)to be delivered upon payment of the sight draft and acceptance of the other, or upon payment of both. There certainly was no 'authority given thereby to deliver the bill of lading upon payment of the sight draft only. It is unquestionably true, as contended by the defendant in error, that where the instructions to an agent are couched in such uncertain terms as to be reasonably susceptible of two different meanings, and the agent in good faith and without negligence adopts one of them, the principal can not be heard to assert, either as against the agent or as against third persons who have in good faith and without negligence relied upon the same construction, that he intended the authority tó be executed in accordance with the other interpretation. Mechem .on Agency, §315. But because an agent’s instructions will admit of different interpretations, he is not thereby authorized to disregard them entirely, and substitute his own judgment in the place thereof. If he acts at all in such cases, he must follow one of the interpretations reasonably derivable from the uncertain terms of the instructions. In this case defendant did neither; but, on the contrary, substituted its own ideas of what was proper under the circumstances, thereby acting directly antagonistic to its instructions. The replication was a good answer to- the first plea, and the demurrer should have been overruled.

II. It is argued with great confidence and ability by counsel for defendant in error that under the facts disclosed by the second plea and replication the Anniston Bank ratified the defendant’s act in surrendering the bill of lading without requiring acceptance of the thirty-day draft, and in support of this view it is claimed that the Anniston Bank received the $1,650 proceeds of the sight draft with sufficient notice to put it upon inquiry as to the surrender of the bill of lading, and retained the money after full knowledge that the bill of lading had been surrendered. In considering this question we must bear in mind that the defendant was acting as an agent of limited powers over a specific subject-matter. The subject-matter consisted of two drafts and a bill of lading. Its powers were defined by special instructions, vis: to deliver the bill of lading upon payment of one draft and acceptance of the other. The contract between plaintiff and the Pensacola Terminal Co. was not attached to the drafts, nor was defendant given any power or authority over it, nor had plantiff held out to defendant or the Terminal Co. in any way that defendant was authorized to exercise any authority over this contract, nor was there anything in the nature of the bill of lading, drafts, or instructions transmitting them to defendant, indicating that they had any connection with plaintiff’s contract with the Terminal Co. The defendant’s duties were • plain and simple, the extent of its authority clearly defined by specific instructions. It is the privilege of the’principal to give instructions, and the duty of his agent to obey them. Any unauthorized deviation from or neglect of the principal’s instructions whereby damage results will entitle him to an action against the agent, even though the latter in deviating from or neglecting to obey instructions, acted in good faith and honestly believed he was acting for the best interest of his principal. Mechem on Agency, §§ 474-477; Story on Agency §§ 192, 217c; Walker v. Walker, 5 Heisk, 425; Bank of Owensboro v. Western Bank, 13 Bush, 526, S. C. 26 Am. Rep. 211; Hall v. Storrs, 7 Wis. 253. When the defendant, without authority, delivered the bill of lading which enabled the Terminal Co. to get possession of the plaintiff’s property without acceptance of the time draft, it disobeyed plain instructions, and even though done under the honest belief, as alleged in the plea, thereby subjected itself to liability unless, as it claims, its acts were subsequently ratified by the plaintiff. The plea does not claim an express ratification of defendant’s act. It alleges subsequent conduct on the part of the plaintiff which it is claimed constitutes an implied ratification, vis: the acceptance and retention of the proceeds of the sight draft collected at the time the bill of lading was delivered to the Terminal Co. Express or implied ratification of the unauthorized act of an agent must, in order to bind the principal, be with full knowledge of all material facts. If material facts be either suppressed or unknown, the ratification is invalid, because'founded in mistake or fraud. Town of Madison v. Newsome, 39 Fla. 149, 22 South. Rep. 270; Bell v. Cunningham, 3 Pet. 69; Bank of Owensboro v. Western Bank, 13 Bush, 526, S. C. 26 Am. Rep. 211; Humphrey v. Havens, 12 Minn. 298; Bohart, Dillingham & Co. v. Oberne, Hosick & Co., 36 Kan. 284, 13 Pac. Rep. 388; Martin v. Hickman, 64 Ark. 217, 41 S. W. Rep. 852; Adams Express Co. v. Trego, 35 Md. 47; Dean v. Bassett, 57 Cal. 640; Pennsylvania, Delaware and Maryland Steam Navigation Co. v. Dandridge, 8 Gill & J. 284, text 323; Vincent v. Rather, 31 Tex. 77, S. C. 98, Am. Dec. 516; First National Bank of Fort Scott v. Drake, 29 Kan. 311, S. C. 44 Am. Rep. 646; Bennecke v. Insurance Company, 105 U. S. 355; Owings v. Hull, 9 Pet. 607; Davis v. Talbot, 137 Ind. 235, 36 N. E. Rep. 1098; Holm v. Bennett, 43 Neb. 808, 62 N. W. Rep. 194; Baldwin v. Burrows, 47 N. Y. 199; Wheeler v. Northwestern Sleigh Co., 39 Fed. Rep. 347; Clark v. Clark, 59 Mo. App. 532; Bryant v. Moore, 26 Me. 84 S. C. 45 Am. Dec. 96. Generally speaking it does not devolve upon the principal to make inquiries as to the facts. He has a right to presume that his agent has followed instructions, and has not exceeded 'his authority. Whenever he is sought to be held liable on the ground of ratification, either express or implied, it must ‘ be shown that he ratified upon full knowledge of all material facts, or that he was willfully ignorant; or purposely refrained from seeking information, or that he intended to adopt the unauthorized act at all events, under whatever circumstances. Combs v. Scott, 12 Allen, 493; Marsh v. Joseph, L. R. (1897) 1 Ch. Div. 213; Phosphate of Lime Company v. Green, L. R. 7 C. P. 43; Mechem on Agency, § 129. Tested by these rules the second plea was bad, and even if the replication was itself bad, it was a good answer to a bad plea. Wade v. Doyle, 17 Fla. 522. The plea admitted that the Terminal Co. paid the sight draft on August 6, after it had notified defendant that the property embraced in its contract with plaintiff was not in the condition provided by said contract, and that the draft was paid upon the understanding that the bill of lading was to be surrendered without acceptance of the time draft, and that the amount of the balance of payment for the property be left open for future adjustment between the Terminal Co. and the plaintiff. By this course the defendant not only violated its instructions as a special agent, but it took upon itself to make a new contract for the plaintiff without the slightest semblance of authority to do so. Yet subsequent to this transaction defendant telegraphed the Anniston Bank: “Draft paid; remitted today, but thirty days not yet accepted,” and later, on the same day, defendant remits to cover sight draft, and writes regarding the other draft, “we enter,” with no intimation whatever that the time draft would not be accepted, although it had then been dishonored and the bill of lading delivered. Neither was there the slightest intimation in this letter or telegram that the bill of lading had been surrendered, or that defendant had assumed to change the contract between plaintiff and the Terminal Co., and the expressions, “not yet accepted,” and “we enter,” relative to the time draft, were calculated to convey the impression that the draft would be accepted, although defendent then knew it would not. Under these circumstances the acceptance of the proceeds of the sight draft would not'become the basis of a claim of ratification, for plaintiff then had no knowledge of any departure from instructions by the defendant; but, on the contrary, had every reason to suppose that they were being complied with. The plea alleges that defendant returned the unaccepted draft to the Anniston Bank on the 8th of August, and that on the 12th it notified that bank of the refusal of the Terminal Co. to accept the time draft, and of defendant’s consequent action in surrendering the bill of lading without such acceptance, but it is nowhere alleged that defendant or any one else ever informed plaintiff at any time that the bill of lading was surrendered upon the understanding that the amount of the balance due under plaintiff’s contract with the Terminal Co. was to be, not the definite amount to be evidenced by the time draft, but such amount only as might be determined upon a future adjustment. This was a very material matter for the plaintiff to know in determining whether it would ratify what its agent had assumed to do for it. Plaintiff might well ratify the release of its security, viz: the delivery of the property to the Terminal Co., without requiring as a prerequisite the acceptance of the time draft, looking to its remedy upon the original contract, which would have been ample to secure the full amount evidenced by the time draft if the property had been inspected and approved by the persons named in the contract, while it might very promptly have repudiated the unauthorized acts of its agent had it known that such agent had not only released its security, but had actually given the Terminal Co. an advantage by leaving the balance due to be ascertained, not in accordance with the contract, but upon some future adjustment. Consequently, plaintiff did not ratify defendant’s acts by retaining the proceeds of the sight draft, in ignorance of this material fact. There are none of the elements of an estoppel set up in this plea, as contended by the defendant, and an essential element of ratification is wanting. We are, therefore, of the opinion that the demurrers to plaintiff’s replications should have been overruled.

The judgment is’reversed with directions to the Circuit Court to enter an order overruling the demurrers to plaintiff’s replications, and for such-further proceedings as .may be comfortable to law.