York County Bank v. Stein

Weisel, J., delivered the opinion of this Court. The appeal in this case is from a judgment of the Court of Common Pleas for Baltimore City, and the questions raised by the record and briefs are : First. Whether the action can be maintained betAveen the parties; Secondly. If so, whether the defendants were entitled to a certain credit for five hundred dollars claimed by them under their plea of payment, which was resisted by the plaintiff. The facts set out in the exception, as proved in the cause, and Avhich were to be found by the jury, show that the contract sued on was made by the agents of the respective parties ; the plaintiff being made known to the defendants at the time of the contract, but the defendants not being disclosed until some time afterwards, but before the day of payment arrived ; it being known however to the plaintiff at the time of the contract that McGfinn, a broker, was acting as an agent in the premises for one of his customers. As to the liability of the defendants to the plaintiff in such a case this Court entertains no doubt or difficulty. The laAV is avcII settled that the principal is personally responsible in all .cases of contracts made by an agent, within the scope of his authority, and this is not varied by the fact that the agent contracts in his own name, whether he discloses his agency or not, provided the circumstances of the case do not shoAV that an exclusive credit was given to the agent. The circumstance that the name of the principal was not disclosed at the time of the contract, does not determine the election of the plaintiff to look to the agent alone for the fulfillment of the contract. The principal is, [464] notwithstanding, answerable when discovered. Story on Agency, sec. 446 and notes. Thomson vs. Davenport, 9 Barn. & Cres., 73. And such is the law with regard to a plaintiff, principal, who contracts by an agent. If the agent contracts in his own name without disclosing the principal, either the agent or the principal may sue upon the contract; the defendant in the latter case being entitled to be placed in the same situation, at the time of the disclosure of the principal as if the agent had been the contracting party. Sims vs. Bond, 5 Barn. & Adol., 389. New Jersey Steam Nav. Co., vs. Merchants' Bank of Boston, 6 How. 380, 381. In all cases of contracts by agents, without disclosing their principals, the Courts in affording' remedies, will look to the substantial parties in interest, in order to avoid circuity of actions, saving however to the defendant any rights which he may justly acquire as against the plaintiff by the course of dealing anterior to the disclosure, either with the agent of the plaintiff, or his own agent. The liability of the defendants in this case, under the law as herein stated, was not disputed by their counsel in the argument, but it was insisted, and that is the main point of inquiry, that their responsibility must be taken with this qualification, that if in the meantime, before their names were disclosed, they had settled with their agent they could not be held bound, and that the payment by them of both the margins called for the plaintiff to their agent before their names were made known, enured to their benefit and should be credited on the plaintiff’s claim in suit, whether paid over by their agent to the plaintiff or his agent, or not. That the rule of the defendant’s liability is subject to a qualification, arising from his transactions in relation to the contract with his agent in the interval, which will discharge it under certain circumstances, is true. This qualification is stated by Judge [465] Story (Agency, Sec. 449,) thus : “That the principal will not be made personally liable, if, in the intermediate time, he has settled with his agent, without any suspicion of his own personal liability, or if he would otherwise, without any default on his own part, be prejudiced by being made personally liable.” Examples are given and the authorities cited both in the text, and in the notes, to illustrate and explain the extent and bearing of this qualification, and the section concludes with the author’s view of it, as derived from the later decisions. In all the cases he declares it essential that the plaintiff should in some way have either deceived the principal, or induced him to alter his position and account towards his agent, before he is deprived of his remedy against the principal; and that it is how settled that the simple fact that the principal has paid his agent the funds with which to pay the plaintiff, does not deprive the plaintiff of his right to look to the principal, if the agent fail to pay over according to his orders. Same sec. and Pabkh Baron in Heald vs. Kenworthy, 10 Ex., 739, and other cases cited in note 1. The instruction of the Court below to the jury on the trial of this cause, was, that if they believed the facts stated in the bill of exceptions, then the defendants were entitled, as against the plaintiff, to be credited with all the money paid by them to McGinn, whether paid over by him to Small or the plaintiff, or not. This was given upon one of two grounds, either that McGinn, in the matter of the margins, acted as the agent of the plaintiff, and that his receipt of them was the receipt of the plaintiff ; or, that the payment of the margins to McGinn, as the agent of the defendants, exonerated them under the circumstances from their amount in this action. If the former, then the Court erred, inasmuch as it took from the jury the question of fact as to McGinn’s agency for the plaintiff in the receipt of the margins, and assumed [466] that there was not only evidence, but sufficient evidence of it, and upon such assumption absolutely instructed the-jury to allow the credits. If there was evidence to establish such an agency, the jury were the exclusive judges of its weight. Henderson vs. Mayhew, 2 Gill, 409. If, however, the Court acted upon the other ground, and considered, as a conclusion of law, that the payment of the margins by the defendants to their own agent, before the disclosure of their names to the plaintiff, discharged them from further liability for such amount of them a» was not paid over to the plaintiff or its agent, we think that in -this view the Court also erred in the instruction given. In looking at the evidence.in the exception we discover nothing that would tend to show that the plaintiff or his agent, in calling for the margins through McGrinn, either deceived the defendants or induced them to alter their position or account towards their agent, or so acted as manifestly to make it unjust in the plaintiff to recover the amount. The contract was made with McGrinn as a broker and agent for a then unknown principal, the defendants, who received by way of loan the plaintiff’s money, upon a security that was failing to answer the purpose, and which it was agreed should be strengthened by what are termed margins, or additional collaterals. Under the circumstances, McGrinn was. the proper party to whom the application for the margins should have been made. They were made to him as the only known channel of communication with the real borrower, or as the party personally bound to furnish the required collaterals, and within three days of each other ; and the only response to both was the receipt of five hundred dollars which was applied to the plaintiff’s claim ; but whether this was the money of the agent, or was paid by the defendants, neither the plaintiff nor its agent, Small, then knew. In this we see nothing that could bring the payment of the margins to [467] the defendant’s agent, within the qualification of the rule of liability as understood and settled by the authorities to which we have adverted. In other words, we do not see in the record any evidence that would exempt the defendants from the payment they claim to have made. (Decided April 11th, 1866.) The instruction given to the jury being therefore erroneous upon both grounds, the judgment of the Court below must be reversed. In passing upon the prayer of the plaintiff and the instruction asked in it, we see nothing objectionable in them as presented. The controversy was narrowed by the pleadings to the one margin that had been received by McGinn and not paid over by him to the plaintiff or its agent. It was not therefore necessary for the Court to instruct the jury that the defendants should be protected in their verdict for the proceeds of the collaterals sold. Looking at the evidence we can discover no proof which would have justified the jury in finding that McGinn acted in the matter of the margins and of their receipt by him from the defendants, as the agent of the plaintiff. In view, therefore, of this state of the case and of what has been said of the law governing it in its other aspects, the instruction asked by the plaintiff was correct, and its prayer, in our opinion, should have been granted. Judgment reversed and procedendo awarded.