International Harvester Co. of America v. McLaughlin

STATEMENT OF FACTS.

Appellant brought this suit to enforce the collection of two notes given by appellee for balance of purchase money due for a Farm All Tractor and other machinery sold him by T. B. Cooper, in which the title was retained in the payee, owner or holder of the notes till they were paid. The notes were made payable to T. B. Cooper or order, recited retention of title "in the payee, owner, or holder" until all the notes were paid and were duly indorsed to appellant company.

Appellee admitted the purchase of the machinery, the extension of the notes, alleging that appellant was the real party in interest, was in fact at that time, and is now, the owner of said notes; admitted that the property purchased was upon his property, but denied his possession or ownership of same, alleging that it had been delivered back to appellant on November 28, 1929; alleged by way of cross-complaint that the notes had been paid by returning the Farm All Tractor and equipment to appellant's agent upon its demand for payment, setting it aside according to the settlement for plaintiff to take possession the following day, claimed damages for loss of rent of lands in the sum of $1,200 by reason of being deprived of the use of the machinery, etc.

Appellant's reply denied that the Farm All Tractor and equipment were delivered back to it on November 20, 1929; denied all the allegations of the complaint, that it had ever agreed to take back the machinery and surrender the purchase money notes, that it had taken possession of same in any way or deprived appellee of the possession or use of same, or had ever made any contract with appellee other than the contract of sale under which the notes sued on were executed for the balance due on the purchase price.

Appellee testified admitting the execution of the notes for the balance due on the purchase price; stated that a man claiming to be a collector for appellant company came to see him in November, 1929, and he told him he couldn't pay before about 60 days, since he had not sold his cotton, but the man wouldn't agree to extend the notes. That in a few days another man came to collect, that he told him the first collector wouldn't agree to an extension, and he then said to him he would return the machinery for the notes and lose the $400 he had paid down on the purchase; he made the same proposition to the second collector, "who on the next day returned with another man, and told me he would send for the tractor on the next morning, but did not do so. He didn't return until February and had with him the man I bought the tractor from. I asked him how much discount he would allow if I kept the tractor. He replied that kind of a change didn't suit me;" admitted receiving two letters from the Memphis office of appellant, one of date of January 6, 1930, demanding payment of the past-due notes given for the tractor and attachments signed by appellant company "By M. Lusk;" said he returned the letter with an indorsement thereon as follows:

"This tractor was surrendered by me and accepted by your collector sometime in December. He said he would come after it the next day, but have not heard from him since that time. You will please return my notes when you send after the tractor.

"Yours truly, (Signed) W. R. McLaughlin."

The other letter of January 9, 1930, reads as follows:

"January 9, 1930.

"Mr. W. R. McLaughlin, "Toltec, Arkansas.

"Dear Sir: We are in receipt of your letter of recent date advising that you had surrendered your tractor and same was accepted by one of our collectors, and we wish to state that this statement is in error, as the writer called on you in person and you stated the only thing you could do would be to surrender the tractor. The writer advised you that he would take the matter up with the home office to see whether or not they would accept the return of this tractor in settlement of the notes, and this they had declined to do, and we are now asking for payment of our note, and trust it will not be necessary for us to turn this note over to our attorney for collection. However, we will not accept the return of the machine from you.

"Yours truly, International Harvester "FS Company of America. By M. Lusk."

Said tractor remained in the shed at his place from the time the gentlemen, who came to collect the note, took it up till the sheriff came for it under the writ issued herein, and that the sheriff left it in his possession, and it is still there under the shed. He gave no retaining bond, and the machinery hasn't been touched since that time.

Mr. Lusk was introduced as a witness by appellee to prove his authority as an agent for appellant company; stated he was a collector for the company, and called on Mr. McLaughlin in November, 1929, relative to the collection of the notes; denied that he had any authority to take a tractor back without instructions from the Memphis office, or that he had agreed to do so; said "I agreed with Mr. McLaughlin that I would submit this to the Memphis office"; said on cross-examination: "I was the agent to collect notes that were past due. I have no other authority without further instructions from my superior. If I fail to collect a note, it is my duty to report to the company. I reported to the company in this case. They declined to accept the tractor in settlement of the notes. I notified Mr. McLaughlin of this fact."

Matthews testified he was collecting manager for appellant company. Lusk was our traveling collector. I appointed him. His authority is limited to making collections, and has no further authority. His authority was to go out and collect from delinquent notepayers; and if he failed to make the collection, he would report to my office. I remember when he went to see Mr. McLaughlin, he made a report of that to me. He reported that Mr. McLaughlin couldn't pay the note and wanted it extended, and, in case we wouldn't extend the note, he wanted to return the machine in settlement of the two outstanding notes. I took it under advisement and decided that we couldn't take the machine back. I told him to advise Mr. McLaughlin that we could not take the machine back. He had no authority to make any other arrangement than collect the note.

The court refused to instruct a verdict for appellant, gave other instructions over its objections, and returned judgment upon a verdict by nine jurors in appellee's favor, from which this appeal is prosecuted. (after stating the facts). It is insisted for appellant that the court erred in refusing to direct a verdict in its favor for the amount of the notes sued on, and this contention must be sustained.

Appellee admitted the execution of the notes sued on, that appellant was the holder or owner thereof, and that they had not been paid by him. He alleged that the notes had been satisfied in accordance with an agreement made with the agent of appellant to return the machine and equipment purchased, that he had performed this agreement in accordance with its terms by setting aside the machine for the company, which was to send for it and return the notes to him. The burden of establishing this defense was upon appellee to prove, not only such agreement, the performance on his part of the agreement of settlement made with the alleged agent of appellant, but also that the agent had authority to make such settlement, his authority having been denied. The general rule in cases of this kind was declared in J. F. Fargason Co. v. Dudley, 173 Ark. 1159, 294 S.W. 6, as follows:

"A person dealing with an agent is at once put upon notice of the limitations of his authority, and must ascertain what that authority is. Such person cannot presume that such authority exists; he cannot rely upon the representations of the agent as to what his authority is; he must make inquiry and use due diligence to learn the nature and extent of such authority. If he does not, he deals with the agent at his own risk; and if the authority of such agent is disputed, it devolves upon him to prove it." See also U.S. Bedding Co. v. Andre,105 Ark. 113, 150 S.W. 413, 11 L.R.A. (N.S.) 1019, Ann. Cas. 1914D, 800.

Appellee stated that he made a trade with the collector of appellant company, who agreed to take the tractor back and surrender the purchase money notes, and that Cooper, who had sold him the machine, was with the collector at the time; said he settled without asking what authority the agent had. "I did not do anything to find out whether he had the authority to take this machine back; I didn't care whether he had authority or not. I just presumed he had the authority. I knew Cooper had the authority, because I bought the tractor from him."

Mr. Lusk, the collector of appellant company, who was introduced as a witness by appellee, stated he was collector for appellant company. "I was the agent to collect notes that were past due. I have no other authority without further instructions from my superior. If I fail to collect a note, it is my duty to report to the company. I reported to the company in this case. They declined to accept the tractor in settlement of the notes. I notified Mr. McLaughlin of this fact."

W. S. Matthews stated he was "collecting manager" for appellant company with full control and jurisdiction over other territory including Arkansas; appointed Lusk traveling collector with authority limited to making collections, "and he has no further authority." When he failed to make collection of notes, he reported to Matthew's office. He reported when he went to see McLaughlin that McLaughlin couldn't pay the notes, and, if the company wouldn't grant him an extension, he wanted to return the machine in settlement of the notes outstanding. Witness took the matter under advisement, decided they couldn't take the machine back, and had Lusk to notify McLaughlin, which was done. "He had no authority to make any other arrangement other than collect the note."

Thus it appears that there was no substantial evidence showing any authority upon the part of the collector, Lusk, to make a settlement of the notes by accepting the return of the machine; the testimony that he had no such authority being virtually undisputed. Nor does the testimony show any implied authority to receive or take the property or anything but money in collection or payment of the notes, nor any conduct indicating apparent authority to do so. U.S. Bedding Co. v. Andre, supra; Rodgers v. Peckham, 120 Cal. 238,52 P. 483; Wales Riggs Plantations v. Graves, 132 Ark. 155,200 S.W. 804; Pierce v. Fioretti, 140 Ark. 306,215 S.W. 646.

The transaction therefore could not have amounted to more than an offer on the part of McLaughlin to settle the notes by the return of the machinery, which appellant declined to accept, and notified appellee it had done so.

It follows that the court erred in not directing a verdict in favor of appellant, and the judgment is therefore reversed, and judgment will be entered here as should have been rendered in the lower court. It is so ordered.