Powers v. McLean

The question here of the defendant’s liability is not a question of fact, pure and simple; it is rather a question as to the legal conclusion which should follow the inferences properly deducible from certain undisputed facts. It is quite true that the plaintiffs made no direct personal contract with the defendant for the purchase of the goods in question. They never, in fact, saw the defendant upon the subject of the sale. But it is equally true that they made no direct, personal contract with R. & H. Adams. They never saw any member of that firm upon this same subject. What is certain, however, is that they paid their money to the defendant for the goods in question. They paid it to him as the apparent principal in the transaction, not as the apparent agent for any one. Did he, in return for that money, correspondingly agree, by fair implication, to deliver the goods to the plaintiffs? That is the real question. The defendant admits that he received the money, but denies the corresponding agreement. He asserts, on the contrary, that it was not he, but the firm of R. & H. Adams, who agreed to deliver the goods. Undoubtedly, the firm of R. & H. Adams did so agree; that is, they so agreed with Loisson, who was acting under the plaintiffs’ instructions. But did the defendant as well so agree? If he did, the possible liability of R. & H. Adams as undisclosed principals cannot, save him. The principal and the agent may both be liable; so may the principal and even a collateral contractor. The purchaser may hold the agent for failure to disclose his principal, or he may hold the principal when disclosed; or he may, in either event, hold the collateral contractor, if the latter has made a distinct independent contract. Here it will be observed that the plaintiffs had no other-knowledge of the real principal save that conveyed by the bill rendered. The only person whom they knew in the transaction prior to the receipt of this bill was Loisson. They had simply asked Loisson to “book” the goods for them. Loisson was an employé of R. & H. Adams, and he booked the goods with that firm. But of this latter fact the plaintiffs were not aware. They knew, howrever, that Loisson had formerly been in the employ of R. & H.

The learned referee proceeded upon an erroneous view of the law when he suggested that if the plaintiffs did not know who the principals were, and had desired to be informed upon that subject, they could easily have obtained that information. The rule is the other way. It was held in Cobb v. Knapp, 71 N. Y. 348 , that:

“It is not sufficient that the seller may have the means of ascertaining the name of the principal; he must have actual knowledge. There is no hardship in this rule of liability against agents. They always have it in their own power to relieve themselves, and, when they do not, it must be presumed that they intend to be liable.’’

The defendant’s private arrangements with R. & H. Adams are quite unimportant. The one' crucial fact is that when he authorized them to send out bills in his name, as principal, he permitted them to hold him out as such principal. The other crucial fact is that when, under that authority, R. & H. Adams sent out bills in the defendant’s name, they disavowed their own principalship, and proclaimed his. And there is not a scintilla of evidence that the plaintiffs knew that the defendant was a mere collecting agent, nor is there a fact or circumstance in the case from which they could possibly have inferred any such agency. It would, indeed, have been an extraordinary and most unusual thing to constitute a man one’s mere collecting agent, and yet to have all one’s bills made out in that agent’s name as principal. Everything in the case negatived any such inference. Thus, we find that this defendant acted throughout apparently as principal in this and in all other transactions. For instance, when he found that the plaintiffs had accidentally underpaid him by a few dollars, he telegraphed them at once in his individual name; and thereupon they sent him a check for the small balance, which he also retained. He seems also to have had entire control of the market, for he repeatedly sent out notices with regard to the prices of this particular commodity. The fact is that there was, as Mr. Swift understood, a combination of manufacturers of mosquito netting, composed of the three firms, and that this combination was represented by the defendant. The defendant acted apparently as supervisor or regulator of this combination. Its object, it may fairly be inferred from the proofs, was to avoid competition between the members thereof. One of the defendant’s employés testified that all the goods billed in November, 1895, were, he thought, on the same terms. He could not explain how it happened that the terms of the three concerns were identical, but he believed that the goods were to be sold at the same price. The price of the commodity was fixed to equalize, the charges of the three firms. It was undoubtedly to insure accuracy and good faith in this equal

If this case depended solely upon the law of agency, the rules applicable thereto would not be questioned. No one doubts, for instance, that an agent who holds himself out as principal is liable as such. The agent is personally liable if he contracted in his own name, without disclosing his principal. Cobb v. Knapp, supra. Nor is the agent absolved by reason of the fact that he had no beneficial interest in the contract. It was held in Ferris v. Kilmer, 48 N. Y. 300 , that one who authorizes another to use his name in the conducting and carrying on of a business is liable for the debts incurred in such business, although he has no beneficial interest therein. Even where the vendor or purchaser discloses the name of his principal, if he signs a written contract in his own name merely, which contract does not on its face show that he was acting as the agent of another, he will be personally bound thereby. Mills v. Hunt, 20 Wend. 434 ; Magee v. Atkinson, 2 Mees. & W. 440, was there cited with approval, the court saying that that was a case “where the broker had sent in a note of the sale to the purchaser in his own name,” and that “it was held that evidence of a custom in Liverpool to send in brokers’ notes without disclosing the name of the principal could not be received for the purpose of protecting the broker from liability.” These cases differ from the present in the fact that there the agency was in the negotiations for the sale, while here it arose subsequently. They are not, therefore, literally in point, but the principle enunciated covers the peculiar divergence in the case at bar. But even if one, as matter of fact, is originally neither the actual principal nor the actual agent, he may make himself liable as principal by asserting his principalship, and contracting with regard thereto, upon a good consideration. Our conclusion upon the undisputed facts here is that the defendant, in consideration of the sum which he received from the plaintiffs, impliedly agreed to deliver to them the goods specified in the bill which he authorized to be rendered in his in

There is nothing in the point that the proofs failed to substantiate the allegations of the plaintiffs’ complaint. They did substantiate these allegations; that is, they established the essential facts. It would have been bad pleading to aver the evidence of those facts. Here the plaintiffs averred that they purchased from the defendant, and the defendant sold to them, the goods in question. They substantiated this averment when they proved an agreement on the defendant’s part to deliver the goods to them in consideration of the purchase price. In legal intendment, that established a contract of sale.

The judgment should be reversed, and a new trial ordered before a new referee, to be appointed in the order entered hereon, with costs to appellants to abide event.

VAN BRUNT, P. J., and WILLIAMS, J., concur.

(dissenting). The sole question in this case is one of fact. It is whether the goods which were sold by Loisson to the plaintiffs in November, 1895, were sold by the firm of R. & H. Adams, or were sold by the defendant, McLean. The plaintiffs alleged that they bought the goods of McLean, and paid for them, and he did not deliver them, and they asked damages of him for his failure to deliver them. He denied that the sale was made by him. This was the issue, and the plaintiffs were bound to prove by a preponderance of the evidence that the goods were bought of McLean, as they alleged. The referee having, upon conflicting evidence, found for the defendant, upon the ground that the goods were bought of R. & H. Adams, and not of the defendant, the presumption is that that finding is correct, and the question is whether there was sufficient evidence to warrant the referee in making that finding.

The facts are substantially not disputed.. It appears from the testimony of Mr. Swift, one of the plaintiffs, that they were in business in Cleveland, Ohio; that they knew L. 0. Loisson, and that he had been for several years a salesman for the firm of R. & H. Adams; and that they knew it, and they had no knowledge or reason to believe that he was employed for anybody else. As a matter of fact, it appears, and is not disputed in the case, that Loisson, during the month of November, 1895, and before that, was

When the bill was sent, the transaction was complete. The plaintiffs had dealt with the agent of R. & H. Adams, believing him to be such; had ordered the goods from him. The order had been remitted to his principals, and they had accepted it. That, clearly, made a contract between them and the Adamses. It is quite true that the bill was sent in the name of McLean, but this was done by the Adamses, and it was done for the purpose of enabling him to make the collections. If there had been no explanation of that fact, it would not have made him the seller of the goods which Adams had previously agreed to sell, and it was quite clear that he was not so regarded by the plaintiffs, because Mr. Swift says that, when he wanted a delivery of the goods after the failure of the Adamses, he went directly to their place of business to get it. There is not one word of testimony to contradict the statement that McLean was simply the agent to make these collections; nor is there anything to show that the plaintiffs believed or had reason to believe anything different. The evidence is overwhelming to sustain the referee in his findings of fact. The relation of McLean to this whole transaction is a natural one. It is undisputed. McLean was never relied upon by t}ie plaintiffs as the seller of these goods. They did not, so far as appears, know of his existence until the bill was sent, and even then they did not look to him to deliver them.

But it is said that the contract with the Adamses was transferred to McLean, and assumed by him when the bill was sent in his name, and the money received by him. To this theory there are two insuperable objections. In the first place, no such claim was ever made by the plaintiffs either before the action was begun, or in the pleadings or upon the trial. It is rather a remarkable fact that the plaintiffs’ witness Swift carefully forbore to say what claim he made to McLean when he visited New York to get the delivery of the goods from the Adamses;- just as he carefully forbore to say what was contained in the letter which he, so fortunately for the plaintiffs, destroyed, and in which Loisson offered the goods to him. It certainly cannot be presumed, when he talked to McLean, that he asserted that McLean had become liable upon the contract, and the absence of any such assertion at any time is a very important piece of testimony, as contradicting the fact that such liability ever was deemed to have existed. It certainly could

Upon the evidence, and upon the pleadings, the referee could not find any differently from what he did, and the judgment entered upon his report should be affirmed.

PATTERSON, J., concurs.