Wycoff v. Davis

Deemeb, J. One Dahlberg was plaintiff’s agent at tbe city of Ottumwa for the sale of Remington typewriters. Defendants Davis and Rush were running a gambling bouse in Ottumwa, and Dahlberg was a frequenter of their establishment. In this gambling den be, Dahlberg, lost several hundred dollars of bis employers’ money. Dahlberg bad authority to sell and deliver typewriters in bis particular locality, which included tire city of Ottumwa, and to collect the purchase price therefor, and also to collect plaintiff’s accounts in general within tbe territory alloted to him. In September of tbe year 1902, Dahlberg was short in bis accounts with bis employers to tbe extent of nearly $800. During this month be sent two checks to bis principal purporting to represent some collections made by him. These checks were drawn on an Ottumwa bank, and, when returned, were dishonored by that bank. Plaintiff, through its other agents, was demanding a settlement by Dahlberg, and he, Dahlberg, went to defendant Davis for help. Davis finally loaned him $125, but insisted upon the delivery of the [401] machines in question as security fox the loan. To this Dahl-berg yielded, and pursuant thereto delivered the machines to Davis, and at the same time, at Davis’ request, he, Dahl-berg, issued a receipt to Davis, in the name of the plaintiff company, showing payment of the sum of $205 in full for the two machines. Dahlberg did not receive more than $125, and he did not sell'the machines to Davis. Davis says in a half-hearted way that he purchased the machines from Dahl-berg, but his own testimony shows that the transaction was a pledge rather than a sale. With the money so received Dahlberg took up the two protestéd checks; but plaintiff had no knowledge as to where the money came from until after it had actually been received and credited. Thereupon one of plaintiff’s agents went to Ottumwa to settle its affairs with Dahlberg, and then? learned of the pledge of the machines. This action of replevin was then instituted, resulting in the judgment heretofore stated. While many questions are argued, there is but á single proposition involved in the case, and that is, may plaintiff recover the machines from Davis without returning the $125 loaned by him to Dahlberg? Much is said about the rules applicable to gambling transactions, which has nothing to do with this case. . Davis did not return, nor did Dahlberg receive, the $125 because of any change of heart' on the part of Davis. No one pretends that this $125 was any part of the money won from Dahlberg. It is practically conceded that it was a loan from Davis to Dahlberg, induced to some extent, perhaps, by the thought that, as Dahlberg had lost his money in defendant’s establishment, he, Davis, would be more likely than any one else to make the loan; but at the same time Davis was not conscience-smitten, for he demanded and received what was thought to be adequate security for the loan. But this loan was not made to plaintiff company, or to Dahlberg as agent of the company, but to Dahlberg individually, to enable him to meet a shortage due his principal. lie had the right as an individual to [402] borrow money of wbom be would, but be bad no authority to pledge tbe property of bis employer as security for bis individual debts. No agent bas any sucb implied authority, and it is not claimed that any express authority was given. Dablberg told Davis that be was short in bis accounts, and that be wanted tbe money to send to bis employer. This being true, it is clear that tbe loan was not made either in fact or form to tbe company. Dablberg did represent that tbe machines belonged to him individually, and that be bad a perfect right to sell them; but be did not represent to D'avis that' be had authority to pledge them for a loan either to himself or to bis principal. Divested of all extraneous matter, tbe case is this. Dablberg bad possession of tbe machines as agent for tbe plaintiff, with authority to sell tbe same and to collect tbe purchase price. He was short in bis accounts with bis principal, and applied to Davis for a loan to make up this shortage, stating tbe facts to him, Davis. He represented to Davis that tbe machines were his, and that be bad authority to sell them. Davis loaned $125 to Dablberg individually, and took the machines as security for tbe loan, but, in order to make tbe transaction appear as a sale, insisted upon a receipt showing a sale rather than a pledge. Dablberg did not, of’ course, own the machines, and he could not pledge them as security for his individual indebtedness. These being tbe facts, tbe ultimate conclusion is clear. Dablberg having no express or implied authority to pledge tbe machines as security for his own debt, tbe transaction was not binding upon tbe plaintiff, and it may recover its property, unless it be that, by receiving the money as a result of tbe transaction, it ratified the same and is estopped from asserting its title. Of course, if Dablberg bad assumed to act as an agent for bis company in securing tbe loan and pledging the machines, and plaintiff bad received tbe money so obtained, it could not repudiate tbe transaction without returning tbe money. But that is not this case. Here tbe loan was not [403] made to tbe plaintiff either actually or ostensibly, but to Dahl-berg in bis individual capacity to enable him to meet a shortage to his company. The property was not pledged as the property of the company, but as Dahlberg’s. Dahlberg #as indebted' to his company on other accounts, and the loan was to enable him to make up his shortage' to his principal. The company had the right to receive its money from its agent to apply on this shortage, no matter what its source, so long as the agent had not undertaken to act in his capacity as agent in obtaining the money. It was not bound to return the money, because its agent borrowed the same in his individual capacity and pledged his principal’s property as security therefor, not as agent, but representing himself to be the owner thereof, with authoritiy, in virtue of such ownership, to sell. The doctrine of ratification has no application to such a state of facts, for there is nothing to ratify; nothing was done on the company’s behalf or in its name; the transaction was in the name of Dahlberg and for his individual benefit. In such cases the rules relating to ratification manifestly do not apply. Thacher v. Pray, 113 Mass. 291 (18 Am. Rep. 480); Mecham on Agency, section 127; Hamlin v. Sears, 82 N. Y. 327; White v. Sanders, 32 Me. 188. We are then brought down to the simple question as to which of the parties to this litigation has the better title or right to the possession of the property. Plaintiff is conceded to have been the owner. If it has lost its title, it was through the act of Dahlberg, its agent. Dahlberg had no authority, either express or implied, to mortgage or pledge the property for a debt of his own. Bray v. Flickinger, 69 Iowa, 167, 79 Iowa, 313. Even .if Dahlberg had assumed to mortgage the property as the property of his principal, he would not have had authority to do so under power to sell and collect the purchase price, although here the question of estoppel by ratification might perhaps arise. See, as supporting these conclusions: Mordhurst v. Boies, 24 Iowa, [404] 99; Gilbert v. Baxter, 71 Iowa, 327; Van Vechten v. Jones, 104 Iowa, 436; Edgerly v. Cover, 106 Iowa, 670. None of the eases cited and relied upon by appellee are in point, for in each there was some act done by the agent in the name of or on behalf of his principal which was the subject of ratification. This is not true in the case at bar, and plaintiff was not obliged to see if there was any “ taint on the money ” which was paid by its agent, Dahlberg, in satisfaction or part satisfaction of his account with it. Even if the money were tainted, there is no principle of either law or morals which would prevent the plaintiff from receiving it. The judgment of the district court, which was evidently based upon the theory of ratification, is wrong, and it is therefore reversed.