Equitable Life Assurance Society v. Poe

Alvey, J., delivered the opinion of the Court. Assuming without deciding the contract sued on to be one that could be enforced, if made upc^n competent authority, the case turns upon the question whether the agent with whom the plaintiff dealt had authority from the defendants to employ the plaintiff upon the terms alleged, and as disclosed in proof. It is clearly shown by the plaintiff himself that R. H. Mitchell possessed no general power as agent of the defendants to employ counsel to prosecute legal proceedings for them. Mitchell was, at the time of the alleged employment of the plaintiff, only a special agent of the defendants to effect insurance on lives; and when the subject of the employment was first broached to the plaintiff by Mitchell, the former appears to have understood the necessity of first having special authority from the defendants, for he expressly says he was doubtful of Mitchell’s authority, and he therefore requested him to write and get authority from the defendants for the proposed employment. Sometime thereafter Mitchell did write, and the whole evidence of authority from the defendants for the employment of the .plaintiff to take legal proceedings in their name, is contained in the letter of Mitchell to the Vice-President of the defendants, dated the 15th of October, 1878, and — 33 — the reply thereto of Halsted, the auditor of the defendants, of the 18th of Oct. 1878. In the first of these letters, after referring to the judgment against Miller and the failure of previous efforts to realize the money on it, Mitchell says: “ How, if you will allow me to manage the matter for you, I will employ a young lawyer, who is energetic and smart, who will undertake to make the money for you on a contingent of 40 per cent, and he will at the same time take a policy on his life in our company for ten thousand dollars. Give me the authority to employ him, and you will get sixty cents on the dollar, with interest, and a policy for $10,000 at the same time.” In reply to this letter the defendants, by their auditor, said, “we approve of the proposition offered, it being understood that no additional Court fees or charges of any nature are to he met by us, but that 40 per cent, of the amount collected is to go to the lawyer for his services. As you mention no amount which it is thought can he recovered, we should like to know about what can he expected before a final closing; and before taking such steps should like you to obtain the consent of Mr. Cross to move in the way suggested by you, as such a course will prevent any unpleasant feeling on the part of Mr. C., should he hear that another lawyer has the case in hand. You can arrange the preliminary matter in your own good way.” These letters were produced in evidence by the plaintiff, and are the only evidence of the authority under which he claims to have been employed to take legal proceedings to recover the money due on the judgment against Miller, which was then in hands of Cross as the attorney of the defendants. It appears the plaintiff, acting upon the supposition that Mitchell had written and obtained the authority from the defendants as requested, proceeded, on the 3rd of Oct., 1878, to file a bill in equity against the judgment debtor and others to vacate a deed of trust supposed to have been made in fraud of creditors; and that it was not — 34 — until his authority was called in question by Cross to take such proceeding, that the plaintiff discovered that no-authority had been obtained until that given by the letter of the 18th of Oct., 18*78. As the result of a contention between the plaintiff and Cross as to the power of the former to file the hill in equity, and a correspondence by both the plaintiff and Cross with the defendants upon the subject, the plaintiff was notified, by letter from the defendants, that Mitchell, the agent, had not observed his instructions contained in the letter to him of the 18th of October, 18*78, and that the claim against Miller should remain in the hands and under the control of Cross, the original attorney. The hill filed by the plaintiff -was never further prosecuted, and the claim was soon thereafter adjusted with Cross for seventy-five cents on the dollar. The plaintiff claims that he.could have recovered the judgment in full, if he had been allowed to proceed with the hill filed by him, and he claims the forty per cent, of the amount due the defendants on the judgment as the consequence of having the proceedings taken out of his hands. In this case, it being conceded that Mitchell was hut a special agent, acting under special written instructions from his principal, none of the difficulties that frequently occur in drawing the line that separates the powers of a special agent from those of a general agent, can arise. In cases like the present, the power of the agent and the rights of the party dealing with him, as against the principal, depends upon the legal construction of the written authority under which it is claimed the agent acted; and it is settled, that the construction of the letter of authority is exclusively for the Court. Ferris vs. Walsh, 5 H. & J., 306, 308. The authorities are numerous to the effect that, in the case of a special agent, the principal cannot he hound without or beyond the authority delegated by him; and if an agent he acting under such special authority, whether written or verbal, the party dealing with him is — 35 — bound, át his peril, to inquire into the nature and extent of the agent’s authority, and to understand the legal effect of it; for if he fails to inform himself as to the nature and extent of that authority, and it be exceeded by the agent, he must abide the consequences; the principal will be in no manner bound. 1 Amer. Lead. Cas., (3rd Ed.,) H. & W’s note, p. 544, and cases there cited; Sto. Ag., sec. 126; Paley Ag. by Lloyd, 199; Attwood vs. Munnings, 7 B. & Cr., 278 ; Scimmelpennich vs. Bayard, 1 Pet., 264, 289. Now, with these well settled principles in mind, let us examine the terms of the letters in which the authority is supposed to be found for the employment of the plaintiff on the terms alleged by him. The letter from Mitchell to the defendants asked for the unqualified delegation of authority to effect the employment, with the assurance that the defendants would get sixty cents in the dollar on their claim, and that the plaintiff would take a policy of insurance on his life at the same time. The defendants said in reply that they approved of the proposition made; but, while approving the proposition, they did not accept it without guards and conditions added. In the first place, they desired it to be distinctly understood that they were' to be at no cost or charges on account of the proceeding proposed, over and above the forty per cent, of the claim to be collected. This proposition requiring the plaintiff to assume the responsibility for the costs, was one to which he, as an attorney, could not, of course, assent, but he says he made no arrangement whatever in regard to the costs; and although he could not assent to the proposition to become liable for the costs himself, yet he was put to the alternative of either rejecting the proffered employment, or negotiating for a change in the terms contained in the letter to Mitchell. But to this requirement in the defendant’s letter the plaintiff appears to • have paid no attention. In the next place, the defendants desired that it should be expressly stated to them, what amount of the — 36 — judgment it was thought could he recovered. This information might have been inferred from what was said in the letter from Mitchell; hut the defendants desired not the mere opinion or assertion of their agent, hut the information from the plaintiff himself, and this information they desired to have “before a final closing." These terms of the letter of the 18th of October, 1878, would seem to have contemplated some further correspondence upon the subject before closing the arrangement with the plaintiff. But the still more important condition imposed by this letter, was the getting the assent of Mr. Cross to the employment of the plaintiff and the proposed proceedings by him to make the money on the judgment. The judgment against Miller had been recovered by Cross as the attorney of the defendants, and it was still in his hands .for collection, and, moreover, he was the defendants’ regular attorney in Baltimore. Hence the defendants did not desire to take the judgment out of his hands without his consent, or to do any thing that would give him cause of offence. They therefore desired that Mitchell should, before taking steps for the employment of the plaintiff, obtain the consent of Cross to move in the way that had been suggested. Discretion was. given Mitchell to arrange the preliminary matter in his own way; but the obvious construction of this is, that he was to use his good discretion as to the mode and manner of obtaining the consent of Cross, so as to avoid giving him cause of complaint. That, by the very terms of the letter, was made preliminary to taking any steps in the matter; and an unqualified expression of a wish by the principal, under such circumstances, amounted to a positive command to or requirement of the agent. Marfield vs. Douglas, 1 Sanf. Sup. Ct. R., 360; Sto. Ag., sec. 74. But the consent of Cross was never obtained, or even applied for, as preliminary to employing the plaintiff; and it seems to' have been one of the main grounds upon which the defendants disavowed the employ — 37 — ment of the plaintiff, that Cross’ consent was not first obtained as they had desired it should be. And as the plaintiff was bound to know the nature and extent of the special agent’s authority, he could take no employment from such agent that was not within the terms of the authority prescribed by the principal; and therefore we can perceive no ground upon which the plaintiff can maintain his action against the defendants. The evidence fails to make a case for the consideration of the jury; and without review of all the prayers offered on the part of the defendants, which were rejected, we think the fifth of those prayers should have been granted, which would have required a verdict for the defendants. (Decided 28th January, 1880.) There were other questions presented by the record and argued at the bar, but we have not deemed it necessary to pass upon those questions, and we intimate no opinion in regard to them. Seeing that the plaintiff has no ground of action, we shall reverse the judgment without awarding a new trial. Judgment reversed.