*1 695 habeas ancillary claim under their reinstate ings corpus. accordingly below is court
The decision court for fur- the circuit remanded to and reversed this opinion. inconsistent with proceedings ther plaintiffs. Costs
All concurred.
GANDY v. COLE Opinion op the Court Principal Principal Agent op Agent Liability op —Acts — 1. —Fraud. persons A can be held liable to third for the fraud agent agent in a of his is found that he it agent could defraud while where the authority apparently acting granted within the principal. Principal op Principal Agent op Agent Liability —Acts — —Fraud. agent defraud place Defendant did not plaintiff should known defendant’s where have manage plaintiff’s personal authority lacked financial highly specialized, affairs because defendant’s business was providing only management gasoline services for stations. Principal Agent op Agent Liability op Principal —Acts — —Business Card. give A who allowed an a business indicating card as a associated place “business counsellor” did not personal to defraud finances where in Headnotes Reference Points 2d, Agency Jur 3 Am 261-286. [1-12] §§ specialized operated principal was one of business stations, management general gasoline services for financial affairs of clients. *2 Agent op Agent— Principal and —Position Trust —Acts 4. Liability op Principal. agent principal A be liable for fraudulent acts of his will not benefit, in a case an from which he received no even where trust, agent in agent has been a of personal capacity in agent. dealt with a and not as an was Principal Agent Propensities op Agent and 5. —Antisocial —Acts -Liability op Principal. n — knows, know, principal agent’s
A or of his who should antisocial propensities may places agent liable if he in a damage can where he others. Principal Agent Propensities Knowledge and 6. —Antisocial — of Principal. know; agent principal engaged
A does not in is antisocial merely agent activities because he knew the in- had made large salary in his principal vestments relation to where the agent might had reason to believe the have other income. Principal Agent Misdealings Agent Notice—Signa- and 7. — of — ture on Check. payment by principal’s signed
A cheek from of a one customers principal’s agent was not to inform sufficient notice principal agent that his in involved the customer’s private finances. Principal Agent op Agent and 8. —Acts —Ratification. agent’s principal
Ratification of an fraudulent acts can- complained not occur is unless it found that the acts of were done, professedly done, principal. on the account of the Principal Agent Agent and 9. —Acts of —Ratification—Personal Capacity. principal ratify dealing
A in agent cannot acts of his fraudulently person person a third with where the third dealt agent personal capacity capacity in and not his agent. as Principal Agent op Agent Liability Principal. 10. —Acts — of
A principal money is not liable to for received good faith, ordinary his from course of busi- Opinion of the Court money consideration even where the ness, and for valuable person. frauduently from the third obtained by O’Hara, J. Dissent Authority Liability. Agent Apparent Principal — — potential permits principal cus- who A representing is a business card tomers rep- the card’s bearer is his “business counsellor” and what counsel- resentative should malee it his business to Tcnow agent. ling being by the done Agent Agent Knowledge Principal Princi- —Acts of — pal. agent’s duty all his has a busi- A himself inform a cus- ness activities he learns his has where from accrue tomer excess could far legitmate services rendered. Frederick Oakland, Ziem, C. J. Sub Appeal at (Docket mitted Division 2 9, 1971, Lansing. June *3 No. 10385.) August 30, Decided Mabel Allen L.
Complaint by Gandy against and from William Webb for fraud. damages Judg- Af- ment for defendant Cole. Plaintiff appeals. firmed. Edwards,
Dee for plaintiff. Underwood, Kuhn M. Scupholm é Otís (by Jr.), for defendant Cole. J.,
Before: P. Bronson Danhof, JJ. O’Hara,* P. seeks recover from J. The
Danhof, Allen L. that were inflicted damages alleged * Supreme sitting Appeals Justice, Former on the Court of Court by assignment pursuant 6, 1963, 23 as amended to Const art Webb, William while an of Cole’s. After
hearing jury, the case trial without court found for the defendant, and we affirm. operated
Allen L. Cole a business known as Allen provided L. &Cole Associates. This business gas operators various services to station and was operators. solely gas limited station Cole’s em- ployees, at men, referred as field would call gas operation. They stations and examine the would things inventory do such as check the and the book- keeping regular and make out At tax returns. in- gas operator tervals the station would receive a containing improve statement how advice on operation. money only time that the field men handled they
was when collected the fees owed to Cole.
Plaintiff’s husband was a subscriber to Cole’s services and signed man William Webb was the field as- gas plaintiff’s
to his station. In 1965 husband was killed in an accident, automobile part management time on Webb took an active in the plaintiff’s finances. about the time of the At plaintiff’s gave death of husband, employed a business card that indicated that was by Allen L. &Cole business counsellors. Associates, management Webb soon took over the of most of plaintiff’s money, including proceeds proceeds sale station and of a life policy plaintiff’s insurance husband. Until the Gandy’s sale of the station, the service station bank account was continued names *4 payable Webb. Webb wrote a check Allen L. to &Cole Associates on this account. The check was for the services rendered Cole. plaintiff’s
Webb continued to control the finances During for a considerable time. this time Webb in- partnership vested in some race horses in Cole, with Opinion op the Court appears that at the It stations. in some value. investments are without time these plaintiff’s management of undertook Webb pay understanding her that he would funds per For a time funds. Webb month out these $300 payments later he decreased them but made the $300 per became dissatisfied and month. Plaintiff to $100 seeking phone calls Webb made numerous explanation. had ceased to late 1965 Webb In employed maintained an but still man, as a field did the At' no time establishment. in Cole’s office attempt contact, Cole or plaintiff contact, regarding In 1967the employees finances. of his legal sought this action advice and commencement time About the commenced. disappeared and as Webb action William of this unknown. whereabouts trial his date argues placed that Cole her, was able to defraud and there- where he governing law liable. The Cole must be held fore, Agency, type 1in case is stated Restatement this pp §§ follows: 570, 571, as 2d, 261, 262, puts other a servant or “A who agent, apparently while which enables the upon authority, acting commit a fraud within his subject liability such third persons for the fraud.
“A who otherwise an- would be liable to misrepresentations apparently other for the acting of one liability by for him is not relieved from entirely fact servant or other acts purposes, own unless the other has notice of this.”
For Cole to be liable it must be found that he Webb in a where he could defraud apparently acting while within his au- *5 Opinion op Court the thority. Cole had not The trial found that court placed agree. position we Webb in such a operated by
The business Cole was not one of the general management an af- individual’s business specialized, highly providing fairs. It certain only. services for stations These services were things bookkeeping, preparing limited to as such tax providing’ regarding manage- returns, and advice the ment of busines. At no time did Allen the L. &Cole manage Associates undertake their clients’ finan- general. pos- they cial Nor did ever affairs take session of their funds, clients’ and at no time did they willing being out hold themselves as to under- take such activities. plaintiff places emphasis heavy fact the gave
that Webb a business that card indicated he was & associated with Allen L. Associates, merely business counsellors. We by allowing not believe do that agent designation an the use “busi- placed agent ness counsellor” Allen L. Cole the gave opportunity which him the to defraud plaintiff. the agree finding
We also trial court regardless placed in which Cole place any Webb the did reliance Allen entirely personal L. Cole, but relied on Webb in his capacity agent and not as an of Cole. Even in a case agent where an has been in of trust, will liable for fraudulent acts agent which received no benefit if personal capacity agent. dealt with in an not as agent employed being This is true even if the things inspires is one of the confidence Reporter’s in him. In Notes to 261 Re- of 3 Agency, p following statement 2d, 421, is found: agent pur- “It would seem to be clear is porting doing things act as which v. agents normally do, and the third has no such acting reason to know that the on his own account, the should be liable because he with has invited third in with- deal persons, limits such third would what, *6 agent’s beyond authority. goTo this, seem to be the permit persons to however, and the third to recover every advantage in where case takes of the position standing perpetrate to going a fraud would seem be too far. Thus, to un- doubtedly, person the fact that a is a bank cashier persons causes third to him; trust but the bank by not should be liable to third defrauded merely occupied the cashier because the he inspired readily more the belief he was trust- that worthy. If he is not dealt with as an merely person bank but as a trusted because of his liability in the there bank, should be no more than for other act of an or servant not scope employment.” within done plaintiff The trial court’s conclusion that the did rely ample support on Cole has the record. paid The had no contact with Cole, she Cole suspicious fee, no and when she became she did not attempt to contact Cole. Therefore, it is reasonable rely to conclude she that did not on Cole. may
The
also
that
contends
Cole
be held
theory
negligent
on
liable
that he
was
contin-
uing
employ
to
Webb after he became aware that
untrustworthy.
Webb was
knows,
One who
person’s
propensities
should
of a
know,
antisocial
may
places
be
if he
liable
that
damage
Bradley
where he can
others.
Stevens
(1951),
The bases fact that Cole knew that had Webb invested in several pur- jointly stations that and Cole Webb investments These horses. chased several race salary. large testified Cole relation Webb’s working and wife was Webb’s that that he believed grand receiving money from his was Webb that he also testified estate. Cole father’s plaintiff’s in the involved aware that Webb he believed indicated that The trial court finances. credibility question we defer and on (1968), Huizing 9 Mich trial court. Powers v. the App say as a Furthermore, we are unable in his was unreasonable that Cole matter law belief. plaintiff argues that the fact that a Gandy’s check station was made service
signed sufficient notice William Webb was plain- in the inform was involved agree. It would indeed We cannot tiff’s finances. require heavy burden on a businessman every determine examine check that he receives to *7 signed who had it. that contends Cole ratified Webb’s
The by retaining re-a acts were received as benefits that he learned of the sult of Webb’s fraud after argument on Plaintiff’s is based the fact fraud. in 1966 $1,040 from Webb and 1965 Cole received subsequent- $2,000. The loan was Webb loaned Cole repaid ly $1,040 was received in and the for owed Cole. The trial court Webb knowledge that he found that Cole did have receiving plaintiff’s money. plaintiff’s argument, we understand the she
As of makes Cole contends that the retention benefits damages by actions. liable for all caused Webb’s considering In we remember this contention must ordinarily given cases relief in ratification is the restitution action. same as the case Seavey, receipt Agency, 38(f), p § aof See 73. The v. Opinion op the Court automatically benefit does make one limited liable for all party. damage inflicted place plaintiff often When ratification has taken proper may he of In a has a choice remedies. case bring damages for deceit, or action fraud may v. Wieser seek to rescind a contract. Gower (1934), may Mich 6. also have the option bringing of an action on the or contract, seek- quasi-contract ing Seavey, ain restitution action. p Agency, recovery may § 71. The amount of 38, vary theory depending plaintiff pro- on what recovery depends ceeds but the amount of under, particular simply of facts the case and in- voking automatically the term ratification does not impose liability regard- to the full extent the loss less of other circumstances. question
We turn now to the of whether it can retaining be said that Cole ratified Webb’s acts benefits. In order find ratification must we first complained pro acts find that or done, fessedly principal. on the account of done, See Serges (1964), Cudahy David 442, Michigan Corp. Brothers West Co. v. Dock & Market (1938), Agency, 18; 285 Mich Restatement 2d, p previously 82, 210. As we have stated the trial court found that Webb did not deal with the personal as an Cole, but rather acted in his capacity. acting professedly Since was not acting on Cole’s be held to account, cannot have ratified acts. Webb’s
There is another class cases which the term unfortunately applied. ratification has been Al- *8 though may agency there be no ratification under unjust may law, the element of enrichment be recovery may and thus under had type plaintiff law In this restitution. case the remedy only ahas more limited choice of restitu- 35 Mich tionary possible. Seavey, Agency, relief See 38, 41, pp 71, §§ restitutionary relief is
On the facts of this case plaintiff. money available to the that Cole re subsequently other than the Webb, ceived repaid paid in settlement of debts loan, owed payment Webb to Cole. When one receives good ordinary in the faith, business, course of money for a consideration valuable cannot be though fraudulently recovered even it obtained person. from a third Walker v. Conant (1888), 69 Mich 321. See also & Jules S. Bache Co. v. Bank Seavey, Agency, Detroit 261 Mich 436; (1933), 41, p
An illustrative Bearce case is v. Fahrnow (1896), plaintiff Mich 315. In that case an payment plain- made a to the which defendant payment tiff intended down to be on some live- stock. The defendant refused to deliver the live- money, plaintiff brought stock or return the and the money. an action to recover his The defendant applied contended that he had to an old debt of the and therefore he was not liable. The Court found that the could recover if money belonged the defendant had notice that money paid or if the had in fact been as part purchase price livestock whether money or not the defendant had notice that the be- longed plaintiff. to the In the case at bar, the trial paid court found that fact the been aon debt that Webb owed Cole, that Cole did money belonged plain- have notice that the to the tiff. Therefore, cannot recover under either of the theories advanced Bearce.
Affirmed, costs to the defendant. J., concurred.
Bronson, *9 v. Cole J. Dissent O’Hara, (dissenting). I As understand J. O’Hara, impermissible appellate for the review, it is limits of judgment reviewing for that its court to substitute un- issues of fact on controverted trial court purport clearly I do so do not erroneous. less here. legal completely a different come however,
I do, than facts did the uncontroverted conclusion from judge. trial permits principal a an case, in this
When, as potential a business card customers to proclaiming principal, sundry he, all card bearer counsellor” and that the is a “business representative, principal better make is his “counselling” done, to know what it his business particularly doing counseling a when the results principal $15,000. out of some customer against dis- A faultless has no defense honesty, it this accords does follow that but gullibility. right his When to limitless employee dealing begins his lends horses, race signed by principal money, gives him a check principal’s amount customer far in excess legitimate possibly services accrue for that could of law there I would hold as matter rendered, obligation upon inform himself agent’s doings instanter. judgment I of action would vacate the of no cause testimony taking and remand for as to principal re- amount of the customer’s employee judg- from his dishonest and enter ceived plaintiff in that amount. ment for the Plaintiff have costs. should