William Iselin & Co. v. Saunders

Ervin, J. The transactions giving rise to this litigation are susceptible of several constructions which would have afforded the defendants either complete or partial exoneration from liability to the Falcon Sportswear Company if it had sued the defendants directly upon the claim now in suit. The Falcon Sportswear Company could not have recovered of the defendants for goods sold and delivered without establishing a contract, either express or implied, between it and the defendants, obligating the defendants to accept and pay for the goods. *645 All direct negotiations on tbe part of tbe defendants were bad with tbe Consolidated Clotbiers, wbicb may have been acting in any one of three distinct capacities. It may bave been a selling agent for tbe Falcon Sportswear Company, or an independent dealer, or a purchasing agent for tbe defendants. Upon one view, tbe circumstances in tbe record harmonize with tbe conclusion that tbe Consolidated Clotbiers acted either as an independent dealer, or as a selling agent for tbe Falcon Sportswear Company; that it offered to sell goods to tbe defendants either upon its own account, or in behalf of tbe Falcon Sportswear Company as its principal; that tbe defendants rejected tbe offer; and that in consequence no contract ever came into existence obligating tbe defendants to purchase goods from either tbe Consolidated Clotbiers as an independent dealer, or from tbe Falcon Sportswear Company as its principal. Dodds v. Trust Co., 205 N.C. 153, 170 S.E. 652. Upon another aspect, tbe transactions between tbe parties are consistent with tbe deduction that tbe Consolidated Clotbiers was an independent dealer; that tbe defendants gave tbe Consolidated Clotbiers an order for goods; that tbe Consolidated Clotbiers turned tbe order over to tbe Falcon Sportswear Company, wbicb undertook to fill tbe order on its own account, and wbicb shipped tbe goods to tbe defendants; and that tbe defendants refused to accept tbe goods from tbe Falcon Sportswear Company, and declined to bave any dealings with it. If such was tbe case, tbe defendants did not become liable to tbe Falcon Sportswear Company; for they bad no agreement with it. Tbe law declares that “everyone has a right to select and determine with whom be will contract, and cannot bave another person thrust upon him without bis consent.” Arkansas Valley Smelting Co. v. Belden Mining Co., 127 U.S. 379, 32 L. Ed. 246, 8 S. Ct. 1308. See, also, in this connection: Hardy v. Williams, 31 N.C. 177; Cincinnati Siemens-Lungren Gas Co. v. Western Siemens-Lungren Co., 152 U.S. 200, 38 L. Ed. 411, 14 S. Ct. 523; School Sisters of Notre Dame v. Kusnitt, 125 Md. 323, 93 A. 928, L.R.A. 1916D, 792; 46 Am. Jur., Sales, section 42. Upon a third appearance, tbe circumstances in tbe record support tbe proposition that tbe Falcon Sportswear Company, acting through its agent, Consolidated Clotbiers, contracted to sell certain goods to defendants by sample; that in legal consequence tbe Falcon Sportswear Company impliedly warranted that tbe bulk of tbe goods would correspond with tbe sample in kind and quality; that tbe Falcon Sportswear Company breached this implied warranty by shipping to tbe defendants inferior goods, wbicb did not correspond with tbe sample in kind .and quality; and that tbe defendants forthwith rejected tbe goods because *646 of the breach of warranty and returned them to the Falcon Sportswear Company. If this was the situation, the defendants were not obligated to pay the Falcon Sportswear Company for the rejected goods. Daniels v. Distributing Co., 178 N.C. 15, 100 S.E. 112; Willliston on Sales (Rev. Ed.), Vol. 1, section 255. Upon a fourth view, the testimony in the record justifies the inferences that the defendants had had no dealings with the Falcon Sportswear Company, and had never held the Consolidated Clothiers out as authorized to act for them; that on or about 18 October, 1946, the defendants employed the Consolidated Clothiers as a special agent with the limited power to buy not exceeding 50 pairs of pants for them; that the Consolidated Clothiers exceeded its limited authority, and undertook to enter into a contract with the Falcon Sportswear Company in the name of the defendants, purporting to bind the defendants to purchase 100 pairs of pants from the Falcon Sportswear Company at a price of $9.50 per pair; that the Falcon Sportswear Company endeavored to perform this alleged contract on its part by shipping 100 pairs of pants in two equal consignments from St. Louis to the defendants at Kings Mountain; and the defendants forthwith refused to accept the consignments, and caused them to be returned to St. Louis, where the Falcon Sportswear Company declined to receive them. If this was the state of things, the defendants were liable to the Falcon Sportswear Company for the price of only 50 pairs of the pants. This is true because a special agent can only contract for his principal within the limits of his authority, and a third person dealing with such an agent must acquaint himself with the strict extent of the agent’s authority and deal with the agent accordingly. Graham v. Insurance Co., 176 N.C. 313, 97 S.E. 6; Swindell v. Latham, 145 N.C. 144, 58 S.E. 1010; 122 Am. St. Rep. 430; Mechem on Agency (2d Ed.), Vol. 1, section 742; 2 Am. Jur., Agency, section 96; 2 C.J.S., Agency, sections 93, 114. Notwithstanding the testimony tending to negative or minimize liability of the defendants to the plaintiff’s alleged assignor, i.e., the Falcon Sportswear Company, the court instructed the jury in a portion of the charge, which is the subject of the ninth assignment of error, to award the plaintiff the full amount sued for, i.e., $950.00, in response to the only issue submitted to it in case it “should find from the evidence, and its greater weight, that the account in question was sold and assigned to the plaintiff for a valuable consideration and without any notice of fault before maturity, and that the same has not been paid by the defendants.” In so charging the jury, the court committed substantial error, entitling the defendants to a new trial. The instruction contravenes the well settled principle that the assignee of a nonnegotiable chose in action, *647 though he buys it for value, in good faith, and before maturity, takes it subject to all defenses which the debtor may have had against the assignor based on facts existing at the time of the assignment or on facts arising thereafter but prior to the debtor’s knowledge of the assignment. G.S. 1-57; In re Wallace, 212 N.C. 490, 193 S.E. 819; Ricaud v. Alderman, 132 N.C. 62, 43 S.E. 543; Loan Association v. Merritt, 112 N.C. 244, 17 S.E. 296; Spence v. Tapscott, 93 N.C. 248; Havens v. Potts, 86 N.C. 31; Bank v. Bynum, 84 N.C. 24; Martin v. Richardson, 68 N.C. 255; Harris v. Burwell, 65 N.C. 584; Mosteller v. Bost, 42 N.C. 39; Lackay v. Curtis, 41 N.C. 199; King v. Lindsay, 38 N.C. 77; Moody v. Sitton, 37 N.C. 382; McKinnie v. Rutherford, 21 N.C. 14; Jordan v. Black, 6 N.C. 30. This rule is the inescapable corollary of the bedrock proposition that the assignor of a nonnegotiable chose in action cannot confer upon the assignee a greater right than he possesses. The verdict and judgment are vacated, and the defendants are granted a New trial.