Meeuwsen v. Clough & Warren Co.

Kuhn, J. The plaintiff, in March, 1917, was a manufacturers’ agent engaged in placing contracts between the assemblers of talking machines and the manufacturers of cabinets. Defendant Clough & Warren Company, prior to' December 20, 1916, was engaged in the manufacture and sale of pianos and organs at Adrian, Michigan. The defendant Manophone Corporation is a corporation, organized on December 20, 1916, at which time it took over the plant and business of the defendant Clough & Warren Company and since that time has been engaged in the manufacture and sale of talking machines and talking machine cabinets at the city of Adrian. The Clough [699] & Warren Company has not been engaged in any business since it transferred its plant and business to the defendant Manophone Corporation, although it has not been formally dissolved. There were different stockholders, but Mr. Warren, who was treasurer of the Clough & Warren Company, became the vice president and treasurer of the Manophone Corporation, and Mr. Essex, who was secretary of the Clough & Warren Company, became secretary of the Manophone Corporation. About March 1, 1917, the Manophone Corporation received a letter from the Playerphone Talking Machine Company of Chicago, stating that it was in the market for talking machine, cabinets, and on March 7, 1917, Mr. Essex went to Chicago for the purpose of calling on the Playerphone Company. On March 8th, the plaintiff and Mr. Essex met in Chicago and the latter gave the plaintiff a writing known in the record as Exhibit “A,” which reads as follows: “Chicago, 3/18/17. “For services rendered replacing contract with Playerphone Company, we agree to pay Mr. P. Meeuwsen 5% commission. “Clough & Warren Co., “By L. W. Essex, Sec’y.” On the following day, Mr. Essex and the plaintiff called upon the Playerphone Company, the visit resulting in an order being given to the Clough & Warren Company for cabinets of the value of $67,500. This order was subsequently transferred to the Manophone Corporation and due shipment made to the amount of $26,630.65. Cabinets of the value of $3,-448.92 were returned as defective and were credited to the Playerphone Company account, which left the net business done the sum of $23,181.73. It is claimed that the Playerphone Company order was subsequently cancelled for the reason that Ger [700] man dyes were necessary to meet the specifications of the Playerphone Company and that these dyes were not obtainable, by reason of the war with Germany. It is claimed for the plaintiff that he is entitled to recover a commission of 5% on the full amount of the Playerphone order, whether any shipments were made or not. The defendant Clough & Warren Company claims that Exhibit “A" was not authorized by it and was not a valid and binding obligation upon it. The defendant Manophone Corporation claims that the writing in Exhibit “A” w'as never authorized by it and that it never knew of the writing and that it was not a valid contract binding upon it and that the only contract or agreement between the plaintiff and the defendant Manophone Corporation of which the latter has knowledge was to pay a commission of 5%' on shipments actually made to the Playerphone Company. The Manophone Corporation paid the commissions upon such shipments made and settled for by the Playerphone Company. The case was tried before the court without a jury and the trial judge found that the writing known as Exhibit “A” w!as not a valid contract as to the defendant Clough & Warren Company and dismissed the case as to it. He further found that the writing was a valid contract between the plaintiff and the defendant Manophone Corporation and that the plaintiff was entitled to recover a commission of 5% on the full amount of the Playerphone order. A motion for a new trial was made in which motion it was urged for the first time that the defendant should be excused or relieved from the obligation to pay the commission because of the provision in the contract which stipulated that the performance of the contract was to be subject to delay or failure caused by fires, strikes, riot, the act of God or the public enemies. Such a defense, if urged upon the trial, [701] should have been specially pleaded under the notice of the special defense which was annexed to the plea of the general issue in order to comply with Circuit Court Rule No. 28. But, nevertheless, while such a defense may have been known to the defendant Manophone Corporation, it was not urged upon the trial and no notice of it given, and the first suggestion made with reference to it was upon the motion for new trial. We are of the opinion that, having been made at that time without any other notice having been given of it, it came too late and cannot now be urged. The meritorious question involved in the controversy is whether or not the court erred in holding the writing (Exhibit “A”) to be a valid contract between the plaintiff and the defendant Manophone Corporation. The affairs of the two defendant corporations were so interwoven as might very readily and easily have led a person to believe that, so far as their business was concerned, they were one and the same company. There is no dispute that the Manophone Corporation was informed that Meeuwsen was to have a 5% commission. The question is, Upon what was he to receive the commission? The memorandum in writing, showing what the contract entered into by Meeuwsen and Essex wias, clearly indicates that it was intended to be upon the whole order. The Manophone Corporation accepted the benefit of Mr. Meeuwsen’s services, approved the contract which was made by him, and proceeded to send him commissions as the goods were shipped and paid for. It is the claim of the defendant that it did not have full knowledge of the contract as made by Essex and that Essex had not been authorized to make the contract which the plaintiff relies upon. The trial court held that, as a matter of law, under the peculiar circumstances of this case, that having accepted the benefits of Mr. Meeuwsen’s services, if it did not have full [702] knowledge of the contract, it was its legal duty to make the needed inquiry of Essex or of Meeuwsen to discover all of the terms of the commission contract. This conclusion in law, in our opinion, finds support in the decisions of this court. In Busch v. Wilcox, 82 Mich. 336 (21 Am. St. Rep. 563), in commenting upon the law with reference to the binding effect of the acts of a self-constituted agent, the following is stated: “The law, as we conceive it to.be, is. this: When a person deals with an authorized agent, he is bound to inquire and ascertain the extent and limit of his authority to bind the principal, and the principal is bound by all acts of the agent within the scope of his authority; and when the principal adopts the contract of a self-constituted agent, who has assumed to act for such principal without authority, he is bound to inquire and ascertain the extent the self-constituted agent assumed to act in his behalf, and the principal, when he becomes such by adopting his acts, is bound by all acts within the scope of the assumed authority; and in both cases the liability of the principal extends to the frauds or misrepresentations of the agent committed or made while acting within the scope of the real or assumed authority. We entertain no doubt upon the law that should govern the case.” We think it necessarily follows, under the circumstances of this case, that the defendant Manophone Corporation, by adopting the acts of its self-constituted agent, sought to appropriate to itself all the benefits to be derived from the contract made by him with Meeuwsen as fully as if it had itself induced it in the first instance. This being true, it must also assume the liabilities which attach to it. See, also, Ripley v. Case, 86 Mich. 261; Sokup v. Letellier, 123 Mich. 640; Dodge v. Tullock, 110 Mich. 480. The judgment should be, and is, hereby affirmed. Bird, C. J., and Sharpe, Moore, Steere, Brooke, Fellows, and Stone, JJ., concurred.