Pacific Lumber Co. v. Moffat

LOCHREN, District Judge, after stating the case as above, delivered the opinion of the court. ■ The order by Vreeland, as agent of defendant, upon plaintiff for 90 car loads of shingles at prices 20 cents per thousand above the then market prices, and the acceptance of the order by McDonald as plaintiff’s agent, was the means then devised and adopted by those two persons purposely to defraud the defendant by causing him to pay the indebtedness of about $2,700 then owing to plaintiff by the insolvent Chicago Lumber Company, in which debt the defendant had no concern. Vreeland’s authority as agent to purchase and sell lumber and shingles and to manage that business for defendant, however general, did not authorize him to obligate and bind his principal to pay the debt of another. Mechem on Agency, §§ 307, 313, 392, 400. The testimony of plaintiff’s agent, McDonald, shows clearly that this was the scheme agreed upon between these persons, and that they figured carefully the amount of shingles on which the excess price of 20 cents per thousand would cover that debt'of the Chicago Lumber Company, and made the order for the amount of shingles which would accomplish that result. The personal letter of McDonald to Vreeland of August 19, 1898, speaks plainly of this device. The alleged contract upon which this action is based was therefore entered into by defendant’s agent without authority, and was palpably fraudulent and void as to defendant, the fraud being participated in by plaintiff through its agent. There is in the evidence no color for claiming that it was ratified by defendant, and, indeed, he could not have ratified it, as he was without knowledge of its terms and the circumstances under which it was entered into. Plainly, the moving purpose for entering into this contract between these two agents was to defraud the defendant. There is nothing in the case to indicate that the business of defendant then, or for any reasonable time in the then future, could call for such a large quantity of shingles, if they could be had at or even somewhat below the then market price. The contract was indefinite as to when they were to be delivered. The definite matter agreed on was that defendant should be made to pay the debt of the insolvent company. Not only was all knowledge of the contract kept from defendant, but. it was agreed that, while Vreeland should continue in the employ of defendant or of the corporation which was expected soon to succeed him, the contract should not be delivered to the plaintiff, but, unless sooner called in by order signed by Vreeland and McDonald, should remain in escrow in the hands of Johnson, to whom it was then transmitted by express, and in whose hands, and never, so far as appears, delivered to plaintiff, it still remains. This secrecy in respect to the contract for the sale of shingles is convincing evidence that the two agents fully appreciated its fraudulent character. Because the alleged contract was fraudulent and void, and because it never took effect by delivery, there was no evidence upon which a verdict for plaintiff could have been supported, and the direction of a verdict for the defendant was right. Commissioners v. Clark, 94 U. S. 278, 284, 24 L. Ed. 59. The particular assignments of error not abandoned on the argument have been considered, and are not sustained. The judgment is affirmed.