Case ID: nc_152/html/0604-01.html
Source: Caselaw Access Project
Author: {"author": "Walker, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

V. B. BOWERS v. BRYAN LUMBER COMPANY.
    (Filed 17 May, 1910.)
    1. Principal and Agent — Scope of Authority — Surety Bond — Seal— Regular on Face — Innocent Stranger.
    A bond signed as surety by the agents of a surety corporation, the agents living and doing business in Tennessee as such agents, by means of which goods held under a warrant of attachment were released, is binding upon the surety company as principal, the acts of the agents being within the apparent scope of their authority; and the principal, having furnished its agents with the form of the bond, signed and sealed by it, awaiting only the signature and delivery of the agents for apparent validity, are also held liable thereon for having put it within the power .of the agents to cause loss or disadvantage to innocent third persons.
    2. Principal and Agent — Judgment—Lower Court — Validity Presumed — Statement of Facts.
    Error in the judgment of the lower court will not be presumed on appeal, and when it appears that a surety bond under seal given by a surety company has been delivered for the purpose of vacating an attachment, and its execution appears to be sufficient, the judgment of the Superior Court, establishing its validity, will be sustained, and not declared void for the alleged want of authority of the agents in signing and delivering it, in the absence of any statement of facts by the lower court upon which its judgment was declared.
    
      3. Principal and Agent — Surety Bonds — Ratification.
    A surety company by accepting tbe premium on a bond issued by its agents to vacate a warrant of attachment, ratifies tbe act of tbe agent and cannot be beard to contest tbe validity of tbe bond on tbe ground that its agents bad therein exceeded their authority.
    Appeal from Gouncill, J., a.t November Term, 1909, of Mitchell.
    Tbe facts are sufficiently stated in tbe opinion of tbe Court.
    
      L. D. Love,and G. JE. Greene for plaintiff.-
    
      Hudgins, Watson & Johnston for defendant.
   Walker, J.

Tbis was a civil action prosecuted by tbe plaintiff against tbe defendant for a debt of $1,650. A warrant of attachment was levied upon 125,000 feet of lumber wbicb belonged to tbe defendant, and while tbe property so levied upon was in tbe custody of tbe sheriff, tbe-defendant filed with tbe clerk of tbe Superior Court a bond in tbe sum of $3,700, executed by tbe defendant as principal, and tbe Title Guaranty and Surety Company, by D. H. Willard and D. A. Yines, who professed to be its agents. Tbis bond was approved by tbe clerk of tbe Superior Court and filed as- a part of tbe record, and thereupon tbe attachment was dissolved and the lumber was released and shipped out of tbe State by tbe defendant. At July Term, 1909, of tbe Superior Court, when tbe case was called, it appeared that tbe plaintiff bad filed a verified complaint, and tbe defendant bad filed m> answer. Tbe court rendered judgment by default in favor of tbe plaintiff and against tbe defendant, for tbe amount of tbe debt and tbe costs of tbe action,'and also against tbe Title Guaranty and Surety Company for tbe amount of its bond, to be discharged upon tbe payment of tbe judgment, that is, tbe debt and costs.

At November Term, 1909, tbe Title Guaranty and Surety Company moved to strike out or set aside tbe said judgment, so far as tbe same affected tbe said company, and assigned as tbe ground for its motion that D. H. Willard and D. A. Yines were tbe agents of tbe said company in Tennessee and did not reside in this State, but at- Johnson City in tbe said State of Tennessee, and that Willard and Yines acted without authority in executing tbe said bond. Affidavits were filed by tbe parties and an order was granted staying tbe execution until tbe motion of tbe Guaranty and Surety Company could be beard. At tbe bearing of tbis motion, Judge Gouncill rendered a judgment denying tbe same ap.d dissolving tbe restraining order; but in bis judgment there are no findings of fact, nor does it appear anywhere in the record that the appellant requested the judge to find and state the facts. In what is termed a case on appeal, there appears to have been some colloquy between the court and counsel as to the ground of the motion and as to the reasons why the Guaranty and Surety Company was entitled to have the judgment against it vacated; but there are no findings of fact which relate to the authority of Willard and Yines to act in behalf of the:: said company in the execution of the bond by it as surety. This Court ordered the original bond to be sent up, in order that it might ascertain, from an inspection of it, whether the corporate seal of the company had been affixed thereto, and we find, upon an examination of the bond, that the corporate seal of the company had been affixed.

In the present state of the case we are of the opinion that the Guaranty and Surety Company is bound by the act of Willard and Yines, because the corporate seal was affixed to the bond, and in the absence of any statement of facts we must presume that his Honor found such facts as would support his judgment, and, therefore, found that Willard and Yines were invested with the necessary authority to execute the bond. We do not presume that error was committed in the court below, and the burden is on the appellant to show error.

The Guaranty and Surety Company entrusted Willard and Yines with a bond, to which its corporate seal had been affixed, and it was licensed to do business, that is, to execute an indemnity bond, in this State. When this was done, the Guaranty and Surety Company put it in the power of Willard and Yines to induce others to believe that they had the power and authority to execute a bond in its behalf as surety, even if the signatures'of the said agents were necessary to make it a valid bond as against the company after it had thus affixed its corporate seal and its corporate name had been signed to the bond.

This case is not, in principle, unlike Havens v. Bank, 132 N. C., 214, in which it appeared that spurious bank certificates had been issued by the cashier of the defendant bank, they having been left with him after having been signed in blank by the president and secretary. In that- case, and with reference to its facts, we held that the bank was legally responsible for the fraudulent acts of its cashier, and that the mere fact that he was not in the performance of his master’s business, but was acting outside of the scope of Ms agency, did not alter the case nor change the result, for “this would be true -'as to all fraudulent acts and as to all acts done not strictly within the line of duty. The correct principle is that (it will be quite sufficient to charge the employer with liability, if all the acts of the employee are done within the apparent, though not real, scope of his agency.” We further said! that as the certificates had ’been signed by the president and delivered to- the cashier, the bank had given to the latter the power to commit the fraud, and must answer for its negligent act, upon the principle that “whenever one of two innocent persons must suffer by the act of a third, he who has enabled such third person to occasion the loss must sustain it.” Lickbarrow v. Mason, 2 T. R., 70. It was said by Lord Holt, in Hearn v. Nichols, 1 Salk., 289 : “For as somebody must be a loser by this deceit, it is more reasonable that he-who employs and puts a trust and confidence in the deceiver should be the loser, than a stranger.” In R. R. v. Kitchin, 91 N. C., 39, we held that “where one of two persons must suffer loss by the fraud! or misconduct of a third person, he who first reposed a confidence or by his negligent act made it possible for the loss to occur, must bear the loss.” The principle is well stated in the case of R. R. v. Bank, 60 Md., 36, as follows: “It may be conceded, and was doubtless the case, that the agent had no authority in fact to issue such certificate; he had no real authority as between himself and his principal, .or other parties cognizant of the facts, for doing the particular acts complained of, but the company by its own act and, as it turned out, misplaced confidence, placed the agent in the position to do, and procure to be done, that class of acts to which the particular act in question belongs; and in such case where the particular act in question is done in the name of and apparently in behalf of the principal, the latter must be answerable to innocent parties for the manner in which the agent has conducted himself in doing the business confided to him. Upon no other principle could the public venture to deal with an agent. In such ease the apparent authority must stand as and for real authority.” And again: “Where he issued such a certificate and delivered it to a third party, who acted without knowledge and in good faith, paying value for it, such party had the right to act upon the presumption that the representations of such certificates were truthful, and not false and fraudulent. Having confided to him the said trust of executing the business, the agent was held out to the public as competent, faithful and worthy of confidence; and though he deceived both his principal and the public, by forging and issuing false certificates, it is but reasonable that the principal, who placed him in the position to perpetrate the wrong, should bear the loss.” We think the principle is also well supported by the reasoning of the Court in McNeill v. Bank, 46 N. Y., 325.

Willard and Yines, who professed to act as agents of the corporation in executing the bond for it as surety, must be taken, under the facts and circumstances of this case, so far as they appear, to have had full authority to do and perform the act which the Guaranty and Surety Company now attempts to repudiate, for they were acting apparently within the scope of their authority, the company having placed in their possession evidence which would indicate to an innocent person dealing with them that they had the necessary power to act as they did. It is sufficient to charge the principal, if his agent is acting within the apparent scope of his authority. Bank v. Hay, 143 N. C., 326.

We cannot examine the affidavits with a view to finding the real facts in this case, as it has been well settled that the facts upon a motion to set aside a judgment must be found by the court below. We said, in Oldham v. Sneed, 80 N. C., 15, that “in the absence of any facts found, we only see from the case sent up that the judge refused to vacate the judgment, but why he did so, or whether with or without any mistake or misapplication of the law, cannot be seen.”

The Guaranty and Surety Company received the premium or consideration for this indemnity bond, and, having done so, it was put on inquiry as to whether Willard and Vines had acted within the scope of their authority, and in such a case it must be held-to have ratified what they had done. It is not permissible, nor is it sound morality, for the company to accept the benefit of what they did in executing the bond for it as surety, and when a liability is incurred on the bond, to repudiate what their alleged agents had done in their behalf.

We find no error in the record. .

Affirmed.