Hoyer v. Ludington

Cassoday, C. J. The complaint alleges, in effect, that on April 10, 1891, and prior thereto, the defendant Ludington was the owner of the real estate described; that Ludington, for the purpose of disposing of the same, authorized and employed the defendant Myers as his agent to effect a sale of such land; that pursuant to such agency, and as incidental thereto, Myers, with one Bingham and others, pretended to organize a corporation under the laws of this state, with a capital stock of $35,500, divided into 3,550 shares, of $10 each, for the purpose of purchasing from Ludmgton the land described; that Myers acted, or pretended to act, as the secretary of the corporation; that Myers, as the agent of Ludington for the purpose of effecting a sale of the real estate aforesaid, induced the plaintiff to subscribe and pay for 150 shares of the stock, by falsely and fraudulently representing to the plaintiff that such corporation was duly and sufficiently organized as a legal and valid corporation for the transaction of the business of buying real estate, that the capital stock was of the amount and value stated, and duly subscribed for by solvent and responsible persons, and that at least twenty per. cent, of the capital stock had then been paid into the treasury thereof in cash, whereas, in fact, fifty per cent, of the capital stock was not then, and never had been, taken or subscribed for, and such corporation was not then, and never had been, organized sufficiently for the transaction of business with others than its members, and was not then, and never had been, a legal or valid corporation, all of which was at the time well known to Myers; that Myers concealed from the plaintiff the fact that he was the agent [444] of Ludington for the sale of such real estate; that, relying upon and believing such representations to be true, and in ignorance of the fact that Myers was then acting as such agent of Ludmgton, the plaintiff subscribed for such stock, and paid to Myers $1,500 therefor; that the plaintiff, as such stockholder, was afterwards called upon to pay, and did pay, to Myers, as such officer of such corporation, from time to time, in the aggregate $716.25; that on or about that time Ludington conveyed to the corporation the real estate described in consideration of $11,500 paid to him by the corporation in cash, and $23,500 secured by a mortgage upon the feal estate so conveyed; that the money so procured from the plaintiff by Myers was all paid by him to Ludington for such conveyance, and for and on account of interest on such mortgage; that said false and fraudulent representations, and each of them, were made by Myers as the agent of Ludington, within the course and scope of his employment as such, with intent to deceive the plaintiff; that such false and fraudulent representations were unknown to the plaintiff until April 17, 1896; that the stock issued to and held by the plaintiff is now, and always has been, absolutely worthless and without value. Wherefore the plaintiff prayed judgment against said Ludmgton and Myers for $2,216.25, with interest, costs, and disbursements of this action. The action having come on for trial before the judge and a jury, and a witness having been upon the stand, the defendant Ludington objected to any evidence under the complaint as to him, upon the grounds that the complaint did not state a cause of action as against him. Thereupon the court sustained the objection of Ludington, and ordered the complaint as to him to be dismissed. From the portion of the judgment entered thereon accordingly, dismissing the action as against Ludington, the plaintiff appeals. There is no doubt of the general proposition that, if an agent is employed to effect the sale of lands for his principal, [445] and he does so by means of false representations in respect to the land conveyed, even without the authority or knowledge of his principal, the latter is chargeable with such fraud in the same manner as if he had known or authorized the same. Law v. Grant, 37 Wis. 548; McKinnon v. Vollmar, 75 Wis. 82; Gunther v. Ullrich, 82 Wis. 222. And this is especially so where the principal accepts and enjoys the benefits of the purchase. Fintel v. Cook, 88 Wis. 487. But, even then, “ the representation which is to bind the principal must be made in reference to the subject matter of his agency; it must be made while the agent is acting as such; and the making of such a representation must be within the apparent scope of his authority.” Mechem, Agency, § 743. Here the alleged false representations were not made in reference to the sale of the land which was the subject matter of the agency, but wholly in reference to creating and organizing a corporation to purchase the land. There is no pretense that Ludington had anything to do with the corporation or the procuring of subscriptions to any of the capital stock of the corporation. True, it is alleged that such false and fraudulent representations, and each of them, were made by Myers as the agent of Ludington, and while acting within the course and scope of his employment. The demurrer ore terms only admitted the issuable facts alleged in the complaint, but did not admit such mere conclusions of law from the facts alleged. Aron v. Wausau, 98 Wis. 592, and cases there cited. The representations of Myers in respect to the corporation and the capital stock thereof were not within the apparent scope of his authority to sell the land. Besides, it appears from the complaint that Myers was only an agent of Ludington for the purpose of selling the particular lands in question. He was not a general, but only a special, agent. “ The scope of the authority of a special agent is ordinarily much more restricted than that of a general agent.” Mechem, Agency, § 285. “While a general agent may bind his prin [446] cipal when acting within, the scope of his apparent authority, although he exceeds his specific instructions, yet that is not the rule in the case of a special agent.” Bryant v. Bank of Commerce, 95 Wis. 481, and authorities there cited. We are clearly of the opinion that the complaint fails to state a cause of action. By the Court.— The portion of the judgment of the circuit court appealed from is affirmed.