Powers v. McLean

Barrett, J. : The question here of the defendant’s liability is not a question of fact pure and simple. . It is rather a question as to the legal conclusion which should follow the inferences properly deducible from certain undisputed facts. It is quite true that the plaintiffs made no direct personal contract with the defendant for the purchase of the goods in question. They never in fact saw the defendant upon the subject of the sale. But it is equally true that they made no direct, personal contract with R. & H. Adams. They never saw any member of that firm upon this same subject. What is certain, however, is that they paid their money to the defendant for the goods in question. They paid it to him as the apparent principal in the transaction, not as the apparent agent for any one. Did he, in return for that money, correspondingly agree,- by fair implication, to deliver the goods to the plaintiffs ? That is the real question. The defendant admits that he received the money., but denies the corresponding agreement. He asserts, on the contrary, that it was not he, but the firm of R. & H. Adams, who agreed to deliver the goods. Undoubtedly, the firm of R. & H. Adams did so agree. That is, they so agreed with Loisson, who was acting under the plaintiffs’ instructions. But did the defendant as well so agree? If he did, the possible liability of R. & H. Adams as undisclosed principals cannot save him. The principal and the agent may both be liable. So may the principal and even a collateral contractor. The purchaser may hold the agent for failure to disclose his principal, or he may hold the principal when disclosed, or he -may, in either event, hold the collateral contractor, if the latter has made a distinct independent contract. Here it will be observed that the plaintiffs had no other knowledge of the real principal save that conveyed by the bill rendered. The only person whom they knew in the transaction prior to the receipt of this bill was Loisson. They — 97 — had simply asked Loisson to “ book ” the goods for them. Loisson was an employee of R. & H. Adams, and he booked the goods with that firm. Bnt of this latter fact the plaintiffs were not aware. They knew, however, that Loisson had formerly been in the employ of R. & H. Adams, but, after the year 1893, they always supposed, that he had become a salesman for what Mr. Swift describes as a, “ trust ” or “ combination ” composed of three firms, viz., R. & H. Adams, Andrew McLean & Co. and Jarnés Thompson & Co. Mi'. Swift testified that he did not think his firm (the plaintiffs) bought any mosquito netting through Loisson after the year 1893, “ except through the combination.” Be that as it may, Loisson was authorized to book the goods wherever he deemed best. He never notified the plaintiffs that he had booked the goods with R. & H. Adams, •nor did that firm ever come forward as principals in the matter, or notify the plaintiffs that they had contracted with Loisson. On the contrary, they sent the plaintiffs a bill which plainly disavowed their own principalship and notified the plaintiffs of the defendant’s, principalship. All the plaintiffs knew, from the beginning to the-end, was that they had authorized Loisson, acting as a salesman for-the trust or combination, to book the goods wherever he pleased, and. that, as a direct and immediate consequence, the defendant came: forward as principal and demanded the money for the goods. What, did this convey to the plaintiffs ? Plainly the implication that Lois-son had booked. the goods with the defendant. And this implication— that the goods had been booked with the defendant—also-attaches to R. & H. Adams, who sent the bill, as well as to the. defendant, who authorized it to be so sent. The bill thus rendered, was a direct assertion that the price was due to the defendant personally, and to no one else. That assertion surely involved, by fair-implication, a corresponding obligation to deliver the property. It. was as the maker of this assertion, with the corresponding obligation fairly implied, that the defendant accepted payment. This bill was, issued and sent to the plaintiffs with the defendant’s full and unqualified approval. It was not an isolated transaction, nor was it: the result of mistake or inadvertence. It was part of a deliberately-planned method of transacting business. And the bill followed the. regular custom of that business. It will also be observed that the. — 98 — bill disclosed no principal other than the defendant. The plaintiffs were not told thereby that the defendant was acting as agent for the firms named therein. On the contrary, the bill was made, out to the defendant personally — that is, in terms, it reads “ to Andrew •McLean, Dr.” • After this the vendee is informed that Andrew McLean is the sole agent — not for the three firms, but for mosquito netting manufactured by the three firms. In other words, the vendee is informed of Mr. McLean’s general line of business. The personal character of the bill, and of the contract impliable therefrom, is not varied hy the notice stamped thereon that the goods. are shipped by one of the three firms. It was immaterial who was to ship them, or who then owned them, or who had them. The " defendant agreed,, for the price paidliim, to deliver them. That is what the bill conveyed; that, and nothing else. But even if the plaintiffs had been informed that the bill was sent hy R. & H. Adams, that would simply have been notice* of that, firm’s avowal of the defendant’s principalship, and disavowal of their own. It would have been equivalent to their saying: Loisson booked your order with us, but We have arranged to place it with Andrew McLean. Under our arrangements with'" him, however, we will deliver the goods to you upon your order. But it will be delivery upon his ■ account, and he will look to you, as Ms vendees, for payment. And that idea the plaintiffs ratified, by accepting the .bill in McLean’s name and. paying it accordingly. The learned referee proceeded upon an erroneous view of the law when he suggested that, if the plaintiffs did not know who the principals were, and had desired to he informed upon that subject, they could easily have obtained that information. The rule is the other way. It was: held in Cobb v. Knapp (71 N. Y. 348) that “.it is not-sufficient that the seller may have the means of ascertaining the name of the principal. * * * He must have actual knowledge. There is no hardship in the rule of liability against agents. They always have ilt in their own power to relieve themselves, and when they do not, it ■ must be presumed that they intend to be liable.” The defendant’s private arrangements with R. .& H. Adams are quite unimportant. The one crucial fact is that when he authorized them to send out bills in his name as principal he jjermitted them to hold him out as such principal. The other crucial fact is — 99 — that when under that authority R. &.H. Adams sent out bills in the defendant’s name they disavowed them own- principalship and proclaimed his. And there is not a scintilla of evidence that the plaintiffs knew that the defendant was a mere collecting agent, nor is there a fact or circumstance in the case from which they could possibly have inferred any such agency. It would indeed have been an extraordinary and most unusual thing to constitute a man one’s mere collecting agent and yet to have all one’s bills made out in that agent’s name as principal. Everything in the case negatived any such inference. Thus we find that this defendant acted throughout apparently as principal in this and in all other transactions. For instance, when he found that the plaintiffs had accidentally underpaid him by a few dollars he telegraphed them at once in his individual name, and thereupon they sent him a check for the Small balance, which he also retained. He seems also to have had entire control of the market, for he repeatedly sent out notices with regard to the prices of. this particular commodity. The fact is that ' there'was, as Mr. Swift understood, a combination of manufacturers of mosquito netting composed, of the three firms, and that this combination was represented by the defendant. The defendant acted apparently as supervisor or regulator of this combination. Its object, it may fairly be inferred from the proofs, was to avoid competition between the members thereof. One of the defendant’s employees testified that all the goods billed in November, 1895, were, he thought, on the same terms! He could not explain how it happened that the terms of the three concerns were identical, but he believed that the goods were to be sold at the same price. The price of the commodity was fixed to equalize the charges of the three firms. It was undoubtedly to insure accuracy and good faith in this equalization that all the bills were vised by the defendant and collected by him. He entered them upon a special ledger, received payment from the debtors and paid over what he received (less two per cent retained for “ handling the accounts ”) to the proper member of the combination. When debtors were remiss in their payments he “ sent out regular monthly statements, such as are commonly sent out by mercantile houses.” In the. case under consideration he paid over to R. & H: Adams what he received from the plaintiffs, less two per cent, but that firm credited the plaintiffs — 100 — only with -what they so received from the defendant. Thus R. & H. Adams failed to give the plaintiffs credit for the real price of goods and substantially charged them with the defendant’s commission. This certainly looks like mere nominal! bookkeeping. It points, at all events, to no contract between them and the plaintiffs to deliver the goods for the price specified in McLean’s bill. The defendant, however, gave tlie plaintiffs credit ■ upon his special ledger for the full price of the goods, just as he did upon a prior occasion when his receipt specified that the check then given to him was in payment of his bill of June 6, 1895. If this case depended solely upon the law of agency, the rules applicable thereto would not be questioned. No one doubts, for instance,. that an agent who holds himself out as principal is liable as such. The agent is personally liable if he contracted in his own name without disclosing his principal, (Cobb v. Knapp, supra.) Nor is the agent absolved by reason of the fact that lie had no beneficial interest in the contract. It was held in Ferris v. Kilmer (48 N. Y. 300) that one who authorizes another to use his name 'in the conducting, and carrying on of a business is liable for the debts incurred in such business although he has no beneficial interest 'therein. . Even where the vendor, or purchaser discloses the name of his principal, if he signs a written contract in his own name merely, which contract does not on its face show that he was acting as the agent of another, he will be personally bound thereby. (Mills v. Hunt, 20 Wend. 431.) Magee v. Atkinson (2 M. & W. 440) was there cited with approval, the court saying that that was a case “ where the broker had sent in a note of the sale to the purchaser in his own name,” and that “ it was held that evidence of a custom in Liverpool to send in brokers’ notes without disclosing the name of the principal could not be received for the purpose of protecting the broker from personal liability.” These cases differ from the present in the fact .that there the agency was in the negotiations for the sale, while here it arose sub- ' sequen'tly. They are not, therefore, literally in point, but the principle enunciated covers the peculiar divergence in the case at ban But, even if one, as matter of fact, is originally neither the actual principal nor the actual agent; he may make himself liable as . principal by asserting his principalship and contracting with regard — 101 — thereto upon a good consideration. Our. conclusion upon the undisputed facts here is that the defendant, in consideration of the sum which he received from the plaintiffs, impliedly agreed to deliver to them the goods, specified in the bill which he authorized to be rendered in his individual name. As between the plaintiffs and the defendant, the money in question was not paid to the latter as the agent of R. & H. Adams, but was paid to the defendant personally as demanded, pursuant to his authority. Upon that payment a corresponding obligation arose on the defendant’s part to deliver the goods upon the plaintiffs’ demand. The contract between these parties was thus completed, and that contract was entirely unaffected by the arrangement which Loisson had previously made with R. & H. Adams, of which the plaintiffs were in entire ignorance. And it would, as we have seen, have been entirely unaffected by that arrangement, even though the plaintiffs had been notified that the bill which was rendered had emanated from R. & H. Adams. There is nothing in the point that the proofs failed to substantiate the allegations of the plaintiffs’ complaint. They did substantiate these allegations, that is, they established the essential facts. It would have been bad .pleading to .aver the evidence of these facts. Here the plaintiffs averred that they purchased from the defendant, and the defendant sold to them, the goods in question. They substantiated this averment when they proved an agreement on the defendant’s part to deliver the goods to them in consideration of the purchase price. In. legal intendment that established a contract of sale. The judgment should be reversed and a new trial ordered before a new referee to be appointed in the order entered hereon, with costs to the appellant to abide event. Tan Brunt, P. J., and Williams, J.,. concurred; Rumsey and Patterson, JJ., dissented.