McDevitt v. Chas. Corriea & Bros.

Plaintiff brought this action to recover from the defendants the aggregate sum of $1,101.33, alleged to be balances due her and four other parties who assigned their claims to her prior to the commencement of this action, from the sale of turkeys to the defendants. The complaint, which was filed on the thirteenth day of January, 1923, is unverified, and, in five different causes of action, each in the form of a common count, sets up plaintiff's own and the claims of her several assignors for goods, wares, and merchandise sold to the defendants. The answers of defendants Chas. Corriea Bros. and Charles Corey (erroneously sued as Charles Correy), each denied the allegations of each of the causes of action set up in the complaint. The defendants A.C. and Rose Biggerstaff failed to answer the complaint and judgment against them was taken by default. The case as to the answering defendants was tried by the court, sitting without a jury, and the findings and the judgment were against them and the Biggerstaffs in favor of the plaintiff in the total sum of $1,068.71. The defendant, Chas. Corriea Bros., made a motion for a new trial, which was denied, and the appeal is by said defendant from the judgment. According to his answer and testimony, the defendant Chas. Corriea, at the time that the transactions herein involved took place, was a commission merchant, buying and selling farm produce in the city of San Francisco under the firm name of "Chas. Corriea Bros.," said Chas. Corriea being the sole owner of said business and hence the sole member of said firm. (We shall hereinafter refer to said defendant as Corriea.) It appears that, either in the month of July or August, 1922, the defendant A.C. Biggerstaff, a resident and farmer and turkey-raiser in Yuba County, entered into some sort of understanding or arrangement with Corriea, whereby the former was to purchase and ship turkeys to the latter at San Francisco for the Thanksgiving and succeeding holiday trade in said city. Said Biggerstaff subsequently employed the defendant Charles Corey to assist him in the purchase of turkeys for the purpose stated. Corey was also a resident of and a farmer in Yuba County. A few weeks prior to Thanksgiving Day in 1922 said Biggerstaff and Corey purchased the turkeys of a number of the turkey-raisers in Yuba County and shipped them to Corriea in San Francisco. *Page 248 Among those from whom turkeys were thus purchased were the plaintiff and her assignors. Corey, in a majority of the instances of the purchases so made, personally conducted the negotiations and completed the bargains leading to such purchases. The Biggerstaffs turned over their check-book to Corey, the understanding being that Corey, on purchasing turkeys, should give the vendor a check signed by the Biggerstaffs on the First National Bank of Marysville, at Marysville, an arrangement having been made with the cashier of said bank by said A.C. Biggerstaff that said checks were to be held by the bank until the money called for thereby was deposited in the bank by Corriea upon drafts drawn upon him by said Biggerstaff. The plaintiff and her assignors were each given such a check for the amount for which the turkeys bought from them totaled. We do not understand from the record that the plaintiff or her assignors, at the time of the sale of their turkeys, knew of the arrangement spoken of between A.C. Biggerstaff and the bank with regard to the payment of the checks. But, at all events, the plaintiff and her assignors presented their checks to the bank for payment, but they were dishonored because of there being no funds in the bank from which they could be paid. Some time thereafter — a week or ten days or perhaps a longer period — the plaintiff and her assignors received or were paid one-half of the amount for which the checks so issued to them respectively called. It appears that the day immediately preceding Thanksgiving Day of 1922 there was a "slump" in the turkey market in San Francisco, with the result that the prices at which turkeys could be sold in said market were below those which Biggerstaff and Corey agreed to pay the plaintiff and her assignors for their turkeys. This situation provoked a controversy between A.C. Biggerstaff and Corriea, which culminated in the commencement of the present action. The defendants A.C. Biggerstaff and Corey claimed at the trial that in purchasing the turkeys they acted under authority conferred upon them by Corriea as the agents of the latter. Corriea likewise claimed that said Biggerstaff acted independently of him and bought the turkeys upon his own responsibility, with an understanding between him and said Biggerstaff that the latter would ship such turkeys as he might purchase to him at San Francisco on consignment, and there to be by Corriea sold for said Biggerstaff. *Page 249 The foregoing embraces a general statement of the facts and the issue upon which the case was tried below. The defendant and appellant makes these points: 1. That the findings do not derive support from the evidence; 2. That, assuming that the theory of the decision is that A.C. Biggerstaff, as the agent of Corriea, purchased the turkeys and that upon that theory the findings derive sufficient support from the evidence, the judgment, nevertheless, cannot stand, for the reason that it fixed a joint and several liability against all the defendants, whereas, in such case, or where an action is based upon a transaction initiated and consummated for a party through an agent, and both the principal and agent are made parties defendant thereto, the plaintiff, while having the right to make both parties defendants to the action, must, either during the progress of the trial or before the close thereof, in case the relation of principal and agent between the defendants as to such transaction is disclosed, make an election as to which of the two, the principal or the agent, he desires and intends to fix liability upon for the claim sued on. The findings are substantially in the language of the allegations of the several counts of the complaint. The conclusion of law from the findings is as follows: "As a conclusion of law from the foregoing facts the court finds that the plaintiff is entitled to joint and several judgment against defendants A.C. Biggerstaff, Chas. Correy and Chas. Corriea Bros., in the sum of $1,068.71 and said plaintiff is also entitled to judgment joint and severally against defendants A.C. Biggerstaff and Chas. Corriea Bros. in the further sum of Thirty Two Dollars and Sixty Two cents ($32.62), and for the costs of suit." The judgment follows the conclusions of law. The evidence justified a decision only upon either one or the other of two opposing theories, to wit: 1. That the relation between Corriea and Biggerstaff and Corey was that of principal on the part of Corriea and agents on the part of the other two; or, 2. That the agreement between Corriea and A.C. Biggerstaff was that the latter was to purchase the turkeys on his own account and ship the same to Corriea on consignment, or, in other words, were to be shipped by A.C. Biggerstaff to Corriea and by the latter marketed or sold for the former. These were the positions taken at the trial by said Biggerstaff and Corey, on the one hand, and *Page 250 by Corriea on the other, and they constituted the single issue submitted for decision. Under the allegations of the complaint, it was competent to prove whatever might have been the contractual relation existing between the defendants as to the transactions involved herein. The findings, following as they do the language of the complaint, are not specific, and, taken alone or without reference to the judgment, it would be impossible to determine from them what the decision of the court is as to the legal relation existing between the defendants in the business of purchasing the turkeys. In that condition of the findings, however, the presumption must be indulged that they support the judgment and the theory upon which it proceeds. The theory of the judgment upon its face is that the defendants, in the carrying out of the transactions upon which the action is founded, were both jointly and severally liable. Whether that theory was founded in the belief that a principal and his agent, as to any contract the latter has made within the scope of his authority as such for the former, are jointly or both jointly and severally liable thereon, cannot be ascertained from the findings. [1] As will later be pointed out, a principal and his agent are not jointly liable upon any contract made by the agent for the principal. Therefore, to support the theory that the liability of the defendants here was joint or joint and several, there must have been substantial evidence introduced showing that the defendants were either joint adventurers or copartners for a limited or a special purpose. But, save and except a detached statement here and there of A.C. Biggerstaff and Corriea in giving their testimony — a statement which might be interpreted to bear different meanings but from which a supposition might be strained that the agreement between A.C. Biggerstaff and Corriea was that they were jointly to buy the turkeys and share in the profits of the enterprise — there is absolutely no evidence to support the findings, interpreted here as they must be. In other words, there is no substantial, if any, evidence affording support to the theory upon which the findings and the judgment seem to proceed, to wit: That the defendants were or are jointly liable to the plaintiff and her assignors for the turkeys purchased by Biggerstaff and Corey from them and shipped to Corriea. The sole theory upon which the plaintiff's case was tried below was that, in purchasing the turkeys, A.C. Biggerstaff *Page 251 and Corey acted for and represented Corriea as his agents. There was not at the trial, nor is there here, any pretense by the plaintiff that Biggerstaff and Corey purchased the turkeys in any other capacity than as agents of and for Corriea. The evidence presented by the plaintiff was addressed solely to the proof of the proposition, contended for by her attorney at the trial and here, that Corriea had employed A.C. Biggerstaff as his agent to buy turkeys for him and that Biggerstaff employed Corey as a subagent to assist him in the business and that Corriea ratified said Biggerstaff's act in so employing Corey for that purpose. The testimony relied upon by the plaintiff to establish as between Corriea on the one side and said Biggerstaff and Corey on the other the relation of principal and agent in conducting the transactions involved herein is that of said Biggerstaff. As briefly as it may be stated, that portion of his testimony directly bearing upon the question of his relationship, contractually, with Corriea in the purchase of the turkeys, is, in substance, as follows: That during either the month of July or the month of August, 1922, A.C. Biggerstaff received from Corriea several letters in which the latter stated that he intended going to Yuba County and "fix me [the witness] up for buying turkeysfor him for these holidays. Later on," proceeded Biggerstaff, "he came up and out to my ranch. I met him in town and he went out to my ranch with me and looked over the turkeys. . . . We talked the matter over. He told me he would give me an opportunity to buy turkeys — a chance to make four or five or six hundred dollars, and he says, `You are not limited if it is $10,000.' . . . We then came back to town [meaning the city of Marysville] to see Mr. Smith [cashier of the First National Bank of Marysville]. We went down to his [Smith's] house Saturday afternoon, parked the car in front of his house, but he was out. . . . He told me he would give me a percentage for doing hisbuying that way. . . . There was nothing said about profits at that time. He says, `I will treat you right in all deals.' . . . Afterward I called him up on the phone and asked him about buying turkeys, what I could pay for them, a number of times. Chas. Corriea [appellant] fixed the price which I should pay for turkeys." The witness proceeded to explain that the arrangement was that, upon the purchase of turkeys, the check of his wife on the First National Bank of Marysville would be given the vendors for *Page 252 the amount when the turkeys were received by Corriea in San Francisco, he (said Biggerstaff) to draw on Corriea through said bank for the amount of the check issued by him or his wife or Corey, and that the money received on the draft was to be deposited in the bank, to be used in honoring such checks as he or Corey had given to the vendors. Said Biggerstaff further testified that he employed the defendant Corey as a "subagent" to assist him in buying turkeys for Corriea, agreeing to divide with Corey any money he (witness) received as compensation for his services as agent. "A day or two before Thanksgiving," continued Biggerstaff, "I told Corriea over the telephone that we [witness and Corey] were buying turkeys." Corriea inquired, "Who is Corey buying for?" Witness answered, "Helping me buy for Chas. Corriea." Corriea replied, "That is all right, fine and dandy." The witness then asked Corriea, "What is the price?" to which Corriea replied, "Forty-eight cents looking toward fifty-three and fifty-five cents but don't pay over forty-five cents." On cross-examination, said Biggerstaff was asked if he had "rendered a bill" to Corriea for his services in buying the turkeys and he responded that, on account of the slump in the turkey market, he sent no bill to Corriea for his services in buying the turkeys; that, after the "slump," he said to Corriea that "We will waive all rights to what we have got coming if you will settle up everything on account," but that Corriea made no reply to that proposition. Further referring to the fact that Corriea had paid him nothing for his services, Biggerstaff said: "I was waiting for the court to settle it. The court would undoubtedly give me what was coming to me for my labor." The witness further stated, on cross-examination, that Corrieaauthorized him in the summer of 1922 — either in July or August — to buy turkeys for him (Corriea.) The witness produced a letter from Corriea to him, dated August 16, 1922, in reply to a letter previously addressed to Corriea by witness. The letter from Corriea to witness stated, among other things, that he (Corriea) had been too busy "to get away," but that he would endeavor "to get in your territory some time next week and we will make arrangements to buy the other turkeys you have in view and we will talk the whole proposition at that time." There was some other testimony tending to show that A.C. Biggerstaff was employed by Corriea to act as the *Page 253 latter's agent in the transactions. It is not necessary to give a statement of the testimony referred to herein. The plaintiff and her assignors testified that they did not know for whom Biggerstaff and Corey were buying turkeys at the time that they sold their turkeys to them. The plaintiff, though, it should be stated, did say that she "understood" that A.C. Biggerstaff and Corey were buying turkeys for Corriea, but that part of her testimony was stricken out. It is not necessary to refer herein to the testimony presented by the appellant. It will suffice to say that the testimony so presented tended to show that the agreement between A.C. Biggerstaff and Corriea was that the former was to ship turkeys to the latter on consignment, and that Corriea was to sell the same for Biggerstaff for the usual commission for such services. It will be noted, from the testimony of A.C. Biggerstaff, as hereinabove given, that the sole claim of the plaintiff at the trial, as it is her sole contention on this appeal, was that in purchasing and shipping the turkeys to Corriea said Biggerstaff acted as the agent of the latter. [2] This being so, and there being no evidence which supports the theory upon which the decision and the judgment appear to proceed, to wit: That the relation between the defendants in the transactions involved herein was either that of a partnership or a joint adventure, the findings and the judgment have nothing to support them and cannot, consequently, be upheld. There are, however, certain considerations which, in view of a retrial of the issue as to the character of the relation between defendants, pertinently call for notice herein. If a retrial develops the same situation, evidentially, as is presented by this record, then the findings and judgment must be in accord with the one or the other of two different and antagonistic theories, to wit: 1. That A.C. Biggerstaff and Corey represented Corriea as agents in the buying of the turkeys; or 2. That the agreement was that Biggerstaff and Corey, having purchased the turkeys for themselves or on their own account, delivered them to Corriea on consignment, to be by him sold for the former. If the evidence, in the opinion of the trial court, sufficiently shows, to justify a finding to that effect, that in the carrying on of the transactions concerned here, the relation of principal, on the part of Corriea, and agents, on the part of A.C. Biggerstaff and *Page 254 Corey, existed, then the appellant is entitled to have judgment entered in his favor, since the plaintiff now has an unimpeached, and, indeed, an unimpeachable judgment against the agents. [3] This proposition follows from the well-settled rule that in an action on a contract against a principal and his agent, through whom the contract was made on behalf of the former, the plaintiff is not entitled to judgment against both, but must, before the close of the trial, and after the relation of principal and agent between the defendants in the making of the contract has been ascertained or discovered, elect as to which of the two defendants, the principal or the agent, he desires and intends to hold liable by a judgment. The rule and the reasons supporting it are exhaustively considered in 2 Mechem on Agency, section 1750 et seq., but no more clearly than by Mr. Presiding Justice Finlayson in Ewing v. Hayward, 50 Cal.App. 708, 717 [195 P. 970], in a concurring opinion in which Mr. Justice Weller concurred, thus making it the decision of the court. We here quote from said opinion in extenso because it contains a singularly lucid exposition of the rule and the reasons upon which it is grounded: "The agent is liable because credit was originally extended to him in the belief that he was acting for himself. The undisclosed principal is liable on the theory that, having received the benefit of the contract made by his agent, he should assume its burdens. There is but one contract upon which the plaintiff in such an action can bring suit. The person with whom such plaintiff has directly contracted, the agent of the undisclosed principal, may be held liable on the contract as the real obligor, for he contracted in that capacity. Or, if the plaintiff in such an action so choose, he may treat the contract as the obligation of the undisclosed principal for whose benefit it was made, notwithstanding that, on the face of the contract, his agent appears to be the true obligor. There is, as we have said, but one contract in such cases. And though the plaintiff may elect to hold either one of two persons liable on that contract, either the agent or his undisclosed principal, he cannot make two contracts out of the one contract by seeking to hold each of those two persons liable severally as an independent obligor. Nor can he hold them both liable as joint obligors on one contract. He contracted with but one obligor, not two; and though he may elect to hold either one of the two liable as the obligor under *Page 255 the contract, he may not hold them both jointly liable, for to do so would be to give him two obligors where he contracted with, and for the liability of, but one. The result is that the liability of the agent and his undisclosed principal is an alternative rather than a joint or joint and several liability, and either may be so held, but not both. So we find that, according to the weight of authority, it becomes the duty of the creditor, after disclosure of the agency and the identity of the principal, to elect which of the two he will look to to carry out the agreement of the agent. (Note to Murphy v. Hutchinson, 21 L.R.A. (N.S.) 786.) It seems that if, as in the instant case, the alleged undisclosed principal denied the existence of the relation of principal and agent, the party seeking to recover on the contract may commence the action against both the alleged undisclosed principal and his agent, in order to ascertain the facts. But though the plaintiff may bring the action against both, the rule, as I understand it, is that the plaintiff in such an action cannot have judgment against both the undisclosed principal and his agent, but, before the close of the case, must elect whether he will take a judgment against one or the other. (See Sessions v. Block, 40 Mo. App. 569; Pittsburg PlateGlass Co. v. Roquemore (Tex. Civ. App.), 88 S.W. 449; Weil v. Raymond, 142 Mass. 206 [7 N.E. 860]; Tuthill v. Wilson,90 N.Y. 423; Mattlage v. Poole, 15 Hun (N.Y.), 556.)" Counsel for the plaintiff cites certain California cases which he claims hold that both principal and agent are liable to third parties dealing with the agent within the scope of his authority as such, and that an action may be maintained and prosecuted to judgment against both. In one of the cases cited by counsel certain language, taken by itself, might be construed as supporting that view. (See Montgomery v. Dorn, 25 Cal.App. 666, 670 [145 P. 148].) There is no dispute as to the proposition that, as the case just named states, both the principal and agent are liable under a contract executed by the agent for the former when acting within the scope of his authority as such agent; nor can it be disputed that a party may proceed against the principal and agent upon any contract so made. These propositions are clearly stated in Ewing v.Hayward, supra. But, as pointed out in that case, when, in the course of the trial, it appears that one of the defendants was the agent of the other in the *Page 256 making of the contract sued on the plaintiff must, before the close of the case, elect whether he will take judgment against the principal or against the agent. But as to the case ofMontgomery v. Dorn, supra, it will be noted that, although the plaintiff did not exercise such election as between the principal and his agent, the defendants therein, the findings and the judgment acquitted the agent of liability on the contract sued on, but held the principal solely liable. The agent, having been exonerated, suffered no prejudice and, therefore, had no occasion to appeal and did not appeal. The principal was by the judgment merely required to perform the terms of his own contract. It was not, under the circumstances, for him to complain that an election had not been made as between him and his agent. The discussion of the question in that case was, therefore, academic. In the present case, while it is true, as we have said, that the contractual relation between the defendants, whatever may have been the nature thereof, may be shown under the complaint, still, as stated, that pleading appears to proceed upon the theory of the joint or joint and several liability of the defendants, and it may be assumed therefrom and also from the testimony of A.C. Biggerstaff, that the plaintiff did not definitely know the true relation between the defendants in the buying of the turkeys until said Biggerstaff gave his testimony at the trial — at any rate, not until after the complaint had been filed. But whether this was true or not true, or, even if the plaintiff assumed from the beginning that the relation between defendants was that of principal and agents, and proceeded in the presentation of her case according to that theory, it was still her duty, before the close of the case, to have made an election as to which of the defendants, Corriea, as principal, or A.C. Biggerstaff and Corey, as agents, she intended to fix liability upon. But, assuming that, on another trial, the evidence is as it appears in this record, and that the court should find that A.C. Biggerstaff and Corey bought the turkeys for Corriea as the latter's agent, the situation is that there is in existence now an unimpeachable judgment against the agents. The action being on contract, and the judgment reciting that the Biggerstaffs defaulted, and that their default was duly and regularly entered, the presumption is that said default, with its essential consequences, was entered upon the application of the plaintiff (Code Civ. Proc., sec. 585, subd. 1). The *Page 257 action, as we have seen, was prosecuted to judgment against Corey. Thus the question arises: Were the act of applying for and securing a default judgment against Biggerstaff and the fact of prosecuting the action to judgment against Corey the equivalent of an election as a matter of law? Mr. Mechem, in his work on Agency, volume 2, second edition, section 1759, says: "Prosecuting the action to judgment against the agent, after discovery of the principal, has been held in several cases to constitute an election as a matter of law. As a mere matter of ordinary election, this is undoubtedly sound; as a matter of a possible merger it may also be sound; but if election be treated in the manner which has been suggested it cannot well be said that changing the form of the agent's obligation, or putting it into a condition in which it can be more readily enforced, is inconsistent with an intention to proceed against the principal also. Nothing short of satisfaction of the judgment against the agent would then release the principal as a matter of law, and some cases have so held." Authorities supporting both views of the proposition as indicated in the text are cited in the footnotes. [4] It seems to our minds, however, that the stronger position is that taken by the cases holding that when a plaintiff prosecutes his action to judgment as against a party after he learns that such party was acting as an agent only of another in the transaction upon which the action is based, the course thus pursued by him constitutes an election as a matter of law, and that he must stand upon such election regardless of whether the judgment is or may be satisfied by the judgment debtor. [5] It may incidentally be suggested that perhaps the above rule would not apply where a judgment had been taken by default before the plaintiff knew that the relation between the defendants was that of principal and agent. In such case, the default judgment might be set aside upon motion and a showing that the relation of principal and agent was not known to the plaintiff until after the default was taken. In returning the case to the court below, however, it is well to suggest that if the question referred to be retried a specific finding should be made as to the relationship of the defendants in the transactions. Obviously, if it be found *Page 258 that A.C. Biggerstaff and Corey were the agents of Corriea in the purchase of the turkeys, then the latter, as we have stated, is entitled to a judgment, since plaintiff already has a judgment against the former. If the finding is that of a joint adventure or copartnership between the defendants in such purchase, then, of course, Corriea would be jointly liable and may be so adjudged. It may with no impropriety be suggested that if it be found that the relation between the defendants was that of principal and agent, then, upon the satisfaction of the judgment by the agents, there would thereupon accrue to the latter a right of action for indemnity or recoupment against Corriea. But be that as it may, for the reasons hereinabove given, the judgment must be reversed, in so far as the appellant is concerned, and, accordingly, it is so ordered, with directions to the trial court to be governed in another trial of the case by the views herein expressed. Plummer, J., and Finch, P.J., concurred. A petition for a rehearing of this cause was denied by the district court of appeal on January 14, 1925, and the following opinion then rendered thereon: