Brooke v. New York, Lake Erie, & Western R. R.

Mr. Justice Steekett

delivered the opinion of the court, October 5th, 1885.

The facts upon which the judgment of the court below is based, are all embodied in the case stated, and therefore it is' unnecessary to repeat them: Iir substance, however, the controlling facts are these. Defendant is a common. carrier corporation, and, at one of its stations in the state of New York, had in its employ P. J. Weiss as shipping clerk, duly authorized to issue bills of lading for goods delivered to the company for shipment over its line. Plaintiffs, as commission merchants in Philadelphia, received over, defendant’s road, from F. Q. Williams, of Batavia, New York, several consignments of- barley, on which, from time to time, they made advances, by accepting and paying drafts drawn on them by the consignor and attached to the bills of lading signed by Weiss for and on behalf of defendant. All the bills of lading except one represented actual consignments of barley; but that one was fictitious, having been fraudulently issued by Weiss and delivered to Williams for a carload of barley never delivered to defendant nor shipped to plaintiffs. These facts were of course well known to both Weiss and Williams, who conspired to commit the fraud of which plaintiffs were wholly ignorant. Williams made a draft on plaintiffs and attached it to the. fraudulent bill of lading. The draft was duly presented, and, on the faith of the bill of lading, was paid by plaintiffs; but of course the pretended carload of barley never arrived. Plaintiffs, who thus became the innocent victims of the fraud to the extent of several hundred dollars, claim that defendant, through whose shipping agent they were defrauded, should make good the loss.

The claim appears to be both reasonable and just; and, notwithstanding the authorities cited in support of the opposite view, we are satisfied it is so. Under the circumstances cited in the case stated defendant is estopped from denying what its accredited shipping agent asserted in the bill of lading by. which plaintiffs, without any fault on their part, were misled to their injury.

A question has been raised as do whether, upon the facts presented, the law of this state or that of New York should govern in determining defendant’s liability. We are not prepared to admit there is any material difference between the laws of the two states, applicable to the case; but if there is we think it very clear that the law of New York must control, for the reason that the transaction took place in that state. It is well settled that whatever concerns the rights of parties, especially in matters of contract, is governed by the lex loci contractus, while the remedy, including whatever relates to the limitation of actions, etc., must be determined by the lex fori: 4 Minor’s Inst., pp. 509, 740; Bulger v. Roche, 28 Mass., 36. It is said in the last case, “ the authorities both from the civil and the common law concur in fixing the rule that the nature, validity and construction of contracts are to be determined by the law of the place where the contract is made; and all remedies for enforcing such contracts are regulated by the law of the place where such remedies are pursued.” Applying that as the correct principle, the present case is virtually ruled by Armour et al. v. The Michigan Central Railroad Co., 65 N. Y., 111. The facts of that case, as stated in the opinión of the court, are not distinguishable in principle from those of the case before us.. Defendant company’s shipping clerk knowing it had not received from or on account of Michaels- any lard whatever, issued and delivered to him certain bills of lading which were attached by Michaels to his drafts on plaintiffs, who “ upon the faith that defendant had received and would transport to the places specified in the respective bills, the lard therein described to be in its possession, paid the sums specified in the respective drafts at the time and in the order in which they were presented; and thus the question comes up whether the defendant is not estopped from setting up as a defence to this action that its statements, known by its agent at the time of making them to be untrue, were in fact false, and that no lard whatever was recieved by the railroad company for or on account of' Michaels. The true answer to this question is not involved in doubt. The well recognized principle that a party who, by his admissions, has induced a third party to act in a particular manner is not permitted to deny the truth of his admission, if the consequence would be to work an injury to. such third party, applies to and governs this case.” Again, in another portion of the opinion, it is said, “ Street, having power to issue bills direct to consignees for goods actually in the possession of defendant, and the present bills being in no way distinguishable in form from those which were usually employed, he must, as to the plaintiffs acting in good faith, be considered 'as having the necessary authority......The representations in the bills were made to any one who, in the course of business, might think fit to -make advances on the faith of them. There is thus present every element necessary to constitute a case of estoppel in pais, a representation made withfthe knowledge that it might be acted on, and. subsequent action upon the faith of it to such an extent that it would injure the plaintiffs if the representation was not made good.” The language thus employed in that case may very appropriately be applied to the present one.

The same principle is recognized in Coventry, Sheppard & Co. v. The Great Eastern Railway Company, 11 Law Rep., Q. B. Div., 776, the facts of which were briefly these: The railroad company received a consignment of wheat and issued therefor a delivery order which came into the hands of B., who obtained advances thereon from plaintiffs. Shortly afterwards the company issued a second delivery order in respect of the same consignment of wheat. The two orders were different, and such as might be reasonably supposed to relate to distinct consignments. On the second order B.. obtained further advances from plaintiffs, who were under the belief that the delivery orders related to distinct consignments. B. having after-wards become insolvent, it was held that the company was estopped by the negligence of its agent from showing- that the two delivery orders related only to one consignment, and that it was liable to compensate plaintiffs for the loss sustained by them through their advances to B.

It is contended that inasmuch as no authority, real or apparent, to issue bills of lading without receiving the goods mention ed therein, had actually been given by the railroad company to Weiss, it was not in any manner responsible for his unauthorized act, even as to innocent third parties, who were misled and injured thereby. We cannot assent to this proposition. As between principal and third parties, the true limit of the agent’s authority to bind the former is the apparent authority with which the agent is invested; but, as between the principal and the agent, the true limit is the express authority or instruction given to the agent: Evan’s Agency, 594, 606; Adams Express Co. v. Schlessinger, 25 P. F. Smith, 246. The principal is bound by all the acts of his agent within the scope of the authority which he held him out to the world to possess, notwithstanding the agent acted contrary to instructions; and this is especially the case with officers and agents of corporations. Since a corporation acts only through agents it is bound by its agent’s contracts when made ostensibly within the range of their office. One who authorizes another to act for him in a certain class of contracts undertakes for the absence of fraud in the agent acting within the scope of his authority: Whart. Cont., Sec. 96, 130, 269. The authority of an agent to act for and bind his principal will be implied from the accustomed performance by the agent of acts of the same general character for the principal with his knowledge and consent: Evans’ Agency, 193, note. These elementary principles are founded on the doctrine that where one of two persons must suffer by the act of a third person, he who has held that person out as worthy of trust and confidence, and as having authority in that matter, should be bound by it: Evans’ Agency, 591. It is conceded in this case that the company did not authorize the issuance of bills of lading without receipt of the goods, but it put Weiss in its place to do that class of acts, and it should be answerable for the manner in which he conducted himself within the range of his agency. Public policy, as well as the ultimate good of corporations themselves, requires that this should be the rule.

Judgment reversed and judgment, on the case stated, in favor of plaintiffs for $300.39, with interest from May 31st, 1881, and costs.