Kayton v. Barnett — 54 N.Y. Super. Ct. 78

Majority

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WILLIAM KAYTON, et al. v. AARON BARNETT, et. al.

Headnote

Sale.—Undisclosed principal, when not liable.

There can be no recovery of the price of goods sold, against parties as undisclosed, principals, with whom the vendors at the time of the sale expressly refused to contract.

Accordingly, where as in this case, the vendors at the time of the sale asked the party who bought the goods if he was buying for defendants, stating that if he were they would not sell to defendants, and such party replied that he was not buying for defendants but for himself— Held, that defendants could not be held liable as undisclosed principals, though it appeared that the buyer was in fact acting for them on the sale.

Before Sedgwick, Ch. J., Truax and O’Gorman, J.

Decided December 17, 1886.

Exceptions ordered to be heard at general term in the first instance.

The judge who presided at the trial term dismissed the complaint upon the evidence presented by the plaintiffs, and directed that the exceptions be heard at the general term in the first instance, judgment in the meanwhile being suspended.

Action to recover for goods sold and delivered to

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the defendants. The defendants denied the sale and delivery, and alleged that the goods were sold and delivered to a certain other person named Bishop.

Sullivan & Cromwell and George Carleton Comstock, for plaintiffs.

I. The defendants are held responsible as principals to the plaintiffs, the vendors; these plaintiffs, if they so elect, may recover from the defendants as principals, although credit is given to the agent alone (Meeker v. Claghorn, 44 N. Y. 351 ; Wharton on Agency, §§ 464, 469; Pentz v. Stanton, 10 Wend., 271 ; Thompson v. Davenport, 9 B. & C. 78 ; Story on Agency, 267, 446, 447, 423; 1 Am. L. C. 776 , Hare & Wallace). This rule, however, is subject to two exceptions. (a) The principal must not be damnified, that is, the accounts between the principal and agent must not become changed (Rowan v. Buttman, 1 Daly, 412 ; Cheever v. Smith, 15 Johns. 276 ; Rathbone v. Tucker, 15 Wend. 498 ; Bank v. Topping, 9 Ib. 278). There is no evidence, however, in this case to show that the principal was damnified; on the other hand, the evidence clearly shows that the goods in question were delivered to the principal, and that unless he can be made liable in this case he will have paid nothing whatever for their value, (b) Exclusive credit must not have been given to the agent as such, that is, the vendor, with the full knowledge of all the facts and of the relations existing between the principal and the agent, treating with the agent as an agent of some principal and not as a principal, if he then debits the goods to the agent and relies wholly upon the agent’s credit he cannot afterward look to the principal for payment (Thompson v. Davenport, 9 B. & C. 78; Patterson v. Gan de Sequi, 15 East 62; Addison v. Gan de Sequi, 4 Taunton, 574; cited in 2 Smith’s L. C. 309; Wharton on Agency, § 70; Thompson v. Davenport, supra ; Hood v. Cochrane, 1 Bell’s Com., 7th ed. 537; Southard v. Sturtevant, 101 Mass. 390 ; Coleman v. Bank of Elmira, 53 N. Y. 388 ; Rowan

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v. Buttman, supra ; Butler v. Evening Mail Assoc., 34 Super. Ct. 62). The plaintiffs dealt with Mr. Bishop as a principal, and having- some suspicion that he might be acting for the defendants as their agent, put the question, when he expressly denied that he was acting as their agent or otherwise than as a principal. It cannot then be said that the plaintiffs knew Bishop as the agent of defendants or that they had knowledge of the relation of principal and agent which existed between .Bishop and the defendants, so that they could intelligently refuse the credit of the defendants, and in lieu thereof rely exclusively upon the credit of Bishop as agent of the defendants (Lish v. Wood, 4th E. D. S. 329; 1 Am. L. C. [Hare & Wallace], 770; Wharton on Agency, § 464, p. 302).

II. An election to hold responsible either a principal or an agent when such relation exists cannot take place unless accompanied by two or 'more things from which to select; in other words, unless the relation of principal and agent is known at the time the credit is given, there cannot be said to be any election. The fact that plaintiffs expressed an opinion at the time of the sale that they would not sell to the defendants could not be an election unless they knew that Bishop acted as agent for defendants, inasmuch as it was expressly stated that there was but one person in the transaction, and that person Bishop ; there was nothing from which to elect; if held otherwise it would have to be said that the mind acted upon the possibility of a state of facts; such mental action in law is not an election, but a mere opinion; practically it would be absurd to suppose that if the plaintiffs had thought or known that Bishop was acting simply as an agent for defendants that they would have taken his credit in preference to that of the defendants. Bishop had nothing but his honor, while the defendants were known by plaintiff to be rich men (Thompson v. Davenport, supra; Southard v. Sturte

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vant, supra; Coleman v. First Nat. Bank of Elmira, supra; Rowan v. Buttman, supra).

HI. Even had there been an election it could onlv «y be pleaded by the defendants by way of estoppel; in order to plead an estoppel it is necessary to sIioay some damage suffered. Defendants have received the goods, paid nothing for them as yet, and should not be allowed to plead an estoppel, even were they otherwise in a position to do so, which they are not, no election having been shown.

Townsend, Dyett & Einstein and A. R. Dyett, for defendants.

No case can be found where the seller, for any reason, declines or hesitates to sell to the principal, be he merely suspected or suggested, or a possible principal being suggested or suspected, the seller deliberately refuses to sell to him—if he exist-—and intelligently and expressly asserts that he Avill sell to the agent on his credit, and to him and on his credit only, and the seller, Avhen he afterwards discovers that he has been outAvitted by a clever ruse practiced on him, and that the agent, his purchaser by preference, has become insolvent, can then turn around and allege that he sold the goods to the principal. A fortiori Avhere, as in this case, the sellers inquire into the responsibility of the purchaser, the agent, before selling, and then expressing themselves satisfied, deliberately sell to him personally. A sale is a contract, and the minds of the parties must meet. -This is elementary. But they never met in this case. The mere fact that the principal Avas not disclosed, nothing being said upon the subject one way or the other, does not prevent a meeting of the minds of the contracting parties. But in tins case, Avhere the plaintiffs expressly stated in substance that if the defendants Avere the purchasers, the plaintiffs avouM not sell to them at any price, the minds of the plaintiffs and defendants could not meet on a sale by the former to the latter. In the present case, in the face of the

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plaintiffs’ declaration that they would not sell the property to the defendants at any price, how idle it would he to talk of a “ natural presumption that the credit was given to the principal (the defendants) rather than the agent (Bishop).” Yet in all cases of recovery against undisclosed principals such a presumption is the very foundation of the defendants’ liability (Meeker v. Claghorn, 44 N. Y. 351 ).

The action w.as brought to recover from the defendants as undisclosed principals. The evidence shows that the plaintiffs asked Bishop, the person who, as a matter of fact, bought the goods, if he was buying for the defendants, and stated to him that if he was buying for the defendants, plaintiffs would not sell the goods to them. Bishop said that he was not buying for the defendants, but that he was buying for himself.

It was testified on the trial, and for the purposes of this appeal it must be taken as the fact, that Bishop was buying the goods for the defendants.

Where an agent acts for an undisclosed principal, the third party on discovering the principal, may sue him and recover (Meeker v. Claghorn, 44 N. Y. 351 ), provided that in the meantime the principal has not in good faith paid the agent (Armstrong v. Stokes, 7 L. R. Q. B. 253 ; Rowan v. Buttman, 1 Daly, 412 ), and provided that the credit has not been given to the agent as agent (Meeker v. Claghorn, supra; Coleman v. First Nat. Bank of Elmira, 53 N. Y. 388 ).

In each of these cases there must be an agency which was unknown to the plaintiff. But in the case before the court the plaintiffs refused to contract with the defendants. There was no reciprocity of action between the plaintiffs and the defendants; if the plaintiffs had refused to complete the contract, the defendants could not have sued them for damages (Humble v. Hun

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ter, 12 Q. B. 311; Winchester v. Howard, 97 Mass. 303 ; Robson v. Drummond, 2 B. & Ad. 303).

In this case the plaintiffs did not give credit to the agent as agent, because they did not know that Bishop was acting as agent for the defendants.

The plaintiffs’ exceptions are overruled and judgment is ordered for the defendants dismissing the complaint with costs.

Sedgwick, Ch. J., and O’Gorman, J., concurred.

Cases cited

Cheever v. Smith 15 Johns. 276 N.Y. Sup. Ct. p. 79
Rathbone & Banks v. Tucker & Carter 15 Wend. 498 N.Y. Sup. Ct. p. 79
Coleman v. First National Bank of Elmira 53 N. Y. 388 N.Y. 1873-09-23 p. 79, p. 82