Wiley v. Stewart

Mr. Justice Mulkey delivered the opinion of the Court: The foregoing statement, which was prepared by appellant’s counsel, though not quite as full in some respects as it might be, and perhaps slightly colored in others, is nevertheless substantially correct, and sufficiently accurate for the purposes of what we propose to say on the subject. A reference to a few well recognized principles, it is believed, will afford a solution of whatever difficulties, real or imaginary, that are supposed to be in the case before us. It is undoubtedly true, as claimed by appellant, that where a contract is effected through the instrumentality of one who sustains the relation of agent to both the contracting parties, it may, as a general rule, be avoided, at the election of one or both of the parties. So far there is no conflict of opinion. But is such a contract absolutely void ? The logic of appellant’s argument seems to maintain that it is; yet upon principles about which there can be no two opinions, it clearly can not be. If in such case the principals, after notice of the agent’s true relations to the contracting parties, should either expressly approve the contract, or by a course of conduct treat it as an existing obligation, it would, by all the authorities, become obligatory and binding upon them, to the same extent as if they had originally made it in person. This, of itself, on the universal principle that what is void can not be ratified, demonstrates that such a contract is voidable, only. The case of Francis v. Kerker, 85 Ill. 190, is an authority directly in point, wherein such a contract was held to have been ratified by the conduct of the complaining party after notice. There is also another principle applicable to cases of this kind, where, as in the present instance, the contract has been partly executed, which is not only sustained by the authorities, but is founded alike in reason and in justice. It is, that if a party has received anything under such a contract he must restore it, if practicable, before he will be permitted to repudiate the agreement. Harding v. Parshall, 56 Ill 219; Buchencm v. Homey, 12 id. 336; Staley v. Murphy, 4Y id. 241. In this case, the money for which the note in question was given was appropriated, whether rightfully or wrongfully, by O. J. Wilson & Co. in the payment of their indebtedness to the bank, and although this was done some six months or more before the commencement of the suit on the note, the appellant does not seem to have interposed any objection to it or made any complaint about it. The answer to this is, that he did not, personally, know anything about it. That does not at all, in our opinion, alter the case. He clearly had constructive notice of the state of the firm’s account with the bank, including the $800 received from appellee, and appellant is therefore to be held to the same degree of responsibility as if he had had personal knowledge of the transaction. There might be special circumstances which would require a change of the rule, as, where the managing partner of a firm has conspired with third parties to perpetrate a fraud upon the other members, who have no personal knowledge of the partnership affairs. But nothing of that kind is pretended here. If> as appellant seems to claim, the action of Wilson in executing the note to appellee, and appropriating the $800 to the payment of the firm’s indebtedness to the bank, was absolutely void as a contract, what, then, was the legal effect of the transaction ? "Viewed in that light, it was clearly the simple case of one member of a firm taking the money of a third party and appropriating it to the firm’s use,—or, more shortly, it was a tortious conversion by the firm of appellee’s money, for which appellant was equally liable with Wilson, on the familiar principle that the firm is liable for the torts as well as the contracts of its members within the scope of the partnership. And in this view of the ease the amount thus taken might well have been recovered, under the declaration in this case, as money had arid received to the use of the plaintiff. In that view, however, the finding of the jury is perhaps a trifle too large. We do not adopt this theory of the case, however, but have presented it merely to show how little merit there is in the defence, upon appellant’s own theory of it. In view of the fact that appellant has had the full benefit of the money for which the note was given,—at least his firm has, which, in law, amounts to the same thing,—the defence, to say the least of it, strikes one, at first blush, as being decidedly novel. If appellee were trying to collect the money sued for, from the bank, notwithstanding the loan to O. J. Wilson & Co., on the ground that Wilson could not bind appellee while acting for his own firm, there would be much force in the defence. But the present case is wholly unlike the one suggested. Here appellee, who is the only sufferer, takes no exception to Wilson’s authority to make the loan to the latter’s , own firm. On the contrary, he has fully ratified it by bringing suit on the note. But the defendant, whose firm has enjoyed the benefits of the loan, says, by way of defence: “It is true, we got the money and paid our debt to the bank with it, but as Wilson had no right to borrow of appellee on the firm’s account, because in effecting the loan he acted as the agent of appellee, the loan itself is therefore illegal and void.” The law certainly does not sanction such a defence, and we so hold. The appellant not having restored what the firm received under the contract, but having enjoyed the full benefit of the loan, he is estopped from questioning its validity. We have not thought it necessary to take up and consider separately the points made in appellant’s brief. The views here presented are believed to sufficiently answer the substance of the defence, as we understand it, and for a more specific treatment of the questions discussed we refer the parties and counsel to the opinion of the Appellate Court, which has our approval. The judgment of that court will be affirmed. Judgment affirmed.