Killinger v. Iest

SMITH, Justice.

Appellant has appealed from a judgment of involuntary dismissal of his action directed against respondents, and from an order denying his motion for a new trial. Appellant operates an electric appliance repair shop in Twin Falls. Respondent lest resides in Parma; he owns a farm situated north of Shoshone, herein referred to as the Shoshone farm. Respondent Tadlock was Iest’s tenant under an oral lease of the Shoshone farm.

Appellant alleged in his complaint that Tadlock, as tenant and agent of lest, “engaged” appellant to furnish and install an electric irrigation pump on the Shoshone farm; that Tadlock in his personal capacity also promised to pay for the pump; that appellant performed the obligations of the oral contract; and that the respondents, and each of them, wrongfully refused to pay the agreed price for the pump, related materials, and installation services.

The cause was tried to the district court sitting without a jury. Appellant’s case-in-chief, based upon the testimony of appellant, respondents, and appellant’s assistant, Ralph Taylor, revealed the circumstances surrounding the transaction to be as follows:

On May 21, 1963, Tadlock by telephone requested appellant to repair an electric pump used for irrigating the Shoshone farm. Appellant and Ralph Taylor drove to the farm, met with Tadlock, and inspected the malfunctioning pump. The pump appeared to require extensive repair, so appellant loaded the machine into his truck and transported it to Twin Falls. At that time appellant was unaware that lest owned the Shoshone farm and that Tad-lock was merely Iest’s tenant.

The next day, May 22nd, Tadlock went to Twin Falls to inspect the pump. The shaft was broken and the pump was generally in poor condition. Tadlock felt that too much time would elapse before the pump could be restored, and that a new, more efficient pump should be immediately installed to irrigate Tadlock’s crops. According to appellant’s testimony, Tadlock then informed appellant that lest owned the farm and that he, Tadlock, was Iest’s tenant. Tadlock further asserted that he had authority from his landlord, lest, “to make this extensive repair and improvement on the place,” that “he had authority from his landlord to repair the pump or purchase a pump,” and that lest would pay the agreed price. Appellant admitted on cros-examination that he made no attempt to contact lest for confirmation of Tadlock’s asserted authority, hut relied solely upon Tadlock’s statements. Moreover, contrary to the allegations of his complaint, appellant testified that he never requested Tadlock to become a party to the oral contract, nor did Tadlock volunteer his personal liability on the agreed purchase price.

Appellant installed the new pump on Iest’s premises on June 1, 1963. An itemized bill, amounting to $2,047.89, covering machinery, material and installation charges, was mailed to lest in Parma sometime during the second week of June. This was Iest’s first notice that appellant had installed a pump on the Shoshone farm and that lest was expected to pay. Shortly after lest received the bill, appellant telephoned lest and requested payment. lest refused and denied in unequivocal terms that Tadlock had any authority to bind lest on the purchase of the irrigation pump.

Appellant sought to establish Tadlock’s rights and duties under his oral lease agreement with lest. Tadlock, called as an adverse witness under I.R.C.P. 43(b), testified on cross-examination by appellant’s counsel that his duties as Iest’s tenant had been simply to farm the Shoshone farm. The costs of seed and utility bills were divided between landlord and tenant. A major expenditure for installation of a concrete pipeline was ordered personally by lest. On one occasion, Tadlock had a broken shaft on Iest’s tractor repaired, but Tad-lock himself paid the bill without consulting lest. There was no evidence that cash, a portion of Tadlock’s crops, or other consideration passed to lest as the consideration under the oral lease. Tadlock testified, finally, that he used the pump for irrigation purposes throughout the 1963 crop season.

Appellant then called respondent lest who testified that he customarily ordered work and paid the bills himself. lest added that Tadlock’s conduct was unprecedented and definitely beyond his powers and duties as Iest’s lessee.

At the close of appellant’s evidence, respondent lest moved for an order of involuntary dismissal pursuant to I.R.C.P. 41(b), on grounds that appellant’s evidence was insufficient to prove Iest’s liability on the alleged parol contract. Respondent Tad-lock also moved for involuntary dismissal, contending that upon the evidence and the law he was not liable to appellant.

The trial court granted both motions and thereafter entered separate judgments, one dismissing the action as to respondent lest, and the other, dismissing the action as to respondent Tadlock. In granting respondents’ motions for dismissal, the district court took the view that appellant failed to introduce substantial evidence to show Iest’s liability on a theory of agency, or that Tadlock was indebted to appellant as a party to the parol agreement.

The trial court’s disposition of the action constituted a determination thereof on the merits. Grieser v. Haynes, 89 Idaho 198, 404 P.2d 333 (1965); Stratton v. Stratton, 87 Idaho 118, 391 P.2d 340 (1964). On this appeal, the failure of the district court to find the facts specially and state separately the conclusions of law, as required by I.R.C.P. 52(a), is not assigned as error.

Appellant asserts that “The trial court erred in granting defendants’ [respondents’] respective motions for involuntary dismissal * * Under I.R.C.P. 41(b), the dismissal is proper only where “upon the facts and the law the plaintiff has shown no right to relief.”

We conclude that the district court properly granted the motion for dismissal of appellant’s action against respondent lest. Appellant failed to advance any competent evidence tending to establish that lest had invested Tadlock with express or implied authority to contract for the furnishing and installation of an irrigation pump on the Shoshone farm. Appellant, by not showing how lest benefited by any increased yield of Tadlock’s crops, if such there was, also failed to establish Iest’s alleged liability on a theory of ratification. And, finally, appellant’s contention that lest should be estopped to deny liability must be rejected, since the evidence clearly shows that lest never held his tenant out as having authority to contract for major improvements on the Shoshone farm.

Appellant assigns as error the district court’s several rulings as to the admissibility of testimony which appellant sought to introduce against respondent lest.

Appellant first contends that the trial court erroneously ruled that Tadlock’s declarations as to the existence and scope of his authority would not be binding on lest, the alleged principal. That ruling was proper. The declarations of an alleged agent, standing alone, are insufficient to prove the grant of power exercised by him and to bind his principal to third parties. Appellant’s testimony as to Tadlock’s declarations and assumptions was hearsay and inadmissible against the principal to prove the existence of Tadlock’s alleged agency. Brunette v. Idaho Veneer Co., 86 Idaho 193, 384 P.2d 233 (1963); Chamberlain v. Amalgated Sugar Co., 42 Idaho 604, 247 P. 12 (1926); Cupples v. Stanfield, 35 Idaho 466, 207 P. 326 (1922); Cox v. Crane Creek Sheep Co., 34 Idaho 327, 200 P. 678 (1921); Restatement (Second), Agency § 285 (1958).

The statements by the alleged agent, as to the scope of his authority, are admissible if, at the time the statements are offered in evidence, the existence of the agency has been proven by independent evidence. Hayward v. Yost, 72 Idaho 415, 242 P.2d 971 (1952); Lightner v. Russell & Pugh Lumber Co., 52 Idaho 616, 17 P.2d 349 (1932); Seavey, Agency § 105B (1964). Appellant introduced no independent evidence probative of Tadlock’s alleged agency, so that no foundation existed whereby any such statements by Tadlock could serve to corroborate or define the extent of his alleged agency.

The fact of Tadlock’s tenancy on Iest’s property would not constitute independent evidence of agency. Unless made so by specific agreement, a tenant is not the agent of his landlord for any purpose. Denver Tramway Corp. v. Rumry, 98 Colo. 24, 52 P.2d 396 (1935); Shaver v. Bell, 74 N.M. 700, 397 P.2d 723 (1964); Coe v. Esau, 377 P.2d 815 (Okl.1963); 2 C.J.S. Agency § 2.

Counsel for appellant, on direct examination of appellant, proposed the question:

“Now, getting back to this * * * conversation on the ranch with Mr. lest and Mr. Tadlock * * *, at that time do you recall whether or not Mr. lest made any statements indicating that Mr. Tadlock had the authority that he told you he had?”

The question obviously suggests to the witness the answer which appellant’s counsel desired. The trial court correctly sustained respondents’ objection on the ground that the question as phrased, was leading or suggestive. See I.C. § R9-1203.

Appellant’s counsel on further cross-examination of Tadlock, called as an adverse party, attempted to question him on the subject of his alleged authority as Iest’s agent. According to appellant’s argument on appeal, this interrogation was intended to establish Iest’s liability for the acts of his alleged agent. The trial court sustained objections by Iest’s counsel to certain of those questions proposed. Counsel asked of Tadlock, first, whether Tadlock possessed authority to install a new pump on Iest’s property; second, whether Tadlock and lest had reached an agreement as to Tadlock’s power to make purchases for the maintenance and improvement of the property; and, third, whether Tadlock understood or felt that he had to contact lest prior to incurring any expenses. Appellant assigns as error the trial court’s rulings excluding answers to those questions.

While an agency relation cannot he proved by the extra-judicial statements and declarations of one purporting to act as agent, the fact of agency, when it rests in a parol agreement, may be established at trial by the testimony of the agent himself. The agent’s extra-judicial statements are mere hearsay, but at trial the agent’s testimony concerns his relationship to the alleged principal. The relationship being in issue and the witness being subject to cross-examination, the agent’s testimony cannot be termed hearsay. Daly v. Williams, 78 Ariz. 382, 280 P.2d 701 (1955); Jameson v. First Savings Bank & Trust Co., 40 N.M. 133, 55 P.2d 743, 103 A.L.R. 1492 (1936); 3 Am.Jur.2d Agency § 354 (1962).

The alleged agent, however, should testify as to the existence of facts or conditions which establish the ultimate fact of agency. Apellant’s questions, essentially inquiring as to whether lest delegated authority to Tadlock, call for an inadmissible conclusion of the witness. Parker v. Otis, 130 Cal. 322, 62 P. 571, 927 (1900); Hutchings v. Cobble, 30 Okl. 158, 120 P. 1013 (1911); 19 Cal.Jur.2d Evidence § 318; 7 Wigmore, Evidence § 1960 (3d ed. 1940).

Appellant adopted the position at trial that, even if Tadlock originally lacked authority to act as Iest’s agent in purchasing the pump, lest subsequently ratified the transaction by accepting and retaining benefits resulting from Tadlock’s use of the pump. See Tomasini v. Smith, 26 Cal.App. 227, 146 P. 691 (1914); Stout v. McNary, 75 Idaho 99, 267 P.2d 625 (1954); Restatement (Second) Agency § 99 (1958). Appellant established that Tadlock irrigated the 1963 crops with the new pump, but appellant’s evidence as to the quality of the 1963 harvest was excluded by the trial court. The ruling is assigned as error.

Assuming that appellant’s evidence as to the 1963 harvest should have been admitted as relevant to the issue of ratification, appellant nevertheless failed to prove that lest in any way benefited from Tadlock’s use of the pump. The benefits must accrue directly to the principal as the proximate result of the unauthorized transaction in order to constitute ratification by the principal. Bankers Protective Life Ins. Co. v. Addison, 237 S.W.2d 694 (Tex.Civ. App.1951); 3 Am.Jur.2d Agency § 175 (1962). Exclusion of evidence that the pump enhanced the quality of Tadlock’s crops, in the absence of proof that an increased yield directly benefited respondent lest, did not prejudice this theory of appellant’s case.

Although the dismissal of appellant’s action against lest was proper, the dismissal of the action against respondent Tadlock stands upon different grounds. Appellant’s evidence, particularly appellant’s own testimony, established that Tadlock had represented he had authority as lest’s agent “to make this extensive repair and improvement,” “to repair the- pump or purchase a pump,” and to bind lest for the agreed purchase price. The testimony of Ralph Taylor, appellant’s assistant, corroborated appellant’s testimony, and this evidence remained uncontradicted through the examination of the respondents, lest and Tad-lock.

A party entering into a contract in his self-assumed capacity as agent, with no actual authority from the purported principal, or in excess of an existing authority, is personally liable to the other contracting party who acted in good faith and in reliance on the false representations. The liability terminates only if the purported principal is estopped to deny the authority or subsequently ratifies the transaction. Lois Grunow Memorial Clinic v. Davis, 49 Ariz. 277, 66 P.2d 238 (1937); Moore v. Maddock, 251 N.Y. 420, 167 N.E. 572, 64 A.L.R. 1189 (1929); Restatement (Second) Agency §§ 329, 330 (1958).

The issue of Tadlock’s liability for misrepresentation of his authority is somewhat at variance with'the issues as framed by appellant’s complaint. Nevertheless, once the issue emerged from appellant’s offered proof, submitted by express or implied consent of the parties, the district court was obligated to treat the issue of misrepresentation in all respects as if it had been raised in the pleadings. I.R.C.P. 15 (b); McMinn v. Holley, 86 Idaho 186, 384 P.2d 229 (1963); Morford v. Brown, 85 Idaho 480, 381 P.2d 45 (1963).

The motion for involuntary dismissal of the appellant’s action should not have been granted as to respondent lad-lock, since, on the law and the facts established, it appears that appellant had shown a right to relief against respondent Tadlock. I.R.C.P. 41(b). See 2B Barron & Holtzoff, § 919 (Rev. ed. 1961); 5 Moore, Federal Practice § 41.13 (2d ed. 1966).

The district court’s judgment of dismissal of appellant’s action against respondent lest is affirmed.

The judgment of dismissal of appellant’s action against respondent Tadlock is reversed and the cause is remanded for further proceedings consonant with the views herein expressed.

Appellant is allowed his costs apportioned against respondent Tadlock.

Respondent lest is allowed costs against appellant.

TAYLOR, C. J., and McFADDEN, J., concur.