Citizens Bank v. Grove

Adams, J. The appellants concede the familiar doctrine that as a general rule all simple agencies are terminated by the death of the principal. Duckworth v. Orr, 126 N. C., 674; Wainwright v. Massenburg, 129 N. C., 46; Fisher v. Trust Co., 138 N. C., 90. But they say that the doctrine of ratification or estoppel precludes the appellants from asserting this defense. "Whether they are correct must be determined by applying the law to the facts upon which the parties have agreed. It is admitted that for sometime immediately preceding the testator’s death Ellerson had had the general management and control of the business transacted by the Grove-Ellerson Stone and Sand Company and the Laurel River Live Stock Company, under each of which titles E. W. Grove had conducted the business. For the benefit of these concerns Ellerson borrowed money from the plaintiff, made deposits in the name of each company, and checked the money out in the usual course of business. The testator, E. W. Grove, died on 27 January, 1927. On 6 February Ellerson, in the name of Grove-Ellerson Stone and Sand Company, executed and delivered to the plaintiff a note of $1,000, which he renewed at maturity. The money he received on this note was applied to certain indebtedness of the testator contracted during his lifetime in the name of the company; and the debt, had it not been paid, would be a present claim against the estate, for the payment of which the defendants in their representative capacity could be held responsible. *147 Tbe money received on tbe note of $400 executed on 27 May, 1927, by tbe Laurel Eiver Live Stock Company was applied in part to an overdraft on its account witb tbe plaintiff and in part to tbe maintenance and preservation of tbe estate. True, tbe overdraft occurred in tbe month of May, but tbe amount derived from tbe overdraft bad previously been applied to tbe general cost of preserving tbe property and maintaining tbe business. So, tbe' proceeds of both notes were used for tbe exclusive benefit of tbe testator’s estate. To tbe appellants’ contention that tbe death of tbe testator terminated tbe agency and that Ellerson bad no authority to borrow tbe money or to execute tbe notes, several answers may be given. Where an agent who is not authorized to do so borrows money on behalf of bis principal and applies it in satisfaction of tbe legal obligations of bis principal and tbe latter knowingly retains tbe benefits of such payments, tbe transaction constitutes as between tbe principal and tbe lender tbe relation of debtor and creditor. Having received tbe benefits of tbe unauthorized act tbe principal will be deemed to have ratified tbe act and to have barred bis repudiation of it to tbe injury of tbe other party. He cannot accept tbe benefits without bearing tbe burdens; be must duly repudiate tbe transaction or perform tbe contract in its integrity. Lane v. Dudley, 6 N. C., 119; Miller v. Lumber Co., 66 N. C., 503; Rudasill v. Falls, 92 N. C., 222; Christian v. Yarborough, 124 N. C., 72; Hall v. Giessell, 179 N. C., 657. Tbe appellants knew nothing of tbe execution of tbe notes until September, 1927, when tbe plaintiff demanded payment. In response to tbe demand they disclaimed liability but made no offer of restitution, content no doubt witb tbe benefits tbe estate bad received. Tbe agent’s acts, it may be noted, were not void, illegal, or contrary to public policy; at most they were merely voidable. Any one who has tbe capacity to make a contract of agency may ratify an act assumed to be done in bis behalf without authority; and, according to tbe maxim, every ratification has a retroactive effect and is equivalent to a prior command. When tbe appellants qualified they employed Ellerson “in connection witb tbe administration of tbe property” formerly operated by tbe two companies of which be bad been appointed general manager by tbe testator. They qualified as executors and trustees — -not only as personal representatives but as trustees of tbe property. Tbe fifth paragraph of tbe agreed statement indicates that tbe appellants continued or renewed Ellerson’s appointment. This, we think, is a natural and logical interpretation which should estop tbe appellants from claiming either that tbe acts they complain of were not within tbe scope of tbe employment or that at tbe time they paid tbe plaintiff a note executed by *148 Ellerson in the name of tbe Grove-Ellerson Stone and Sand Company, which., the appellee insists, was an express ratification of the agent’s authority, they were ignorant of the relation that had existed between Ellerson and their testator. It was incumbent upon them to know the relation. It may incidentally be remarked in conclusion that Snipes v. Monda, 190 N. C., 190, cited by the appellants is not applicable to the facts. Sec C. S'., 116(a). Judgment Affirmed.