Case ID: ny-st-rep_21/html/0808-01.html
Source: Caselaw Access Project
Author: {"author": "Andrews, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

James S. Cox and Ano., Resp’ts, v. Edgar O. Pearce et al., App’lts.
    
    
      (Court of Appeals,
    
    
      Filed March 6, 1889.)
    
    1. Principal and agent—When notice to agent binds principal.
    The information that an agent acquires in the course of his agency, and while engaged in a transaction for his principal which makes the disclosure to him proper, and when the receiving of such notice is within the scope of his agency, is notice to his principals, although never communicated to them.
    8. Same—Notice to agent before employment—When principal deemed to have notice.
    Notice to an agent before his employment as agent, or notice not acquired. in the very transaction which is the subject of investigation, does not, as a general rule, bind the principal as a constructive notice; but if the principal already had actual or constructive notice of a fact material to a new transaction, the new dealing will be judged and the rights of the parties will be determined on the assumption that the fact of which he had prior notice, actual or constructive, was then known to him.
    3. Same—What relations constitute principal and agent—When PRINCIPAL BOUND BY NOTICE TO AGENT.
    Where a certain coal broker ordered coal from the plaintiff’s firm when needed by the defendants; for this he was paid a commission. While not a salesman for nor an employee of the plaintiffs in the usual sense, he was their special representative in procuring orders from the defendants. On one occasion he was told by Hosea 0. Pearce, one of the partners, that he had retired from the firm, and referred him to his son who had taken his place. He did not communicate this fact to the plaintiffs, and the regular course of business continued for six years longer. Held, that the relation of the broker to the plaintiffs was such as to charge that firm with the notice given Mm by Pearce of his withdrawal from the firm; the occasion called for it, and it was Ms duty to inform the plaintiffs of the information he had received; it operated once for all as a revocation from that time of any authority to deal with the new firm on the credit of Pearce’s name, and Pearce could only be bound by new transactions as proof of fresh authority.
    Appeal from a judgment of the supreme court, general term, second department, affirming a judgment entered upon an order directing a verdict for the plaintiffs.
    
      Albert G. McDonald, for app’lts; John Brooks Leavitt, for resp’ts.
    
      
       Reversing 10 N. Y. State Rep., 443.
    
   Andrews, J.

The notice given in 1878, by Hosea O. Pearce to Marriott, on the occasion of the application of Marriott to him for an order from Pearce & Hall, for another cargo of coal, that he had retired from that firm, was, we think, notice to Cox and Boyce. It is conceded that Hosea 0. Pearce withdrew from the firm of Pearce & Hall, November 1, 1878, and that the business was continued thereafter, under the same firm name, by one of the partners in the original firm, and two new members associated with him. The only serious question upon the effect of the notice given to Marriott, arises upon the point whether he was in law, the agent of Cox & Boyce, and received the notice in that capacity, so that knowledge of the dissolution communicated to him by the retiring partner of the firm of Pearce & Hall, was imputable to Cox & Boyce. If the knowledge of Marriott was acquired in the course of his agency, and while engaged in a transaction for Cox and Boyce; which made the disclosure to him suitable, and the receiving of such notice was within the scope of his agency, it was in law notice to his principals, although never communicated to them. The failure of Marriott to communicate the information, constituted, on the assumption stated, a breach of duty to his principals, but as to Pearce, the notice had the same effect, as though the duty had been faithfully performed. Ingalls v. Morgan, 10 N. Y., 178; Story on Agency, § 140, and cases cited.

So, also, on the assumption that Marriott was the agent of Cox & Boyce, to receive the notice, it is of no consequence that in 1884, when the sale was made, which is the subject of this action, he had forgotten it, and it was not present in his mind or recollection.

If in 1878, Cox & Boyce had actual or constructive notice that Hosea 0. Pearce, had withdrawn from the firm, it operated once for all, as revocation, from that time of any authority to deal with the new firm on the credit of his name, and he could only be bound by new transactions on proof of a fresh authority.

The doctrine that notice to an agent before his employment as agent, or notice not acquired in the very transaction which is the subject of investigation, does not bind the principal as a constructive notice, except under certain limitations, is a generally accepted principle in the law of agency. The Distilled Spirits, 11 Wall., 356; Fairfield Savings Bank v. Chase, 72 Me., 226.

But if the principal already had notice, actual or constructive, of a fact material to the new transaction, the new ■dealing must be judged, and the rights of the parties must be determined, on the assumption that the fact of which he had prior notice, actual or constructive, was then known to him. In other words, notice to a party, actual or constructive, in a particular transaction, of a fact which exempts a defendant from liability in that transaction, is notice to all subsequent transactions of the same character between the same parties.

The case in the aspect we are now considering, comes to the question whether Marriott, when he was notified by Pearce in 1878, that he had withdrawn from the firm, was the agent of Cox and Boyce, in such a sense that notice to him was notice to his principals. Cox and Boyce were coal dealers, and Marriott was a coal broker. But while he was not a salesman for, nor an employee of Cox and Boyce in the usual sense, he nevertheless was their special represent-' ative in procuring orders from Pearce and Hall for coal. The orders were frequent. All the sales made by Cox and Boyce to Pearce and Hall were made through Marriott, and the purchasers in giving the orders, understood that they related to coal of Cox and > Boyce. Cox and Boyce paid Marriott his commissions, and they employed him to carry the coal sold from their wharf to the factory of Pearce and Hall, and paid him for his service. The bills were sent by mail. But, in most instances, Marriott received the checks of Pearce and Hall, and receipted the bills in the name of Cox and Boyce, “per George Marriott.” It is stated in the case that he* received the checks and receipted the bills without previous authority. But he delivered the checks to Cox and Boyce, who received them without objection. Marriott was accustomed to call at the factory of Pearce and Hall from time to time to solicit orders upon Cox and Boyce.

Soon after November 1, 1878, he called for that purpose, and then saw Hosea O. Pearce, and stated to him “ that he wanted to know if Pearce and Hall were ready for another cargo of coal.” Pearce replied “ that he had retired from the concern, and should do no more buying,” and referred him to his son, one of the new partners. Marriott, on the same visit, saw the son, and pursuant to a conversation then had with him, Cox and Boyce subsequently delivered a cargo of coal. The sale for which this action was brought, was made in 1884, six years after, through Marriott.

We are of opinion that the relation of Marriott to Cox and Boyce was such as to charge that firm with the notice given to Marriott in 1878, by Hosea O. Pearce, of his withdrawal from the firm of Pearce and Hall. The notice was material to the very negotiation in which Marriott was then engaged, and it was his duty to inform Cox and Boyce of the information he received, because it was a material fact bearing upon the question whether they should fill the order then made. Marriott, in his dealings with Pearce' and Hall, was not acting simply as a broker in the general sense. In receiving orders from Pearce and Hall, he was acting exclusively in the interest of Cox and Boyce, and it was so understood by the vendor and purchaser. Cox and Boyce permitted him to exercise powers, limited, it is true, but such as are usually exercised by agents. The occasion called for the notification given by Pearce to Marriott. The application for another order was made to the former according to the course of business prior to that time, and good faith required Pearce to make the disclosure, and we think he had a right- to assume that it was within the scope of Marriott’s agency, to receive it in behalf of his principals.

These views lead to a reversal of the judgment, without considering the other questions in the case.

All concur.