Upham & Gordon v. Richey

Mr. Justice Wilkin delivered the opinion of the court: Appellants’ contention is, that by the terms of the written agreement between Foote and Putney the former was the owner and proprietor of the business, the latter being merely his agent for conducting and carrying on the business, and that Foote became liable to them under the rule that the principal is liable for debts contracted by his agent, and on the trial of the case they asked the court to hold certain propositions as the law of the case intended to present that theory, which were refused. The correctness of that ruling is the only question of law presented for our decision. With controverted questions of fact we have nothing to do. Counsel seem to understand that unless the transactions between the parties, as evidenced by their written agreements, amount, in law, to a valid chattel mortgage of the stock of goods from Putney to Foote, the latter must be held the absolute owner of the property, and hence liable to appellants. But that position, in our view of the case, cannot be maintained. Appellants are not seeking to reach the stock of merchandise for the satisfaction of their debt. If they had sued Putney, to whom they sold the goods, and levied upon this particular property in his possession, no argument would be needed to show that they could hold it against any claim of Foote under a chattel mortgage; but the question upon this record whether Foote became the absolute owner of the stock of goods or only obtained a lien upon it to indemnify him as security for Putney, is only material in so far as the determination of it will settle the particular question, Is he liable as principal for goods purchased' by his agent, Putney?—the vital question, as before indicated, being, did Foote, by these written agreements, become the proprietor of the store. If he did not, then he never became liable to appellants, no matter whether he had a valid lien upon the property or not. One of two constructions of the contract, when read in the light of the bill of sale executed at the same time, is inevitable. Either Foote became the owner and proprietor of the business, with Putney as his agent to carry on and manage the same, or else Putney continued to be the owner'and proprietor, simply giving Foote a pledge of the goods and profits of the business as security for the payment of the $7000 in notes upon which he had become security. It may be admitted that the effect of the language of some parts of the contract is to show a sale of the property to Foote, he simply agreeing to allow Putney to manage and control the business for him; but there are some parts of the contract wholly inconsistent with that construction. To say that Putney was to be merely the agent or manager of the business for Foote, and still, in the language of the contract, to do so without cost to his principal, to pay all clerk hire and all freight bills, taxes on the stock, etc., is unreasonable. It is also evident, from the whole contract, that the principal purpose of the transaction was to secure the payment of the $7000 indebtedness, Putney agreeing to apply all profits of the business to the payment of the notes as required or specified in the obligations. The evidence introduced upon the trial explanatory of the circumstances under which the money was borrowed and the contemporaneous contracts entered into, makes it clear to our minds that the intention of the parties was to provide indemnity to Foote against loss as security upon those notes, and not to make a sale and transfer of the property. It is not pretended that Foote paid anything for the goods when he received the bill of sale. It cer'tainly cannot be seriously contended that the parties contemplated that Putney should conduct the business at his own expense, keep up the stock of merchandise, pay off the entire $7000 indebtedness, and Foote be the owner of the entire stock and business after all this was done. We think it clear from a proper construction of the agreements themselves, and especially under the competent evidence as to the facts and circumstances under which they were made, the propositions submitted to the trial court did not announce correct propositions of law and were properly refused. The judgment of the Appellate Court should be affirmed. Judgment affirmed. Mr. Justice Cartwright took no part.