Jan Wai v. Smith-Riddell Co.

Plaintiffs were given judgment for the value of meats alleged to have been "delivered to T. Tominaga at the special instance and request of said defendant."

The evidence shows without conflict that the defendant leased certain lands in Yolo County to Tominaga for a term of one year beginning December 1, 1917, at the annual rental of $12,134, payable as follows: $6,067 on or before July 15, 1918, and $6,067 on or before September 1, 1918. Tominaga gave the defendant a mortgage on the crops to be grown on the land, as security for the payment of the rent, authorizing the defendant to take possession of and sell the crops grown in case of default in payment. Plaintiffs were furnishing Tominaga with meat to supply his camp and early in 1918 they informed him that they could not deliver any more meat until he paid his bill for that already furnished. Not having the money with which to pay the bill, Tominaga informed the defendant of the situation and requested the latter to make payment in his behalf. Thereupon the defendant wrote the plaintiff as follows:

"Telephone Market 1022 "F. H. Smith, A. McD. Riddell, "President. Secretary. "Smith-Riddell Co. "Cable Address Alfalfahay. "Codes used A. B. C. 4th and 5th editions. "Alfalfa "Producers and Dealers. "Ranch and Warehouses "Lisbon District, Yolo County. "Office and Warehouse "381-389 Seventh Street. "San Francisco, Cal., Feb. 2nd, 1918. "Wing Lee Co. "1122 Third St. "Sacramento.

"Dear Sir:

"I will be in town on Wednesday, Feb. 6th and will call and see you about the bill that our tenant T. Tominaga owes you for meat $460.75.

"Very truly yours, "SMITH-RIDDELL CO., "381 7th Street, San Francisco."

Early in the following March, Mr. Smith, who was president of the defendant corporation, called on the plaintiffs at their place of business and gave them the defendant's check for the amount of the bill. Smith testified that at that time there was due Tominaga from the defendant sufficient money to pay the bill. Jan Wai, one of the plaintiffs, testified that, after Smith paid the bill, he asked: " 'When you send meat?' Bookkeeper said: 'No.' He said: 'Why not?' 'Because I no give Tominaga credit.' He said: 'You send him order, then I come pay you every, we pay you every three months.' " Chang Sing Ho, another plaintiff, testified that Smith said: "Go ahead, send meat to Tominaga, we pay every three months, his company. . . . Until we stop, just go stop, — don't any more. . . . You ship meat all right, send me bill, never mind about him, we are going to pay for it." The witness further testified that Smith said that because he was president of the company "anything he speak about, his company stand for." Mr. Smith denied all of the foregoing statements and testified that he did not authorize the plaintiffs to send meat to Tominaga or promise that the defendant would pay therefor. Since the court found in favor of the plaintiffs it must be assumed on appeal that the statements were made.

Plaintiffs thereafter sent meat to Tominaga as ordered by him for about nine months, mailing statements thereof to the defendant every three months. The defendant did not make payment for any meat so delivered or notify the plaintiffs that it would not pay therefor until January 14, 1919, when it mailed them the following letter:

"These bills belong to T. Tominaga. Send them to him and do not keep sending them to us.

"Yours truly, "SMITH-RIDDELL CO."

The plaintiffs thereupon ceased to furnish any more meat to Tominaga and finally commenced this action.

In shipping the meat, duplicate tags were made out, one being forwarded to Tominaga, and the other retained by plaintiffs. These tags were admitted in evidence and were all in substantially the same form. The first one is fairly representative of them all and is as follows, the italicized parts being written in pencil:

"Wing Lee Co. "Meat and Poultry Market "Wholesale and Retail. "Phone Main 3395-J 1122 3rd Street. "Sacramento, Cal., Mar. 2-18.

"M. T. Tominaga

"Address __________ 1 Meat #15 ------ 2 20 ------ 3 ------ 4 300 ------ 5 Freight 25 6 ------ 325@"

The testimony of plaintiffs shows that the meat was sent to Tominaga as indicated by the tags and that the price charged was the reasonable market value thereof. Tominaga testified: "After Smith-Riddell paid the bill, January, February, 1918. I think the bill is along about fourteen or fifteen hundred dollars. I think the tags . . . are all right. I got a copy of these tags with every shipment. I recognize these tags as comparing with the ones I received."

Appellant contends that there is no "evidence to show that F. H. Smith was the agent of defendant, or that he had any power to bind appellant in any manner whatever." It must be kept in mind that this is not the ordinary case of simple agency, but that Smith was president of the defendant corporation and, in so far as the evidence discloses, was in the active management of its affairs. He arranged for the leasing of the land to Tominaga. Pursuant to defendant's letter of February 2, 1918, he appeared at plaintiff's place of business and paid Tominaga's bill. He, of course, had full knowledge of his agreement with plaintiffs. Being president of the corporation, his knowledge was equally the knowledge of the corporation. InBalfour v. Fresno Canal etc. Co., 123 Cal. 397 [55 P. 1062], it is said: "The president of a corporation is a proper person to whom notice, which is to affect a corporation, is to be given. The corporation has no eyes, ears, or understanding save through its agents. The president is considered the head of the corporation, and it is his duty to report to the trustees information affecting the interests of the corporation. And the presumption is that he does so. Usually this is a conclusive presumption. . . . Corporations can only be reached through their agents; it behooves them to be especially careful in regard to the conduct of their agents. In no other way can knowledge be conveyed to the fictitious entity, or negotiations be had with it. It is not usual for parties dealing with a corporation to be brought before the directors to negotiate their contracts." (See also, Lowe v. Yolo County etc. WaterCo., 157 Cal. 513 [108 P. 297]; Swartz v. Burr, 43 Cal.App. 442 [185 P. 411].)

[1] The defendant had leased its land to Tominaga at a cash rental of $12,134 a year, no part of which was due at the time Smith agreed that the defendant would pay for the meat to be furnished. Since Tominaga was unable to pay his meat bill, it is a fair inference that he could not have continued his farming operations without the defendant's assistance in the way of payment for the meat delivered by plaintiffs. It is a reasonable inference that the agreed rent was to be paid out of the proceeds of the crops, if at all. The agreement by Smith in behalf of the corporation was, therefore, an appropriate means by which the defendant might reasonably expect to advance its business of leasing its lands. Smith, being the principal officer of the corporation, must be presumed to have had the "implied power to make all contracts which are essential to the successful prosecution of the business." (Woods Lumber Co. v. Moore, 183 Cal. 497 [11 A. L. R. 549, 191 P. 905].) The defendant offered no evidence whatever to show that Smith was not authorized to make the contract on behalf of the corporation. It seems clear that there is sufficient evidence to make out a prima facie case of authority.

Appellant urges that the evidence does not show how much meat was delivered or the reasonable value thereof. As stated, the shipping tags, showing the weight of each shipment, were produced and testimony was introduced as to the reasonable value thereof. This testimony was not contradicted and was corroborated by Tominaga.

[2] The admission of the shipping tags in evidence is assigned as error. Plaintiff Chan Sing Ho, who was one of the partners and the bookkeeper for the firm, testified: "Most of the time Jan Wai shipped the meat down to Tominaga, I made out the tag, the other man wrapped the meat. I cut most of the meat shipped to Tominaga, very seldom the other boys cut it. The other men wrapped the meat. I got the order for so much meat, so I cut it up and told the man to ship it. I gave the tag I made out to the boy. I gave the other boys the tags so they would know how much meat to cut. They would cut the meat, wrap it up in a paper and put one of the tags inside, the other tag I kept in the office." This testimony, corroborated as it is by that of Tominaga hereinbefore set forth, furnished sufficient foundation for the admission of the tags in evidence. They were not subject to the objection made "that they are hearsay, and not the best evidence." The account book, made up of entries from these tags, was properly admitted.

[3] The oral agreement to pay for the meat delivered to Tominaga is not within the statute of frauds. The complaint and the evidence show an original promise on the part of the defendant. "If goods are delivered by the seller to one person on the promise of another to pay for them and solely on the promisor's credit the promise is original and not within the statute." (25 R. C. L. 488.)

[4] Appellant argues that the allegations of the complaint show an express contract and are not sufficient to uphold the judgment for the reasonable value of the meat furnished. The complaint alleges that "said defendant became and now is indebted to plaintiffs in the sum of fifteen hundred and thirty-two 40-100 dollars ($1,532.40), for and on account of goods, wares, and merchandise, to-wit: Meats sold by plaintiffs to defendant at the special instance and request of defendant and delivered to T. Tominaga at the special instance and request of said defendant." It is sufficient to cite the case of Merchants C. Agency v. Gopcevic, 23 Cal.App. 216 [137 P. 609].

Appellant makes many other assignments of errors of minor importance. A discussion of them would unduly lengthen this opinion. It is sufficient to say that they are without substantial merit.

The judgment is affirmed.

Burnett, J., and Prewett, J., pro tem., concurred.

A petition for a rehearing of this cause was denied by the district court of appeal on December 3, 1921, and the following opinion then rendered thereon:

THE COURT. — In its petition for a rehearing the appellant states: "It is admitted in this case that Smith had no actual authority to enter into the alleged contract." No such admission appears in the record and this court arrived at a contrary conclusion. The case was not decided on the theory of ostensible agency or authority or on the doctrine of estoppel, but upon the conclusion announced that the evidence showed aprima facie case of actual agency and authority. Neither was the decision based upon any presumption that Smith had authority to make the agreement, arising from the mere fact that he was president of the defendant corporation. [5] While such presumption does not arise, it may more readily be inferred from circumstances proved that the president of a corporation is clothed with authority to make a particular contract than one who stands in no official relation to the corporation. In other words, the fact that one is president may be considered with other circumstances shown in determining whether such person was authorized to act for the corporation. The statement in the opinion that "Smith, being the principal officer of the corporation, must be presumed to have had the implied power to make all contracts which are essential to the successful prosecution of the business" must be understood in the light of the evidence showing his activities in the conduct of the defendant's affairs and the latter's attitude toward the same. Smith arranged for the lease to Tominaga of the defendant's lands and, pursuant to defendant's letter to plaintiffs, paid Tominaga's bill with a company check. When asked if he usually carried company checks with him, he testified: "I generally carry some blank checks, because when I am buying hay around in the country, I have to pay the farmer a deposit, that is why I carry blank checks." As stated in the opinion, the defendant must be presumed to have had knowledge of Smith's agreement in its behalf with the plaintiffs. (Newell-Murdoch Realty Co. v.Wickham, 183 Cal. 39 [190 P. 359].) It received quarterly statements showing that the meat furnished to Tominaga was being charged to the defendant. With all this knowledge, it remained silent for nine months. Under appropriate pleadings, the defendant would have been estopped by its conduct from disclaiming liability. [6] Independent of any question of estoppel, the defendant's silence is evidence of actual authority in Smith to make the agreement. Even in a criminal case the silence of a defendant when he ought to speak is evidence that the fact is in accordance with the statement which he fails to deny. It cannot be less in a civil action. The defendant offered no evidence whatever to prove that Smith was not authorized to make the contract. While Smith was a witness for defendant at the trial, he testified to nothing from which even an inference could be drawn that he acted without authority. While the burden of showing authority rested on the plaintiffs, yet, in view of the rule that "evidence is to be estimated not only by its own intrinsic weight, but also according to the evidence which it is in the power of one side to produce and of the other to contradict," the plaintiff must be held to have sustained the burden to the extent of proving a prima facie case.

The petition for a rehearing is denied.

A petition to have the cause heard in the supreme court, after judgment in the district court of appeal, was denied by the supreme court on January 3, 1922.

All the Justices concurred, except Lawlor, J., and Shurtleff, J., who were absent.