Baldwin Fertilizer Co. v. Thompson McAlister

Little, <7. 1. The first question to be considered is, whether the plaintiff was bound by the action of its agent, Bostwick, in agreeing to accept from the defendants certain notes given for fertilizers, in payment of their debt. The law is, that the principal is only bound for the acts of his agent within the scope of his authority. Civil Code, § 3021. The evidence for defendants did not show that Bostwick had any authority to make' the contract by which it was claimed their note was settled. That on the part of the plaintiff company distinctly showed that Bostwick, who was connected with it as a salesman, had no such authority, and that a written contract existed between the plaintiff company and Thompson & McAlister which fully covered the subject of the contract; and in dealing with Bostwick as the agent of the company, Thompson & McAlister did so at their own risk. If Bostwick had the authority to make such a contract, then of course the act of the agent was the act of the principal. If he did not, then the company was not bound by the contract. It seems to us that it is clearly established under the evidence that the agent exceeded his authority in making the alleged settlement_with Thompson & McAlister, and that the company, the principal, was not bound by such contract. Camp v. Southern Banking & Trust Co., 97 Ga. 582. 2. But it is claimed that the company after the making of the alleged contract between Bostwick and Thompson & McAlister, by retaining possession of the property which Bostwick received under the terms of that contract, ratified the same, and is therefore bound by its terms. As a proposition of law, it is [483] undoubtedly true that a principal may ratify the acts of an un.authorized agent, and when ratified, the principal is as much bound by the terms of the contract entered into as if at the time of its execution the agent was authorized to make the contract. It is also true, as a proposition of law, that the principal may so conduct himself that the law will presume that he •did sanction and confirm the act of the agent and adopt it as his own. These principles are invoked by the defendants in error to maintain the contract entered into between themselves and Bostwick. The contention is, that when Bostwick came to Thompson & McAlister to procure the notes they held for fertilizers sold, the latter declined to give up such notes until their own note which they had previously given to the company was surrendered as paid; that the agent agreed to do this, and under that agreement received from Thompson & Mc-Alister the farmers’ notes for fertilizers which he delivered to the company; that the latter retained the notes and collected the' amounts due on a number of them, and by such retention .and collection the company ratified the act of Bostwick in making the contract, and adopted the terms of such contract as its ■own; hence, if Bostwick had no original authority, the company ratified his contract and is bound by it. However this might be under a state of facts different from those which-appear in the present record, we are sure that such a conclusion does not follow under the facts of this case. A written agreement executed in January, 1891, between the company and Thompson & McAlister, stipulated, among other things, that the company, about September 1, should return to Thompson & Mc-Alister the notes taken by the latter for the sale of fertilizers to farmers, and that Thompson & McAlister were to collect these notes as the agent of the company, and hold such collections in trust for the account of the company, until the note given by Thompson & McAlister to the company should be paid, and it was only when the note of Thompson & McAlister should be paid that the notes given by the farmers should become the property of the former. It was also agreed by Thompson <fc McAlister that they should hold these notes ás the property of the Baldwin Fertilizer Company, subject to delivery to the [484] company or its order. These farmers’ notes were the ones, which were the subject-matter of the contract between Bostwick and Thompson & McAlister, and by the terms of that contract the defendants in error allege that their original note was paid by the delivery of these notes. This can not be true, as matter of law, notwithstanding the terms of the contract, because-at the time the contract was entered into, Thompson & Mc-Alister held the farmers’ notes as the property of the company under an agreement to deliver them to the order of the company. Therefore, when they refused to turn over the notes, it. was a violation of the written agreement, and when they stipulated with Bostwick to turn them over in payment of their original note to the, company, and did do so, they were but giving to the company its own property; and even if the company received the notes and knew of the agreement made between Bostwick and Thompson & McAlister, it was nevertheless entitled to hold and collect the notes without being held' to a ratification of the contract made by Bostwick, because the-notes without the contract were its own, and when it came into-possession of its own property, there was no obligation resting on the company to return such notes to Thompson & McAlister, but it had a right under the original contract to hold and retain the same and to collect the proceeds thereof without regard to the contract made, by Bostwick. As a matter of course,, the company could change the original contract and adopt the-contract made by Bostwick, although unauthorized. But the point which we decide is, that as a matter of law it did not do so by retaining the farmers’ notes and collecting the proceeds thereof, without any other evidence of ratification, because such notes belonged exclusively to the Baldwin Fertilizer-Company, and that company had the right and power to collect them. It is, therefore, our opinion that the verdict was. contrary to law and the evidence in the case, and that the-court erred in overruling the motion for new trial. Judgment reversed. All the Justices concurring.