169 P. 102 | Or. | 1917
Lead Opinion
delivered the opinion of the court.
At the trial the court permitted the defendant to testify, over the objection of plaintiff, that he had entered into an agreement with the traveling salesman,Felix Cohn, to the effect that the defendant was not to be liable for the purchase price of the goods sold, “but that plaintiff should accept in payment therefor its pro rata share with other creditors of the funds realized by the trust estate of which defendant was trustee.” At the close of the testimony the plaintiff moved for a directed verdict “on the ground that Cohn has no implied authority to make such an agreement, and that it was not, therefore, bound thereby.”
The motion for a directed verdict was overruled, and when charging the jury the court gave the following instruction:
“The defendant, Cohn, was authorized under the evidence here to solicit orders and to transmit them to his house, and that the house thereupon was to determine whether or not they should be accepted and the goods shipped, and it was his duty to transmit those orders as they were given to him with the condition and limitation, and if there was a condition that the goods were to be shipped to Kennedy as trustee, and that he wasn’t to be personally responsible, but was to pro rata with the other creditors with this plaintiff, it was the duty of this agent to transmit that condition with the order to his principal, and if he failed to do that his knowledge of the conditions would be imparted to his principal, so that is the reason I have denied the motion for a directed verdict. ’ ’
The assignments of error are predicated upon the admission of the evidence of defendant, the ruling on a motion for a directed verdict and the quoted instruction.
The Code prescribes the rule of construction which governs us, for it is said in Section 85, L. O. L., that:
“In the construction of a pleading for the purpose of determining its effect, its allegations shall be liberally construed, with a view of substantial justice between the parties.”
“as such trustee with the full and complete understanding and with the positive agreement to and with said defendant that the goods and liquors so supplied were to be paid for pro rata, and that the defendant was not bound nor held personally and was only liable as such trustee.”
Here is a plain and unambiguous statement that it was agreed that defendant was not to be held personally at all, but that he should only be liable in his capacity as trustee and even in that capacity he was only to be liable “to the extent of the pro ratio share of the proceeds” derived from the Carns saloon business. At no time during the trial or on this appeal was it contended or even suggested by counsel that the answer meant that it was agreed that Kennedy was only to be liable personally to the extent of a pro rata portion of the proceeds of the business; but, upon the contrary, the cause was tried in the nisi prius court by both counsel and judge on the theory that the answer alleged that it was agreed that Kennedy would be exempted from liability entirely. When arguing the motion for a directed verdict counsel for plaintiff addressed the court thus:
“The vital question in this case is whether or not there was an express contract entered into at the time of the sale whereby Mr. Kennedy- — whereby it was agreed that Mr. Kennedy should not be liable for goods he had then and there purchased and that, may it*572 please your Honor, is the question to . which I desire to address myself in this action.”
In his charge, the court repeatedly told the jury that the defendant’s position was that the goods were ordered with the distinct understanding that he was not to he personally liable, and that the position of the plaintiff was that there was no agreement that defendant was not to be liable. Furthermore, the court instructed the jury that the burden was upon the defendant to establish “that he gave the order to pay as trustee and that the distinct understanding between the plaintiff and himself that he wasn’t to be personally liable.” Moreover, no exception to any part of the charge to the jury was predicated upon the theory that the defendant had alleged in his answer that his personal liability was limited to a pro rata share of the trust estate. The answer alleges that the plaintiff and defendant agreed that he was not to be liable personally at all, but that he was only to be liable as trustee and his liability as trustee was limited to a pro rata share of the trust estate. This allegation is only one way of saying that the plaintiff agreed to look solely to the trust estate for payment, and the trial was conducted by all parties on the assumption that such was the meaning of the answer. The defense interposed by Kennedy was sufficiently pleaded if he alleged that the goods were sold to him upon an agreement exempting bim from personal liability. He did so allege in his answer; and it was not necessary for him to allege more. When construed by the rule fixed by Section 85, L. O. L., and when viewed in the light of precedents the answer must be held to mean that Kennedy claimed to be entirely exempt as an individual: Wyatt v. Wyatt, 31 Or. 531, 537 (49 Pac. 855); West v. Eley, 39 Or. 461, 464 (65 Pac. 798); Patterson v. Patterson, 40
Having construed the answer and ascertained the meaning of its language it will now be necessary to determine whether Kennedy can avail himself of the defense that he ordered the goods upon an agreement exempting him from personal responsibility. The plaintiff contends that even though it be conceded that Cohn and Kennedy agreed that the latter should not be liable personally, nevertheless, the plaintiff is not bound by such agreement because it did not have knowledge of the agreement when it shipped the goods and Cohn as agent had no authority to make such an agreement for the plaintiff. The question for decision is whether Cohn had authority to receive orders for goods from Kennedy as trustee with the understanding that the latter should be exempted from personal liability.
It was Cohn’s business to solicit orders and he acted within the scope of his agency when he solicited and obtained orders from customers, whether such customers were individuals or otherwise. He acted within the scope of his agency when he solicited orders from a corporation or from a partnership or from a person acting in a representative capacity or from a person acting for himself individually; and, hence, Cohn did not exceed his authority if he solicited and obtained orders from Kennedy as an individual or from Kennedy as a representative. Kennedy defends by saying that the goods were purchased by him solely in his capacity as trustee with an agreement exempting him from personal liability.
It is not necessary to determine whether Cohn could bind his principal by agreeing to sell for prices less than those fixed by the principal; nor is it necessary to decide whether a traveling salesman can obligate his employer to allow discounts or rebates tc customers. The defense is — not that Kennedy as an individual is only liable to the extent of the amount of the trust assets prorated among the creditors; but, that he is not liable at all as an individual. The alleged stipulation relative to prorating the assets is a component part of the averred agreement with Kennedy as trustee. To
If it be assumed, without deciding, that a sale to a trustee as such involves the risk of being obliged to prorate with other creditors, on the theory that if the trust estate is insufficient to pay all the debts the law will compel the creditors to prorate, then the stipulation entered into between Cohn and Kennedy with reference to prorating did not change the rights of the parties in the least for they only agreed to do what the law would compel them to do even though they had
Dissenting Opinion
delivered the following dissenting opinion.
I cannot concur in the conclusion reached by the majority of the court in this cause. A paragraph of the answer hereinbefore set forth contains a clause which reads:
*577 “That the plaintiff * * supplied such goods, liquors, etc., to said defendant as such trustee with the full and complete understanding and with the positive agreement to and with said defendant that the goods and liquors so supplied were to be paid for pro rata, and that the defendant was not bound nor held personally and was only liable as such trustee, and only to the extent of the pro ratio share of the proceeds thereof
The words here emphasized are a summary of the language of the preceding affirmative averments of the answer on this subject and affords the latest expression of the defendant’s counsel as to their interpretation of the defense interposed. The allegation that the defendant “was only liable as such trustee,” if unqualified, would mean that'Kennedy was personally liable for the payment of the entire consideration of the goods which he purchased from the plaintiff, even in his representative capacity: Perry, Trustees (6 ed.), § 437a; 39 Cyc. 333; Taylor v. Davis, 110 U. S. 330 (28 L. Ed. 163, 4 Sup. Ct. Rep. 147); Ogden City St. Ry. Co. v. Wright, 31 Or. 150 (49 Pac. 975); Connally v. Lyons, 82 Tex. 664 (18 S. W. 799, 27 Am. St. Rep. 935); Roger Williams Nat. Bank v. Groton Mfg. Co., 16 R. I. 504 (17 Atl. 170). The averment that the defendant “was only liable as such trustee” is limited, however, by the phrase “and only to the extent of the pro rcútio share of the proceeds,” thus making the concluding clause of that part of the answer mean that Kennedy was not responsible for the payment of any sum beyond the pro rata share of the proceeds, but to that extent he was personally liable.
That the trust agreement expressly authorized Kennedy to purchase new stock is unimportant, for he was directed to continue the management of the saloon and that grant of general power necessarily carried with
Another paragraph of the answer, referring to the time between June 19, 1912, when Kennedy was appointed trustee and February 25, 1915, when he was discharged, reads:
“That during said interim, this defendant as such trustee purchased from this plaintiff liquors, goods, wares and merchandise of the value of $937.77, and paid out and disbursed said plaintiff therefor the full sum of $616.54, which was pro ratio the amount paid and disbursed to other creditors of said defendant as such trustee for the goods so supplied to keep and maintain said business as such going concern.”
Construing this paragraph in connection with the one hereinbefore quoted, it will be seen that these averments are to the effect that pursuant to the terms of an agreement made with Cohn for his principal, though the defendant ‘ ‘ as trustee ’ ’ was never personally liable for more than a pro rata share of the value of the goods which he purchased from the plaintiff in order to continue the saloon business, he was not when the answer was filed, indebted to the corporation in any
This action was brought to recover the difference between $937.77, the value of the goods sold and delivered, and $616.54, the sum paid on account thereof. In alluding to such remainder, a clause of the answer reads:
“That the said sum of $321.23 sought to be recovered in said complaint is the unpaid balance as aforesaid, and defendant does not owe the same or any part thereof. ’ ’
An ample construction of these averments induces the conclusion, which is to be obtained from the final expression of the facts thus set forth, that while the defendant was “only liable as such trustee and only to the extent of the pro ratio share of the proceeds thereof,” he was not personally liable for any sum in excess of such ratable proportion.
The most liberal interpretation of the allegations of the answer that can possibly be demanded by Section 85, L. O. L., will not justify the deduction that defendant’s counsel pointed out a better writ, or suggested that the relief demanded in the complaint should be denied because this action was not brought against Kennedy “as trustee,” or Cams as cestui que trust, thereby manifesting an intention to plead in abatement, as would seem to be indicated from the following excerpt taken from the majority opinion herein:
“If Kennedy is not liable personally then the instant action must fail because it is prosecuted against him personally. ’ ’
A text-writer in commenting upon this legal principle observes:
“In a court of law the trustee is the absolute owner of the estate, and he can exercise all the powers of*580 ownership; he can sne and be sued, even though the cestui que trust is dead, and must act in many respects as the owner; and so he must be treated by .others as the sole proprietor; but in equity the cestui que trust is the owner, and the question in equity is, how far the trustee can act without exceeding his powers, and rendering himself responsible to the cestui que trust”-. Perry, Trustees (6 ed.), § 475.
Kennedy was a trustee of an express trust: Section 29, L. 0. L. As such he held the legal title to the property that had been assigned to him, and for any infringement of his right of possession or of property he could have maintained an action at law in his own name. Thus in Trustees M. E. Church v. Adams, 4 Or. 76, 89, Mr. Justice Thayer in speaking of a person so appointed, remarks:
“Adams has the legal title, and a full and complete remedy may be had without bringing any of the other parties who have participated in the transaction referred to before the court”: See also United States v. McCann, 40 Or. 13, 17 (66 Pac. 274); Wright v. Conservative Investment Co., 49 Or. 177, 179 (89 Pac. 387); Kollock v. Bennett, 53 Or. 395, 401 (100 Pac. 940, 133 Am. St. Rep. 840).
The converse of this rule is true and a trustee of an express trust, like an administrator or executor, can be sued individually on contracts made by him on a new and independent consideration: 2 Bates, Plead. Prac. Parties & Forms, 1597; 30 Cyc. 92. As the contract of sale herein was made with Kennedy after he was appointed trustee, an action at law could have been maintained against him individually: Taylor v. Davis, 110 U. S. 330 (28 L. Ed. 163, 4 Sup. Ct. Rep. 147).
The defense herein is not based upon the postulate that this action should be defeated because it was not
It has been held that if a trustee would escape personal liability upon contracts made by him in his representative capacity, he must expressly agree with the other party that the latter will rely solely upon the trust estate for the consideration of the obligation thus incurred: Taylor v. Davis, 110 U. S. 330 (28 L. Ed. 163, 4 Sup. Ct. Rep. 147). It must be conceded that a solvent merchant who possessed adequate mentality could by express agreement donate his goods to a person individually or while acting in a representative capacity, so that a delivery of the merchandise would transfer the legal title and preclude the possibility of a recovery of any part of the consideration therefor. When a commercial traveler solicits an order for the sale of goods to a trustee, an agreement that the sale is made to him individually is not distinguishable, in legal effect, from a contract to sell to him in his representative capacity, for in each character the purchaser is personally liable, in the absence of a stipulation to the contrary.
The gist of the affirmative defense herein is not that the liquors, etc., were sold and delivered to Kennedy
The part of the instruction hereinbefore quoted, which made it incumbent upon Cohn, as a commercial traveler, when receiving a request from Kennedy to purchase any of the plaintiff’s goods, to forward such order to his principal is supported by reason and authority: 2 C. J. 593. Thus in L. A. Becker Co.v. Clardy, 96 Miss. 301 (51 South. 211, Ann. Cas. 1912B, 355), it was ruled that by virtue of his employment a traveling salesman was authorized only to solicit orders and transmit them to his principal, and that he could not make an absolute contract of sale unless he had had express authority to do so, or was held out as possessing such power.
I cannot, however, assent to that part of the court’s charge which states in effect that if Cohn failed to transmit to the corporation the order which he received, with its restrictions and limitations, “his knowledge of the conditions would be imparted to his principal.” If such a doctrine were to prevail, the precept would permit a commercial traveler, in the absence of testi
In Dight v. Chapman, 44 Or. 265, 278 (75 Pac. 585, 65 L. R. A. 793), it is said:
“The general rule is that knowledge of an agent, acquired while acting within the scope of his authority, relating to matters intrusted to him and over which his authority extends, is constructive notice to his principal. * * There are several well-recognized exceptions, however, to this general rule. # # If an agent conspire with a third party to defraud his principal, or if on his own behalf he intends to do so, the knowledge which he may obtain, and which it was his duty to disclose to his principal, will not be imputed to the latter. * * So, too, if an agent has an interest to sub-serve that is adverse to his principal, any knowledge that he may have acquired from a third party during the time of and relating to the matter of the agency will not be imputed to his principal.”
The practice is so general that judicial notice might almost be taken that the compensation of a commercial traveler depends very much upon the amount of sales of goods which he negotiates. His personal interests would therefore prompt him to magnify, as much as possible, the volume of orders which he secured. While Cohn might have had reason to believe that full compensation would be made for the goods which Kennedy ordered, and for that reason never notified the plaintiff of the agreement, which the jury found he made, to accept a pro rata share of the value of the merchandise, but however this may be the agent evidently had an interest to subserve that was adverse to
In Walsh v. Hartford Fire Ins. Co., 73 N. Y. 5, 10, Mr. Justice Andrews in discussing this subject, observes :
“The authority of an agent is not only that conferred upon him by his commission, but also, as to third persons, that which he is held out as possessing. The principal is often bound by the act of his agent in excess or abuse of his actual authority, but this is only true between the principal and third persons, who believing and having a right to believe that the agent was acting within and not exceeding his authority, would sustain loss if the act was not considered that of the principal.”
The legal proposition thus announced has been sanctioned in the cases of Connell v. McLoughlin, 28 Or. 230, 234 (42 Pac. 218); Harrisburg Lmbr. Co. v. Washburn, 29 Or. 150 (44 Pac. 390); Baker v. Seaweard, 63 Or. 350 (127 Pac. 961); Portland v. American Surety Co., 79 Or. 38 (153 Pac. 786, 154 Pac. 121); Nicholas v. Title & Trust Co., 79 Or. 226 (154 Pac. 391, Ann. Cas. 1917 A, 1149).
In the ease at bar no evidence of Cohn’s former dealings having been offered as tending to show the plaintiff had held him out as possessing sufficient authority to make such an agreement as is alleged in the answer herein, the defendant could not have been justified in believing the agent was empowered to accept a pro rata compensation for the goods ordered. A party undertaking to hold a principal liable for the disputed acts of an agent, must offer proof tending to establish either that requisite authority had been conferred, or conduct on the part of the principal constituting an estoppel, or his ratification of the unauthorized agree
The authorities cited by defendant’s counsel do not in our opinion controvert the legal principle here asserted. Thus in 31 Oyc. 1331, et seq., reference is made to the apparent scope of an agent’s authority, which manifest grant of power is evidenced by the principal holding out the agent as possessing such right, or knowingly allowing him to assert that he has the requisite authority. Among the cases cited a§
“The agency as claimed by the plaintiff was controverted, and there was evidence tending to establish it. The sufficiency of the evidence was a question for the jury under appropriate instructions from the court.”
In that case testimony was received tending to show an estoppel on the part of the principal. In Liddell v. Sahline, 55 Ark. 627 (17 S. W. 705), it was decided that a general agent with power to buy might bind his principal by purchases within the scope of his authority, though in violation of specific instructions of which the seller had no notice. In that case the evidence was sufficient to be submitted to the jury on the question of the agent’s authority, though transgressing particular directions of which the seller had no notice.
“If the plaintiff accepted the contract of his agent, he must accept it as a whole, and cannot accept that which suits him and reject the balance. The principal is bound by the representations of his agent, bound by the contracts he makes within the apparent scope of his authority.”
If the testimony in that case had disclosed that the principal, with a knowledge of all the material facts, accepted a part of the contract undertaken to have been made by his agent, such approval would have amounted to a ratification of the entire agreement, and the conclusion thus reached would have been consonant with the current of authority. The evidence on that subject as set forth in the opinion is meager. If it was intended by the use of the language employed to announce the doctrine that a ratification resulted without a knowledge of all the material facts, I cannot assent to the doctrine so asserted.
• The remaining case cited by defendant’s counsel is that of Banks Bros. v. Everest, 35 Kan. 687 (12 Pac. 141), where it was declared that a principal was bound by the acts of his agent within the scope of his authority, and that the principal was also responsible for
The testimony received at the trial shows that the defendant, though trustee for Cams, was also engaged with a partner in conducting for the firm a saloon at Medford, Oregon, and that Kennedy’s financial standing was such that he could, upon his own account, have secured from wholesale liquor dealers goods to the value of most any reasonable amount, and that the plaintiff had, prior to such assignment, sold and delivered goods to that firm. While Cohn may have been authorized in other instances to solicit in behalf of his principal, liquors, etc., he must necessarily have been empowered to negotiate sales of like goods to such customers as Kennedy. The implied authority of a traveling salesman is to take orders for the sale of his principal’s goods, payable in cash on delivery or within a reasonable time. To hold a principal liable upon a contract alleg'ed to have been made by his traveling salesman, whereby only a portion of the purchase price of goods might possibly be paid, in full satisfaction thereof, in the absence of any proof on the part of the purchaser that the agent possessed real or apparent authority to conclude an agreement to that effect, is to render a recovery by a wholesale house of its demand dependent upon the oral testimony of the purchasers of their goods after they are delivered.
Buies of the common law ought so to be formulated and applied by courts as generally to dispense substantial justice to all parties. However honest a com
While the principal is held liable for the contracts made by his agent if he acts within his real or apparent authority, evidence thereof should be given when the power of a commercial traveler is controverted, before the principal is rendered liable. This is as far as the rule ought, in reason, to be extended, and to hold that the principal is liable when the agent did not communicate to him an offer made by a contemplated purchaser, though it was to the interest of the commercial traveler to withhold such information, is to carry the doctrine to the very limit of unreasonableness.
In my opinion errors were committed in refusing to direct a verdict for the plaintiff, and in charging the jury as stated. For these reasons the judgment should be reversed.
