St. John & Marsh Co. v. Cornwell

The opinion of the court was delivered by AlleN, J.: [716] !• of agenté [715] The main question presented for our consideration in this case is whether the agent of a foreign corporation having general charge of a lumber yard located in this state, with authority to collect accounts due it, may, by entering into a contract for his personal board with a person indebted to the company, bind his employer to the extent of its claim. It appears that Cornwell was indebted to the plaintiff at the time Catlin contracted for his board. Catlin agreed that Cornwell should have credit on the account with the amount of his board at the rate of $5 a week. It appears that Catlin was working at a salary of $55 a month, which was in full for all his services. The plaintiff was under no obligation to board him, or pay any other of his personal expenses. It may be conceded that, as to the transaction of plaintiff’s local business at St. John, Catlin was its general agent. The question then arises whether it will be presumed that Catlin had authority to bind the plaintiff for the payment of his personal expenses. The general rule is that the principal is bound by acts within the apparent scope of the agent’s authority, irrespective of secret instructions or private agreements known only to principal and agent; but is the power to bind the principal for the board of the agent within the agent’s apparent author [716] ity? Parties dealing with him necessarily know that board is furnished for the personal benefit of the agent. It cannot be'said that employers are generally responsible for the board or other personal expenses of their agents or employés. To carry such presumption to its logical end would make them responsible for clothing, household supplies, and other purely personal expenditures. We think no such authority can be presumed, and that when a party deals with an agent with reference to board, clothing, or any other matter which the party must know is furnished solely for the personal benefit of the agent, if he relies on the principal for payment, he does. so at his peril. The defendant in this case expected Catlin to give him credit on the plaintiff’s books for the amount of his board, and to charge himself with the same amount on his salary account. If this were done, it would be, of course, a proper and legitimate transaction, and would amount to a collection of the plaintiff’s account; but until Catlin actually accounted to the plaintiff for the amount of his board, the contract remained purely a personal one between Cornwell and Catlin. It was Cornwell’s place to see that Catlin complied with the contract. No obligation rested on the plaintiff to inquire into the terms on which Catlin procured his board. It was under no obligation to pay it, and therefore under no duty to make inquiries with reference to it. This is not a case in which the agent has attempted to discharge a debt due his principal by receiving in payment thereof an obligation of his own, which under the authorities he could not do. (Mechem, Ag., § 375; Furniture Co. v. Mason, 52 N. W. Rep. 671; Deatherage v. Henderson, 43 Kas. 684; Scully v. Dodge, 40 id. 395; Organ Co. v. Lasley, 40 id. 521.) In this case the agent undertook to bind his principal by a contract in advance for his own personal benefit, agreeing that the debt due the principal should be .discharged by the board he was to receive. The defendant certainly could not fail to see that this arrangement was for the personal advantage of the agent, and must have known that the principal would [717] reap no advantage from it unless the agent actually accounted for and paid over the agreed rate to the employer. It is well settled that the agent does not bind his principal by such contracts. (Mechem, Ag., supra; Aultman v. Lee, 43 Iowa, 404; Rhine v. Blake, 59 Tex. 240; Williams v. Johnston, 92 N. C. 532.) 2- ratified!4’not It is urged on behalf of the defendant in error that the facts show a ratification of Catlings contract. This is based on the items charged to himself by Catlin on plaintiff’s boobs and credited to defendant on account of board. It is urged that these entries were brought to the knowledge of H. C. Wood, the company’s general agent, who had full authority in all matters connected with the company’s business, and of Mc-Connaughey, the company’s auditor, and that such entries were notice of the existence of a contract between Catlin and the defendant, concerning the terms of which it then became the duty of the plaintiff to inquire. We think the ratification extends only to the items appearing in the account on plaintiff’s books. As to such items it is of course a ratification, and no objection is now made to these credits by the plaintiff, but the defendant seeks credit for the balance due him for Catlin’s board which was not credited on plaintiff’s books. We do not think the plaintiff was under obligation to inquire into the terms of Catlin’s contract for board, nor that its ratification of his acts extended to anything beyond the items appearing on its books. Generally a principal is held to have ratified the unauthorized act of an agent only when he has been fully informed of all of the facts and circumstances of the transaction, and then accepts some benefit or does some act inconsistent with a disaf-firmance of the unauthorized transaction. (Bohart v. Oberne, 36 Kas. 284; Reynolds v. Ferree, 86 Ill. 570.) We think the court erred in its conclusions in this case. The judgment is reversed, with the direction to enter judgment in favor of the plaintiff for the amount claimed in its petition. All the Justices concurring.