Case ID: ny-st-rep_31/html/0710-01.html
Source: Caselaw Access Project
Author: {"author": "Brown, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

James Edwards et al., Resp’ts, v. John E. Dooley et al., App’lts.
    
    
      (Court of Appeals, Second Division,
    
    
      Filed June 3, 1890.)
    
    1. Principal and agent—Title of principal’s property pledged to STRANGER BY AGENT.
    Plaintiffs employed one George Ford to go to Cheyenne and buy hides-for them, drawing upon them for expenses and salary. He was to engage in no other business and give them his entire services. He violated his-agreement by becoming connected with two other firms, and used the proceeds of drafts drawn upon plaintiffs, without their knowledge, for the benefit of said firms. Ford bought hides with defendant’s money and gave a bill of sale of the same to creditors of one of his own firms. Meld, that if the hides were bought by Ford or his agents with money furnished to him for that purpose by the plaintiffs they were plaintiffs’ property at the time Ford sold them.
    2. Same.
    Plaintiffs became the owners of the hides as soon as they were paid for, whether or not Ford used for that purpose the specific proceeds of the drafts drawn upon the plaintiffs, or used such proceeds for his own purposes and made up the amount by substituting other funds lor such proceeds.
    3. Same.
    Where the agent purchases the very property which his principal authorized him to purchase, the act of purchasing is the act of the principal, and the title passes by the contract of sale from the seller to the principal.
    4. Same—Bona fide purchaser. .
    Defendants had reason to believe from a letter written by plaintiffs that Ford was not the sole owner of the goods and that plaintiffs were interested in them, and had knowledge of the manner of Ford’s agency. They made no inquiry, but relied on Ford’s statement that he was the owner. Meld, that they were not bona fide purchasers.
    Appeal from a judgment of the general term of the first judicial department,'which affirmed a judgment entered upon a verdict of a jury..
    This action was to recover the value of a quantity of hides.
    Plaintiffs claimed title on the ground that the hides were bought by their agent and with their money.
    Defendants claimed under a bill of sale given by said agent as security for a present loan of money.
    ' At the close of the testimony the defendants moved to dismiss, the complaint “ upon the ground that no title in plaintiffs had been shown to the property,” and the contention upon the argument of this appeal was that the respondent’s title was not legal, but equitable solely, and insufficient to maintain an action for conversion. •
    The uncontradicted evidence was, that in August, 1877, the plaintiffs employed one George Ford to go to Cheyenne and purchase hides at that place, and in that vicinity, and ship them to-the plaintiffs at Boston.
    The contract was in writing, and provided that Ford should hire a place to store the hides until they could be shipped.
    Plaintiffs were to pay all expenses at Cheyenne, such as rentr cartage, etc., and to furnish all the money necessary to purchase the hides, and Ford was to render a full account of his transactions every week or oftener. He was to engage in no business either for himself or any other house, and to buy no hides or skins excepting for the plaintiffs; his entire services being employed in their behalf.'
    Under this agreement Ford went to Cheyenne and entered upon the performance of his contract, but subsequently, with the plaintiffs’ consent, removed the business to Ogden. He hired a storehouse where the hides were stored and baled, and from which they were shipped to the plaintiffs.
    The money necessary to pay for the hides and the expenses of the business was advanced by plaintiffs, upon drafts drawn upon them by Ford, and collected through bankers at Ogden.
    Ford rendered to the plaintiffs from time to time statements of the business and memorandum of purchases. In the statements he charged himself with the cash received, and credited himself with the merchandise purchased and the expenses. In the memorandum of purchase, he gave particulars of each purchase.
    In violation of his agreement, Ford connected himself with the firm of Parsons, Chase & Co., who were engaged in slaughtering cattle- at Corrine, a few miles from Ogden, and also became a member of the firm of Ford & Eussel, dealers in dressed beef, at San Francisco.
    From the proceeds of drafts drawn upon the plaintiffs Ford advanced money to Parsons, Chase & Co., which the latter used in purchasing cattle, and having slaughtered them the hides were delivered to Ford, and the dressed beef was shipped to Ford & Eussel, to be sold at San Francisco.
    Plaintiffs had no knowledge of these transactions. On February" 17, 1879, the defendants, who were bankers at Ogden, were creditors of Parsons, Chase & Co. to the amount of $4,000. To secure this indebteness, and also to obtain a loan of an additional sum of $5,500 for the benefit of Parsons, Chase & Co., Ford transferred by bill of sale to the defendants the entire stock of hides in the storehouse at Ogden.
    Subsequent to the date named, other hides of the value of $2,394 were put into the warehouse by Ford, and $2,500 having been paid on the $5,500 note, a car load of hides was released to Ford and shipped to the plaintiffs.
    Plaintiffs were notified of the transaction, and Mr. Brackett, on March 18th, demanded possession of the hides from the defendants. This was refused, and the balance of the $5,500 note being unpaid, defendants on that day sold the entire stock for $6,308.67. On December 28, preceding the above mentioned events, the defendants wrote to the plaintiffs the following letter:
    “ Ogden, Utah, Dec., 28, 1878.
    
      Messrs. Edwards & Brackett, Boston, Mass.:
    
    Gentlemen.—Will you please inform us in confidence what you know of the financial ability of Geo. Ford & Co., hide merchants, who are doing business here, and drawing on you ? They desire to avail themselves of our facilities and we can materially aid them in their business provided they have a sufficient amount of capital to make us safe in doing so.
    Any information will be kept strictly confidential, and we shall be happy to reciprocate at any time.
    Respectfully yours,
    J. E."Dooley & Co.”
    To which plaintiff replied as follows •
    “ Boston, January 7, 1879.
    
      Messrs. J. E. Dooley <£ Co., Ogden, Utah:
    
    Gentlemen.—Your favor of 28th December is received, contents noted. We do not suppose that Mr. Ford has much if any means of his own, nor is there any Co.' to Geo. Ford & Co., that we know of. Our arrangement with Mr. Ford is that he is to buy hides to send to us and he is to draw on us for the cost of them. He has been doing this business for a year or more. As he has no capital of his own he advises us of purchases which he malees and draws on us for the money to pay for them.
    
    Very truly yours,
    Edwards & Brackett.”
    Plaintiffs had a verdict for the amount realized on the sale of the hides by defendants and interest.
    The general term reduced the judgment entered on such verdict by deducting therefrom $508.50, and from the judgment so reduced the defendants appealed to this court. Further facts appear in the opinion.
    
      Roger A. Pryor, for app’lts; William A. Jenner, for resp’ts.
    
      
       Affirming 13 N. Y. State Rep., 596.
    
   Brown, J.

The principal contention of the appellants on this appeal is that the legal title to the hides in question was not in the respondents.

The court denied a motion to dismiss the complaint made on that ground, and it instructed the jury “ that if the hides * * *■ were bought by Ford or his agents with money.furnished to him for that purpose by the plaintiffs, they were plaintiffs’ property at the time Ford pledged them.”

“That the plaintiffs became the owners of the hides as soon as they were paid for, whether or not Ford used for that purpose the specific proceeds of the drafts drawn upon the plaintiffs, or used such proceeds for his own purposes and made up the amount by substituting other funds for such proceeds.”

These propositions stated correctly the law applicable to the case.

To recover in trover there must have been possession of the property by the plaintiffs, or there must be an existing right to take immediate actual possession of it.

Ford’s business at Ogden was to purchase hides for the plaintiffs. He had agreed to give them his entire services and engage in no other business or employment. Funds were placed in his possession to enable him to execute and perform that agreement, and if the hides in question were purchased by him in the performance of his contract, and paid for out of moneys furnished to him by the plaintiffs for that purpose, his acts were the plaintiffs’ acts, and the delivery to him of the hides was a delivery to the plaintiffs and vested the title and possession in them.

It is a well settled principle Of the law of agency that the agent is but the instrument of the principal, who acts by and through him.

An individual assumes the relations, acquires the rights and incurs the obligations which are the proper results of his acts, •equally whether he does those acts himself or through the medium of another. In either case the thing done is the act of the principal.

The hides transferred to the defendants were all procured either from Parsons, Chase & Co. or from sources other than that firm.

Ford, in violation of his agreement with plaintiffs, became partner with Parsons, Chase & Co., and to enable them to carry on their business, paid to them the proceeds of drafts he drew upon the plaintiffs.

The money thus obtained was paid by plaintiffs to enable Ford to perform his contract with them. The consideration for the advance to Parsons, Chase & Co. was the future delivery of hides that would be taken from the cattle slaughtered by that firm.

The fact that the money thus supplied to Parsons, Chase & Co. was first used to purchase cattle which they slaughtered and that the dressed meat was sold by Ford at San Francisco, and the money resulting from such sales again used to enable Parsons, Chase & Co. to carry on their business, does not necessarily alter the nature of the transaction between Ford, as plaintiffs’ agent, and Parsons, Chase & Co., with reference to the hides.

It may be that plaintiffs, if they had been cognizant of these dealings, might have repudiated them and recovered their money from Parsons, Chase & Co., but it is equally true that third parties could not do that for them, and if plaintiffs do not complain of that manner of purchasing hides by their agent, no one else can. In substance and effect, therefore, there was a sale of the hides by Parsons, Chase & Co. to Ford, in consideration of his advances of money, and upon delivery of the hides the contract was executed and the title and possession were in the plaintiffs.

The witness Johnston, who was a clerk for Ford after January 1, 1879, and during the whole period in which the hides in question were delivered to Ford, testified as follows: “All the money that was advanced to Parsons, Chase & Co. by Ford was advanced to secure the hides that came off the cattle and the cattle were generally bought by money obtained from Ford & Bussel.”

“ During the time I was with Ford he never bought any hides and paid for any hides except with the direct proceeds of drafts drawn upon Edwards & Brackett”

As to the hides procured elsewhere than from Parsons, Chase & Co., the evidence is of a similar character. Johnston testified as to them as follows: Ford had two travellers out buying hides and shipping them in. He bought any hides that were offered at Ogden if they were cheap enough. Hides purchased by Ford were very seldom purchased on credit As a rule, unless they had been previously paid for by advances to the sellers, they were paid for in cash. Ford obtained the money which he paid for hides, purchased by drawing drafts on Edwards & Brackett and got the cash in the bank.”

It thus appears without contradiction that all the money paid for the hides purchased by Ford was furnished by the plaintiffs, and as there was no claim that Ford was purchasing hides for any persons except the plaintiffs, the conclusion was permissible that they were purchased in the performance of his agreement with the plaintiffs. This conclusion is strengthened by the fact that the purchase of all the hides transferred to the defendants was reported by Ford to the plaintiffs in a detailed statement showing the number of each kind, their weight, cost and where purchased, and there appears to be no contradiction of the testimony of Mr. Brackett that the plaintiffs paid for all the hides which Ford re-' ported he had purchased.

After the transfer to the defendants a large quantity of hides were placed in the warehouse by Ford, all of which were paid for by the plaintiffs’ money.

. This evidence, if not absolutely conclusive, certainly permitted the jury, under the instructions of the court, to determine that the title to the hides was in the plaintiffs, and as the court refused to hold as a question of law that the hides were the property of plaintiffs, but allowed the jury to pass upon that question, the defendants had as favorable a ruling on the case as they could possibly have been entitled to.

It would be impossible upon the evidence to sustain the claim of the appellants that the title to any of the hides after their delivery to Ford at the warehouse at Ogden was in Parsons, Chase & Co., and the contention that the title was in Ford is opposed to well settled principles of the law of agency.

The learned counsel for the appellant has referred us to many cases holding that an agent purchasing property in his own name, with trust funds, is but a trustee for the principal, whose only remedy is to follow the property in a court of equity and fasten a trust upon it for his own benefit. But those authorities have no application to cases like the one under consideration, where the agent has purchased the very property which his principal authorized him to purchase. Here the act of purchasing is the act of the principal, and the title passes by the contract of sale from the seller to the principal.

None of the other exceptions in the case can be sustained. The title being in the plaintiff it was not possible for Ford to convey the same to the defendants unless authorized thereto by the plaintiffs, or unless the plaintiffs had by words or acts done that from which third parties would have been justified in believing that Ford had authority to sell the property.

The fundamental principle of the law of personal property is that no person can be divested of Ms property without his own consent.

Mere possession does not confer a power to sell and an unauthorized sale, although for a valuable consideration and to one having no notice that another is the true owner, vests no higher title in the vendee than was possessed by the vendor. Covill v. Hill, 4 Denio, 328 ; 2 Kent’s Com., 324.

While a principal is bound by his agent’s acts when he justifies a party dealing with his agent in believing that he has given to the agent authority to do those acts, he is responsible only for that appearance of authority which is caused by himself and not for that appearance of conformity to the authority which is caused only by the agent.

That is, he is bound equally by the authority he actually gives and by that which by his acts he appears to give. Eor the appearance of authority he is responsible only so far as he has caused that appearance. For the appearance of the act the agent alone is responsible. The fundamental proposition is that one man can be bound only by the authorized acts of another. He cannot be charged because another holds a commission from him and falsely asserts that his acts are within it. Mechanics' Bank v. N. Y. & N. H R. R. Co., 13 N. Y., 599, 634; Bickford v. Menier, 107 N. Y., 490; 12 N. Y. State Rep., 304.

Ford had no authority to sell or pledge the hides purchased. The sole purpose of their purchase was to ship them to Boston and sell them in that market. The few instances of sales of small quantities that were unfit to be shipped to the plaintiffs (if known to the defendants) would- not have warranted the belief on their part that he had authority generally to dispose of the hides.

His acts in entering into extensive business arrangements at Ogden and elsewhere and giving himself the appearance of a man engaged in large business enterprises, although doubtless calculated to mislead parties dealing with him, cannot be attributed or charged to the plaintiffs.

They had no knowledge of his violation of the agreement with them in that respect, and these acts of Ford cannot be resorted to to establish a power not included within the line of Ms commission.

The rule is that whoever deals with an agent constituted for a special purpose deals at his peril, when the agent passes the precise limits of his power. McCombie v. Davies, 6 East., 538; Saltus v. Everett, 20 Wend., 267 ; Wooster v. Sherwood, 25 N. Y., 279-287.

And we find no evidence in the case that would sustain a claim that the plaintiffs had held Ford out to the world as possessing any general authority to dispose of their property.

But the plaintiffs’ case does not rest upon this rule of law alone.

We are of the opinion that the defendants had notice that Ford’s possession of the hides was as agent for the plaintiffs and that the hides were the property of the plaintiffs, and if this notice was not explicit it was at least sufficient to put them upon inquiry as to the existence of a right in conflict with that they sought to acquire.

On the 7th of January, 1879, in response to an inquiry from defendants as to the financial ability of George Fprd. & Co., hide merchants,, plaintiffs wroie file defendants as f qllows;

“Our arrangement with Mr. Ford is that he is to buy hides to send to us, and he is to draw on qs for the cost of them. He has been doing this business for a year or more. As he has no capital of his, own he advises us of purchases he makes and draws on us for the money to pay for them.”

The co.urt instructed the jury that “ if the defendants ¡hqd knowledge of the fact that Ford was engaged in the business of buying hides for the plaintiffs with money furnished by them aqd shipping them on their accqqnt, the defendants, acqqirpd no title to the hides by virtue of Ford’s pledge thereof to tliqm.”

The defendants had knowledge outside of this letter of the drafts drawn upon plaintiffs by Ford. Spme of these grafts had been discounted by them at dates as early as October, 1877, and as late as January, 30, 1879. At the time of the transfer Orth was told by Ford that the hides were all paid for but were as yet unfit to be shipped east. That they could nqt be shipped for four or five weeks and that in ten days Ford & Éussel, of San Francisco, would furnish the fun^s to repay the loan."

These facts, in connection with the plaintiffs’ lptter, were sufficient to put the defendants on inquiry as to the plaintiffs’ rights.

They had reason to believe that Ford was not the sole owner of the goo.ds and that plaintiffs were interested in them. They knew Fqrd’s business was not to sell to' plaintiffs, but to buy for them; that the cost of the hides was reported to plaintjffs, who thereupon furnished .the money to pay for them; that Ford had no capital, and that the particular hides in question were to be shipped east.

They made no inquiry whatever, but relied upon Ford’s assertion that he was. the. owner, and their neglect in that respect is fatal to. jbeir plaim to be considered bona fide purchasers. Williamson v. Brown, 15 N. Y., 354; Wright v. Cabot, 89 id., 570.

There was no error in the charge of the court upon the subject of notice which I have quoted.

The other exceptions present no vital error, and the judgment must be affirmed, with costs.

All concur.