Bohart, Dillingham & Co. v. Oberne, Hosick & Co.

The opinion of the court was delivered by Johnston, J.: 2 Unauthorized acts of agent. The facts of this case can be ascertained only from the findings of the referee, and the findings appear to be fairly within the issues of the case. Involved in this case is the question of liability of the defendants for the unauthorized acts of their agent. John Eldridge was the agent of the defendants, and the extent of his authority was to purchase hides, wool, furs, and tallow, and to pay for the same with the funds furnished by the defendants. The power conferred did not authorize him to loan or advance the moneys of the defendants to their customers and others, nor to gep tjie pr0perty and accounts that he received in satisfaction of the unauthorized advances which he had made, much less to guarantee the payment of such accounts. i. Agent — extent of authority, His Power was special and limited, and one to be g^otly pursued, and the plaintiffs were bound at their peril to know the extent of his authority. Speaking generally, it may be said that the power given to an agent in such cases includes with it the authority to do whatever is usual and necessary to carry, into effect the principal power conferred, but bartering in the property and fixtures of a meat [290] market, and in the unsettled accounts of its former proprietor, was not incidental to the power conferred on Eldridge, nor necessary for its execution. It was outside of the apparent scope of his agency, and the facts in the case fairly justify the finding that the plaintiffs Avere chargeable Avith notice that Eldridge acted in excess of his authority. It is claimed, hoAvever, that the defendants have rendered themselves liable in this action by the ratification of the unauthorized acts of their agent. The claim of ratification rests mainly upon the folloAving facts: The unauthorized advances of the defendants’ money made to Withrow & Deo by Eldridge, and the book-keeper, Plosick, amounted to about $1,300, and the property and accounts sold and guaranteed to the plaintiffs Avere received from Withrow & Deo in part payment of these advances. Bills of sale were executed purporting to convey the property and accounts to the defendants. Eldridge sold and transferred the property and accounts in the name of the defendants, and in payment the defendants were credited Avith $45, which they Avere owing to the plaintiffs, and the residue of the payment Avas made by means of the plaintiffs’ check payable to the defendants’ order. This check Avas indorsed by the book-keeper in the name of the defendants, and the amount of the check was placed to the defendants’ credit in the bank. It is argued that the accepting of the proceeds of the sale and guaranty, by defendants, Avas a ratification of the contract of sale made by their agent, and that they are liable to the plaintiffs for any breach of that contract, Avhether authorized by them or not. The general rule contended for, that by the receipt and retention of the benefits of the unauthorized act of an agent the principal thereby ratifies such act, may be conceded; but there can be no ratification without full knowledge of all the material facts. The defendants were wholly uninformed in regard to the transaction. They remained in ignorance of the fact that the purchase and sale had been made in their names or in their behalf until after this action [291] was begun. They never knew until that time that the cheek and the indorsement had been made or paid to them, or on their account. They had been informed of the unauthorized advances of their agent to Withrow & Deo, but they regarded and held the agents personally liable for such advances. When they were informed of the failure of Withrow & Deo, and that they had transferred their property and accounts to defendants’ agents, they were told that Eldridge and Hosick had converted the property into cash, and had themselves made up and paid $300, which was the remaining portion of the indebtedness arising from the unauthorized advances. And until this suit was brought, the defendants understood that Eldridge and Hosick had acted for themselves and on their own account, and that the money received for the property and accounts purchased by plaintiffs was paid to and received by the defendants in satisfaction of the personal liability existing against the agents. It will thus be seen that the fruits of the transaction were received and retained by the defendants without any knowledge of what the transaction was. They were not received as the fruits of a contract made for them or in their behalf, but upon an independent liability existing between themselves and their agents. If the defendants had known of the material facts in the case, and that Eldridge and Hosick had acted for them and in their names, and then, with this knowledge, had retained and enjoyed the benefits of the transaction, they would be bound as fully as if they had given their agents authority in the first instance. The money which was placed to their credit was innocently held by them. The defendants could not disavow the acts of Eldridge, nor repudiate the transaction because they did not know that it had been made on their account until after the commencement of the present action. 3. unauthorized, by agent, not ratified by prin~ oipai. The receipt and retention of the fruits of the contract, x > J under these circumstances, do not amount to a ratification of such contract, nor render the defendants liable in this action. (Baldwin v. Burrows, 47 N. Y. 199; The Penn. Co. v. Dandridge, 8 Gill & Johns. 323; Roberts v. Rumley, 58 [292] Iowa, 301; same case, 12 N. W. Rep. 323; Reynolds v. Ferree, 86 Ill. 576; Smith v. Tracy, 36 N. Y. 79.) We find no error in the rulings of the district court, and its judgment will therefore be affirmed. All the Justices concurring.