Bowers v. Bryan Lumber Co.

The facts are sufficiently stated in the opinion of the Court. This was a civil action prosecuted by the plaintiff against the defendant for a debt of $1,650. A warrant of attachment was levied upon 125,000 feet of lumber which belonged to the defendant, and while the property so levied upon was in the custody of the sheriff, the defendant filed with the clerk of the Superior Court a bond in the sum of $3,700, executed by the defendant as principal, and the Title Guaranty and Surety Company, by D. H. Willard and D. A. Vines, who professed to be its agents. This bond was approved by the clerk of the Superior Court and filed as a part of the record, and thereupon the attachment was dissolved and the lumber was released and shipped out of the State by the defendant. At July Term, 1909, of the Superior Court, when the case was called, it appeared that the plaintiff had filed a verified complaint, and the defendant had filed no answer. The court rendered judgment by default in favor of the plaintiff and against the defendant, for the amount of the debt and the costs of the action, and also against the Title Guaranty and Surety Company for the amount of its bond, to be discharged upon the payment of the judgment, that is, the debt and costs.

At November Term, 1909, the Title Guaranty and Surety Company moved to strike out or set aside the said judgment, so far as the same affected the said company, and assigned as the ground for its motion that D. H. Willard and D. A. Vines were the agents of the said company in Tennessee and did not reside in this State, but at Johnson City in the said State of Tennessee, and that Willard and Vines acted without authority in executing the said bond. Affidavits were filed by the parties and an order was granted staying the execution until the motion of the Guaranty and Surety Company could be heard. At the hearing of this motion, Judge Councill rendered a judgment denying the same and dissolving the restraining order; but in his judgment there are no findings of fact, nor does it appear anywhere (606) in the record that the appellant requested the judge to find and state the facts. In what is termed a case on appeal, there appears to have been some colloquy between the court and counsel as to the ground of the motion and as to the reasons why the Guaranty and Surety Company was entitled to have the judgment against it vacated; but there are no findings of fact which relate to the authority of Willard and Vines to act in behalf of the said company in the execution of the bond by it as surety. This Court ordered the original bond to be sent up, in order that it might ascertain, from an inspection of it, whether the corporate seal of the company had been affixed thereto, and we find, upon an examination of the bond, that the corporate seal of the company had been affixed.

In the present state of the case we are of the opinion that the Guaranty and Surety Company is bound by the act of Willard and Vines, because the corporate seal was affixed to the bond, and in the absence of any statement of facts we must presume that his Honor found such facts as would support his judgment, and, therefore, found that Willard and Vines were invested with the necessary authority to execute the bond. We do not presume that error was committed in the court below, and the burden is on the appellant to show error.

The Guaranty and Surety Company entrusted Willard and Vines with a bond, to which its corporate seal had been affixed, and it was licensed to do business, that is, to execute an indemnity bond, in this State. When this was done, the Guaranty and Surety Company put it in the power of Willard and Vines to induce others to believe that they had the power and authority to execute a bond in its behalf as surety, even if the signatures of the said agents were necessary to make it a valid bond as against the company after it had thus affixed its corporate seal and its corporate name had been signed to the bond.

This case is not, in principle, unlike Havens v. Bank, 132 N.C. 214, in which it appeared that spurious bank certificates had been issued by the cashier of the defendant bank, they having been left with him after having been signed in blank by the president and secretary. In that case, and with reference to its facts, we held that the bank was legally responsible for the fraudulent acts of its cashier, and that the mere fact that he was not in the performance of his master's business, but was acting outside of the scope of his agency, did not alter the case nor change the result, for "this would be true as to all fraudulent acts and as to all acts done not strictly within the line of duty. The correct principle is that it will be quite sufficient to charge the employer with liability, if all the acts of the employee are done within the apparent, though not real, scope of his agency." We further (607) said that as the certificates had been signed by the president and delivered to the cashier, the bank had given to the latter the power to commit the fraud, and must answer for its negligent act, upon the principle that "Whenever one of two innocent persons must suffer by the act of a third, he who has enabled such third person to occasion the loss must sustain it." Lickbarrow v. Mason, 2 T. R., 70. It was said byLord Holt, in Hearn v. Nichols, 1 Salk., 289: "For as somebody must be a loser by this deceit, it is more reasonable that he who employs and puts a trust and confidence in the deceiver should be the loser, than a stranger." In R. R. v. Kitchin, 91 N.C. 39, we held that "where one of two persons must suffer loss by the fraud or misconduct of a third person, he who first reposed a confidence or by his negligent act made it possible for the loss to occur, must bear the loss." The principle is well stated in the case of R. R. v. Bank, 60 Md. 36, as follows: "It may be conceded, and was doubtless the case, that the agent had no authority in fact to issue such certificate; he had no real authority as between himself and his principal, or other parties cognizant of the facts, for doing the particular acts complained of, but the company by its own act and, as it turned out, misplaced confidence, placed the agent in the position to do, and procure to be done, that class of acts to which the particular act in question belongs; and in such case where the particular act in question is done in the name of and apparently in behalf of the principal, the latter must be answerable to innocent parties for the manner in which the agent has conducted himself in doing the business confided to him. Upon no other principle could the public venture to deal with an agent. In such case the apparent authority must stand as and for real authority." And again: "Where he issued such a certificate and delivered it to a third party, who acted without knowledge and in good faith, paying value for it, such party had the right to act upon the presumption that the representations of such certificates were truthful, and not false and fraudulent. Having confided to him the said trust of executing the business, the agent was held out to the public as competent, faithful and worthy of confidence; and though he deceived both his principal and the public, by forging and issuing false certificates, it is but reasonable that the principal, who placed him in the position to perpetrate the wrong, should bear the loss." We think the principle is also well supported by the reasoning of the Court in McNeill v. Bank, 46 N.Y. 325.

Willard and Vines, who professed to act as agents of the (608) corporation in executing the bond for it as surety, must be taken, under the facts and circumstances of this case, so far as they appear, to have had full authority to do and perform the act which the Guaranty and Surety Company now attempts to repudiate, for they were acting apparently within the scope of their authority, the company having placed in their possession evidence which would indicate to an innocent person dealing with them that they had the necessary power to act as they did. It is sufficient to charge the principal, if his agent is acting within the apparent scope of his authority.Bank v. Hay, 143 N.C. 326.

We cannot examine the affidavits with a view to finding the real facts in this case, as it has been well settled that the facts upon a motion to set aside a judgment must be found by the court below. We said, in Oldhamv. Sneed, 80 N.C. 15, that "In the absence of any facts found, we only see from the case sent up that the judge refused to vacate the judgment, but why he did so, or whether with or without any mistake or misapplication of the law, cannot be seen."

The Guaranty and Surety Company received the premium or consideration for this indemnity bond, and, having done so, it was put on inquiry as to whether Willard and Vines had acted within the scope of their authority, and in such a case it must be held to have ratified what they had done. It is not permissible, nor is it sound morality, for the company to accept the benefit of what they did in executing the bond for it as surety, and when a liability is incurred on the bond, to repudiate what their alleged agents had done in their behalf.

We find no error in the record.

Affirmed.

Cited: Tarault v. Seip, 158 N.C. 372; Stewart v. Realty Co.,159 N.C. 233; S. v. Bailey, 162 N.C. 585; School Trustees v. Board ofEducation, 166 N.C. 467.