Matteson v. Rice

BabdeeN, J. An inspection of tbe complaint and findings discloses that defendant’s agent, Klempke, made false-representations as to tbe character of defendant’s building. Tbe 'plaintiff relied thereon. From tbe character of the-building, it was impossible for plaintiff to ascertain tbe truth-of such representations. Because tbe fact represented was-not true, plaintiff suffered loss. Defendant’s agent bad authority to show tbe flats, make leases, put tenants in possession, and collect tbe first month’s rent. He bad no express-authority to make any “warranties or representations” in regard to tbe construction of tbe building, and be bad no intention of deceiving plaintiff, and believed tbe statement be-made to be true. It must be understood at tbe outset tbat we are not dealing-witb tbe question of tbe authority of an agent to make warranties for bis principal. A warranty, if false, gives rise to an action on contract. Tbat is not this case. If we understand tbe complaint, tbe plaintiff sues to recover damages because of certain false representations made by tbe defendant’s agent. A warranty is a collateral undertaking by which [332] tbe warrantor contracts tbat certain facts in relation to tbe property are or shall be as be represents them. 28 Am. & Eng. Ency. of Law, 728. Tbe same authority, on page 739, says: “Tbe terms ‘warranty’ and ‘representation’ are not synonymous. A warranty is always a representation, but tbe reverse is not necessarily true, tbe first being a more comprehensive term.” This case seems to have become divested of any element of contract, and turns upon tbe question whether tbe representations made by Klempke were within tbe apparent scope of bis employment. An agent’s authority to warrant, as said in Westurn v. Page, 94 Wis. 251, 68 N. W. 1003, must arise from express authority, or proof tbat tbe transaction is usually attended with warranty. Cases may and frequently do arise where tbe agent may have no authority to warrant, and yet, from tbe character of bis agency, bis principal may be held liable in tort for false representations made by him. This distinction may seem somewhat fine and inconsistent, yet it is nevertheless one amply recognized by tbe courts, and frequently enforced. It arises from tbe character and duty of tbe agent in relation to tbe particular business in bis charge. Tbe general liability of tbe principal is as stated in tbe late case of Hoyer v. Ludington, 100 Wis. 441, 76 N. W. 348, where tbe following language was used: “There is no doubt of tbe general proposition tbat if an agent is employed to effect tbe sale of lands for bis principal, and be does so by means of false representations in respect to tbe land conveyed, even without tbe authority or knowledge of bis principal, tbe latter is chargeable with such fraud in tbe same manner as if be bad known or authorized tbe same. Law v. Grant, 37 Wis. 548; McKinnon v. Vollman, 75 Wis. 82, 43 N. W. 800; Gunther v. Ullrich, 82 Wis. 222, 52 N. W. 88. And this is especially so when tbe principal accepts and enjoys tbe benefits of tbe purchase. Fintel v. Cook, 88 Wis. 487, 60 N. W. 788. But even then ‘the representation which is to bind.tbe principal must be made in reference to tbe subject-matter of bis agency; it must [333] be made while tbe agent is acting as such; and tbe making of such representation must be within tbe apparent scope of bis authority.’ Mecbem, Ag. § 743.” In Law v. Grant, 37 Wis. 548, tbe rule in such cases was stated with great strictness. It was there said: “If tbe agent effected it [tbe saie] by means of false representations or fraud of any other description, although without authority from tbe plaintiff to do so, and although the plaintiff was entirely ignorant that he had done so, the legal status of the plaintiff is precisely the same as it would have been had he made the false representations, or committed the fraudulent act to the same end, in person.” It seems to have been assumed that the acts done or representations made in that ease were within the apparent scope of the agent’s authority. The agent represented that valuable minerals had been found on the land. If the principal was bound by such representations, it is not difficult to see in this case that defendant was responsible for the representations as to the fire wall. The representation of the existence of such wall was one of the inducements that led the plaintiff to make the lease he did. In the one case the representation of a mineral discovery induced the sale, and in the other the representation of the existence of a fire wall induced the lease. The one seems to have been as much within the scope of the agent’s employment as the other. The representation as to the existence of the fire wall referred to the safety and condition of the premises. If it existed, the fact was an inducement to plaintiff to make the lease he did. Suppose plaintiff had asked the agent whether the roof leaked or the plumbing was in good condition; would not the agent have had implied authority, from the fact that he stood representing the owner, to have made answer to such questions ? The difficulty .experienced in cases of this kind is as to the proper understanding of the phrase “within the scope of his agency.” It cannot properly be restricted to what the parties intended in the creation of the agency. Nor [334] can the question be determined by the authority intended to be conferred by the principal. As stated in some of the cases, we must distinguish between the authority to make the representations which amount to a fraud, and the authority to transact the business in the course of which the fraudulent act was committed. Tested by reference to the intention of the principal, it might be conceded that the making of representations culminating in fraud was not within the scope of the agency; but, tested by the connection of the act with the property and business of the agency, we find a direct connection between such act and business, and that the act was done by virtue of the authority of the agent in the particular matter. See Reynolds v. Witte, 13 S. C. 5. Tbe scope of the agent’s authority reaches out, and permits him to do such acts and things as are directly connected with and essential to the business in band. Tie may .not do everything bis principal may do, but where the matter in controversy directly appertains to and becomes a necessary part •of the transaction under consideration, and an inducement to the acceptance of the deal by the party to whom the representations are made, then we may say that it falls “within the scope of the agency.” If the principal bad been present, .-showing bis building, with a view of leasing, inquiries regarding the danger of fire, the condition of the plumbing, and the like, from the lessee, would have been perfectly natural and in accordance with ordinary business foresight. Any false answer material to such inquiries, and affecting the proposed tenancy, would have made the principal liable. 'Substitute the agent with authority to lease; bow is the situation changed? Tbe considerations mentioned were germane to the transaction. They operated as an inducement to the making of the lease, and the referee has found that, if the representations bad not been made, the lease would not have been entered into. Tbe fact that the agent bad power <to make the lease gave him authority to answer such ques [335] tions regarding the nature and construction of the building .as were not evident to the senses of a prospeetivé tenant. .Such authority arises from the nature of the transaction and the enforced reliance of the tenant upon the agent’s answers. 'The fact that the agent believed such representations to be true, and had no intention to deceive the tenant, does not lessen defendant’s liability. That question was settled early in the history of the jurisprudence of this state, and some of the cases are mentioned in Davis v. Nuzum, 72 Wis. 439, 40 N. W. 497. The subject is discussed in McKinnon v. Vollmar, 75 Wis. 82, 43 N. W. 800, where a sub-agent pointed out the wrong land to the purchaser, and where false representations were made as to the amount of timber thereon. In Gunther v. Ulrich, 82 Wis. 222, 52 N. W. 88, the agent of the vendors made a false statement as to the location of their lots, whereby the vendee was induced to purchase the same. The vendors were held liable for such misrepresentation by the agent, whether intentional or not. If an agent to sell has authority to point out the location of land he de-cires to sell, it is difficult to see why an agent to lease has not .authority to describe the building and its surroundings which he desires to lease. See Porter v. Beattie, 88 Wis. 22, 59 N. W. 499; Beetle v. Anderson, 98 Wis. 5, 73 N. W. 560; Krause v. Busacker, 105 Wis. 350, 81 N. W. 406; Hart v. Moulton, 104 Wis. 349-359, 80 N. W. 599. As already suggested, such authority seems to fall naturally from the relation of the parties, the nature of the business intrusted to the agent, and the circumstances found by the referee. In this view, the conclusions of the referee and the trial court were erroneous, and the judgment must be reversed. There being no bill of exceptions, and no finding as to the •amount of plaintiff’s loss, the court below is directed, if necessary, to take further testimony upon the subject, to determine the amount of such loss, and to enter judgment therefor for the plaintiff. By the Court. — So ordered.