Case ID: miss_20/html/0398-01.html
Source: Caselaw Access Project
Author: {"author": "Mr. Chief Justice Shaukey Mr. Justice Clayton Mr. Justice ThacheR", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Albert G. Brown, Governor of the State, vs. Richard M. Johnson.
    Where a special authority was given in writing, by a principal'to an agent, directing the agent to purchase for the principal, at a commissioner in chancery’s sale, a particular piece of property, belonging to the state, and the agent bought at the sale a different piece of property altogether ; paid one third the purchase money in cash, and executed his principal’s notes by him as agent for the residue, payable in one and two years, and received a deed in his principal’s name for the land ; and the principal, on being informed of the acts of his agent, disaffirmed the purchase, and immediately filed his bill in chancery, to have the contract of sale set aside, and the money paid, refunded to him ; it was held, that the agent having exceeded his powers, the sale was void as to the principal; and the principal was entitled to have it declared so, and the money paid for him refunded to him by the state ; but the contract of purchase will be binding on the agent, and may be enforced against him by the state.
    Nor, in such case, would it make any difference, that the agent had borrowed the money paid by him at the sale, for his principal, and in the name of the principal; the contract of borrowing the money for his principal formed po part of the purchase, and was affirmed by the principal, when he treated the money borrowed as his, by demanding its return.
    When a person deals with another, knowing him to be a mere agent, it is the former’s duty to ascertain the extent of the agency; he deals with him at his own risk; the law, in such case, presumes him to know the limit of the agent’s power ; and if the agent exceed his power, the contract will not be binding on the principal, but will be on the agent.
    Mr. Justice Thacher, in this case, dissented from the majority of the court; and held, that the agent in betraying the trust reposed in him by the principal, had committed a fraud on the state, of participation in which the state was entirely innocent; and the principal having thus trusted to his agent, put it in the latter’s power to defraud an innocent parly, and must therefore, as between himself and the state, be the loser. The sale being binding on the agent, and the payment having been made by him, although in the name of his principal, yet the latter, and not the state, having trusted the agent, must look to the agent, and not to the state, for the return of the money.
    
      On appeal from the superior court of chancery; Hon. Stephen Cocke, chancellor.
    Richard M. Johnson, on the 8th of February, 1845, filed his petition, alleging that in the case of Tillman M. Tucker, governor of the state, against the heirs of H. W. Runnels et al., a decree was made to sell, on behalf of the state, a tract of land, part of which was situated in section thirty-two, township nine, north of range four, west, which part petitioner wished to buy. He verbally so informed B. F. Johnson, and then went to Kentucky, from which state he wrote to him to the same eifect, directing him to bid off the land in section thirty-two for him. This was the only authority B. F. Johnson had from him to purchase at the sale; but B. F. Johnson did not obey his directions; he allowed section thirty-two to be bid off by the state, and without any authority, direct or indirect, express or implied from him, bid off three hundred and twenty acres in section thirty-one, being the north-east and south-east quarters thereof, and returned his (petitioner’s) name as the purchaser, at the rate of thirty-six dollars and seventy-five cents per acre. To make the cash payment of a third, being $3920, B. F. Johnson borrowed money in petitioner’s name, and gave a note for it as agent of petitioner; and also executed in petitioner’s name, as his attorney in fact, a bond to Albert G. Brown, governor of the state, in the penalty of twenty thousand dollars for the payment of the remaining two thirds, being $7840, to be paid in two equal annual instalments. ' That he had been informed that a motion to confirm this sale was about to be made; that the commissioner who made the sale had paid the money into the public treasury.
    As soon as he heard of the sale, he refused to ratify it,' and so at once informed the attorney of the state.
    He prays that the sale may not be confirmed; the bond for the unpaid purchase money be cancelled, and the state be ordered to refund the money paid.
    With the petition was the following affidavit of B. F. Johnson : —
    “Personally appeared before me,- Richard Barnett, commissioner of the superior court of chancery of the state of Mississippi, in and for Warren county, B. F. Johnson, of the state of Mississippi, who being duly sworn according to law, states, that in the spring of 1844, Richard M. Johnson, Jr. of Yazoo county and state aforesaid, left the state to spend the summer in Kentucky; he verbally instructed and requested me in the event of the. sale of certain seminary lands in his neighborhood being brought on in his absence, to purchase for him a portion of said land situate in section thirty-two, in township nine, range four, west, the same being adjoining the plantation he then occupied and cultivated. On the 12th of August, 1844, said lands were advertised to be sold, and I was again requested and authorized by said Richard M. Johnson, Jr., in a letter from him, to purchase for him said portion of land in section thirty-two as above designated and no other; said Johnson expressly stating to me in the letter not to be misunderstood as to the particular portion of land he wanted me to purchase for him, as there was a section and a half together to be sold embracing section thirty-two, and the east half of section thirty-one, in said township and range. He designated said portion of land in section thirty-two as the part he wanted, and no other. On the day of sale of said lands, said section thirty-two was offered, and bid in by Morgan McAfee, Esq. for the state of Mississippi; the east half of section thirty-one in said township and range was offered and bid off by me in the name of Richard M. Johnson, Jr., at the sum of thirty-six dollars and seventy-five cents, but without any authority from said Johnson, direct or indirect, express or implied. Prior to said sale I contemplated purchasing said half section thirty-one, provided it could be had at a price that was reasonable, and not beyond my means. When it was offered, I was opposed in the bidding for same by a malicious neighbor, and believing at the moment of the sale, that it was necessary to purchase said half section thirty-one to cut off competition for said section thirty-two, and thereby be enabled to purchase the portion of land in said section thirty-two, which said Johnson wanted, and believing under the circumstances that it would be to the interest of said Johnson to have said half section thirty-one, and believing that said Johnson, or- some of his brothers, would be willing to take said half section thirty-one, if I bid it, off in said Johnson’s name, and being determined that said malicious neighbor should not outbid me, who was a bankrupt, and. who I did not believe would or could comply, if he succeeded in the purchase, and bid the same off in the name of, and for the benefit of, said Johnson; said Johnson refused to take said land so bid off; refused to sanction and confirm the sale and purchase of said land, has never sanctioned or confirmed the sale and purchase of same in his name, and still refuses to confirm or sanction the same, and wholly disavows and repudiates the same as having been done on my part without competent authority. I would further state that I borrowed the amount of money necessary for the first payment on said half section thirty-one, in the name of my friend, said Johnson, and paid the same to Morgan McAfee, Esq.,/who paid the same into the treasury of the state of Mississippi. g p j0HNS0N »
    On the 21st of June, 1845, the chancellor ordered the sale, to be set aside and the land resold.
    On the 28th of January, 1846-, the attorney-general filed a petition to have the minutes corrected, on the ground that the chancellor had not set the sale aside absolutely, but only as to Richard M. Johnson; but had ordered it to stand as to B. F. Johnson, and had decreed that the money paid should not be refunded to Richard M. Johnson, but should stand as a credit on the purchase made by B. F. Johnson, and filed with his petition the opinion of the chancellor in the following words, viz.:
    “ I shall direct R. M. Johnson to be released from the sale, but I shall not set aside the sale, but order B. F. Johnson to be proceeded against as the trust purchaser, he having had no authority to act for R. M. Johnson in the premises ; I shall make no order for refunding the money. I consider it borrowed on the responsibility of B. F. Johnson, and shall regard it as a payment on his purchase. A party may be compelled by an order on him, in a summary way, to complete his purchase, by giving bond. 3 Gill & Johns. A person who bids in trust for another will be attached and compelled to complete the sale. 1 Hogan, 320.”
    
      The chancellor overruled the motion to amend the minutes, and the attorney-general embodied the evidence read on the hearing of the motion in a bill of exceptions, and appealed from the decision of the chancellor, setting the sale aside.
    The counsel in this court, on both sides, agreed that the court might “decide the whole case as to all points.”
    
      John D. Freeman, attorney-general for the state.
    
      George /S'. Yerger, for R. M. Johnson,
    Cited 2 Daniell, Prac. 910; 11 Ves. 599; 1 Jac. & Walk. 639; 2 Ves. Jr. 335 ; 2 Daniell, Ch. Prac. 922 ; lb. 918, 919; Lord v. Lord, l Sim. 503; Story, Agency, § 126, 127, 169-172, 175, 435, 437; Commonwealth v. Bagley, 7 Pick. 279.
   Mr. Chief Justice Shaukey

delivered the following opinion.

R. M. Johnson authorized B. F. Johnson to purchase for him a particular parcel of land, being part of section thirty-two in township nine, range four, west, which was about to be sold under a decree of the chancery court, for default of payment by a purchaser from the .state, it being part of the seminary lands. The agent did not buy the land he was authorized to purchase, but bid off and purchased, in the name of his principal, part of section thirty-one. He borrowed money in the name of his prin-pal, to make the cash payment required by the terms of the sale, and in his name, also, executed bonds to the state for the remaining two thirds of the purchase money.

So soon as R. M. Johnson was informed of what had been done, he disaffirmed the contract of the agent, and filed a petition in the chancery court to prevent the confirmation of the sale, and the chancellor thereupon set it, aside, and ordered the bonds to be delivered up, and also that the land should be resold according to the terms of the original decree. Governor Brown, some time afterwards, filed a petition that the order of rescission should be set aside, which was refused, and thereupon an appeal was prayed, which professes to be an appeal from the original order. As counsel have filed a written agreement that the merits of the case only shall be considered, we pass over objections that might arise to the regularity of the proceedings.

The case was decided at last January term, but a re-argument was granted. It was tpen decided that the sale was void, because the agent had exceeded his authority. This is undoubtedly so. The authority in this instance was particular or special, and required to be strictly pursued. If the agent vary from an authority of this description, his act is void as to his principal. Paley on Agency, 150. The agent had no authority whatever to purchase any part of section thirty-one, and the principal was entitled to have his bonds delivered up. But the important question is, had he also a right to have the money refunded. If the contract was absolutely void as to him, and it was his money, this would seem to follow as a necessary consequence, even if the contract should be valid as to the agent. If the money is not to be refunded, then the contract is only void in part. This is a matter in which the state is concerned, but this does not vary the principle. Is the state to say to Johnson, true, your agent exceeded his authority, and this was known to the officers, and the contract was void, but you must look to your agent for your money 1 The agent states that he borrowed the money in the name of his- principal. The validity of that transaction is not now involved. It may be that it was borrowed under ample authority for that purpose. It was a different contract with a different person. We cannot decide that the agent exceeded his authority in that particular also, for that would be to prejudge the rights of the lender, who is not before us. For all the purposes of this investigation, we are to regard R. M. Johnson as legally bound for the payment of the borrowed money; he claims it. as his money, and the agent says it was his. The circumstance of borrowing can make no change in the principle which must govern the case. It must stand precisely as though R. M. Johnson had taken the money from his pocket, and placed it in possession of his agent for the particular purpose.

It is important to be kept in mind, that the seller of this land contracted with B. F. Johnson as agent. He bid as agent, and gave the bonds as agent, and made payment as agent. It was impossible for the officer who took the bonds to be ignorant of the agency, and it was therefore incumbent on him to examine the extent of the authority, and to know that the agent was not exceeding it.

Then if it be true, that this contract was void, and the money paid by the agent belonged to R. M. Johnson, which fact was known to the seller, it would seem that he should be allowed to recover it back. It was a misapplication of the money with the knowledge of the party who received it. If an agent misapplies the money of his principal, it is a fraud upon him, and if this be known to the party who receives'it, he too is a participant in the breach of faith, and cannot hold the money. There are maily cases enumerated, in which it is said the principal may recover back money paid by his agent. He may do so where the contract has been rescinded. Story on Agency, 435; Smith’s Mercantile Law, 75, 76. He may recover property, or even follow the proceeds of property improperly sold by his agent. Story on Agency, § 224, 229; 3 Maulé & Selw. 562. An abuse of trust does not confer any privilege on the party who has abused it, nor does it confer rights on those who claim in privity with him. That is the case here; the agent abused the trust ■ by applying money differently from the directions of his principal, and this misapplication was known. See Dunlap’s Paley, 335, et seq. (note G.) This contract has been rescinded, and therefore seems to fall within the very language of Judge Story above cited. The effect of a rescission is to place the-parties as they stood before the contract was made. The principles above referred to apply in courts of law; courts' of equity, it is said, go further in applying them. Story on Agency, § 230. This is a case in equity, and the application is made to set aside; a judicial sale, before that sale was confirmed; it was still incomplete at the time the application was made, when it was competent for the court to render justice to all parties, by putting an end to the sale before it was consummated.

As to R. M. Johnson, then, the sale must be set aside, and the actual amount of money paid refunded. But as to B. F. Johnson, the sale was not void. An agent who exceeds his authority in making a purchase is himself liable. But the opposite party should have the discretion either to affirm, or rescind for nonperformance of the conditions of the sale; and the election can be made in the court below.

Decree reversed and cause remanded.

Mr. Justice Clayton

delivered the following opinion.

I agree with the conclusion of the chiéf justice in this case..

All the court concur in the opinion, that the contract of purchase is not valid as to R. M. Johnson. It is an uniform principle of a court of equity, that when it decrees a rescission of a contract, it places.the parties as nearly as possible in statu quo. This is especially so, when a contract is avoided. The court endeavors to place the parties in the situation they respectively occupied before the contract was entered into. Fitzgerald v. Reed, 9 S. & M. 103. In the case just cited, the contract was set aside by this court, because of the want of mental capacity in the purchaser. The want of mental capacity to make a contract, has the same effect with a want of power. In either event, the contract is invalid, because of the want of consent of those who have legal power and capacity to act in the given case. When the contract is avoided in consequence thereof, each party is bound to give up all advantage derived under it. The duty of restitution necessarily follows from the total dissolution of the contract.

This is a case of special and limited authority, and the party dealing with the agent must look to the extent of his power. If he permits the authority to be transcended, the loss will not fall on the party who gave the authority. He has marked the limit to which he is willing to be bound by his agent, and the law will not bind him farther. I do not think this case is complicated with the question of fraud, or of notice, farther than the notice furnished by the power of attorney itself. In my view, it is a naked question of excess of power. When it is declared, that the power has riot been pursued, the contract is not binding upon the principal, and if another person has gained any advantage from the unauthorized act of the agent, he must give it up.

There is no doubt in my mind, but that the contract is binding upon B. F. Johnson, if the state chooses so to regard it; or he is answerable to it in damages, for any'injury it may sustain, by reason of his unauthorized act. As to him it may confirm or set aside the sale at pleasure, and as it may best accord with its interests. As to R. M. Johnson the sale is set aside, and the state is bound to refund his money to him, if the payment were in money, if not, the value of what was paid.

The decree is reversed, and cause remanded for farther proceedings.

Mr. Justice ThacheR

delivered the following opinion.

The facts of this case will be found contained in the bill of R. M. Johnson, and the affidavit of B. F. Johnson. R. M. Johnson alleged that a sale of certain land, a part of which was contained in section thirty-two, township nine, north, range four, west, being about to be sold under a decree in chancery, and he being desirous to purchase the same, he verbally informed B. F. Johnson of his desire, and directed him to bid it in for him at the sale; and he subsequently wrote B. F. Johnson from Kentucky reiterating his directions particularly as to the tract to be purchased for him; but that B. F. Johnson, without his authority, bid off a tract of land in section thirty-one, and returned R. M. Johnson as the purchaser; and borrowed money in the name of R. M. Johnson whereby to make the required first payment for the purchase money, and executed a bond to the governor of the state to secure the balance of the purchase money.

B. F. Johnson stated in his affidavit, that before R. M. Johnson left for Kentucky, he verbally instructed him to purchase the tract of land contained in said section thirty-two, and after-wards reiterated this particular direction by letter; that the said tract in section thirty-two was offered for sale,, and bid in by the state; that a tract in section thirty-one was offered and bid in by him in the name of R. M. Johnson, “ without any authority from said Johnson direct or indirect, express or implied; ” that “ prior to said sale, he contemplated purchasing said half section thirty-one, provided it could be had at a price that was reasonable, and not beyond his means, but when it was offered, he was opposed in the bidding by some malicious neighbor; and believing it was necessary at the moment of the sale to purchase said half section thirty-one to cut off competition for said section thirty-two, and thereby be enabled to purchase the portion of land in said section thirty-two, which said Johnson wanted; and believing, under the circumstances, that it would be to the interest of said Johnson to have said half section thirty-one, and believing that said Johnson, or some of his brothers, would be willing to take said half section thirty-one, if he bid it off in said Johnson’s name, and being determined that said malicious neighbor should not outbid him, who was a bankrupt, and whom he did not believe either would or could comply, if he succeeded in the purchase; ” that said R. M. Johnson refused to sanction his purchase of said tract in section thirty-one, and has never since done so; and that he “borrowed the amount of money necessary for the first payment on said section thirty-one in the name of said Johnson, and paid the same to the commissioner, who paid it into the state treasury.”.

The foregoing contains the whole history and all the facts of the case. And from this statement of facts, it is obvious that B. F. Johnson, in purchasing the tract contained in section thirty-one in the name of R. M. Johnson, acted without authority from R. M. Johnson, and consequently his act could not bind R. M. Johnson as the principal of B. F. Johnson, the agent. For where an authority is particular, the agent must pursue it, and if the act vary from it, the agent departs from his authority, and what he does is void as to his principal. Dunlap’s Paley’s Agency, 178; Story’s Agency, § 176. But it is another matter whether B. F. Johnson is not responsible to the state for the acts done for the contract of purchase of the tract in section thirty-one. It is well settled, that “ whenever a party undertakes to do any act, as the agent of another, if he does not possess any authority from the principal, or if he exceeds the authority delegated to him, he will be personally responsible therefor to the person with whom he is dealing for or on account of his principal. Story on Agency, § 264, and note 3. There is nothing to show that the commissioner was informed that B. F. Johnson had not authority to purchase the tract in section thirty-one, and it no where appears that either he or the state participated in the fraud attempted to be practised upon R. M. Johnson. It was the ordinary case of a person bidding for property at a public sale, and subsequently stating himself to have therein acted as an agent for another, and it turns out that he had no such authority, or that he exceeded his authority. In such case, it is universally held that the supposed agent is considered as making the purchase on his own account, and may be sued as a purchaser. Story on Agency, supra Hampton v. Speckenagle, 9 Serg. & Rawle, 212. In some cases of authority, it is laid down, that if a person represent himself as having authority to do an act, when he has not, and the other side is drawn into a contract with him, and the contract becomes void for want of such authority, the damage is the same to the party who confided in such representation, whether the party making it, acted with a knowledge of its falsity or not. Story, Agency, p. 262, note 1. The agent undertakes for the truth of his representations, and his liability is put upon the general ground that he acted without authority. 3 Johns. Cas. 70; 8 Wend. 494; 16 Mass. 461.

Another question arises out of the fact that B. F. Johnson, in making the purchase, paid one third of the purchase money in cash, which money he had obtained upon the credit of R. M. Johnson, and R. M. Johnson now claims that the state shall refund the same to him. In his bill, R. M. Johnson merely states that B. F. Johnson borrowed the money in his name, and executed for it a note as his agent; and B. F. Johnson merely admits that he did borrow the amount upon R. M. Johnson:s credit. It appears from the record, that B. F. Johnson represented himself to the commissioner in chancery, who was authorized. to make the sale, as the agent of R. M. Johnson, for the purpose of purchasing the tract of land in section thirty-one, which representation B, F. Johnson himself now states to have been false. From this it is clear, that the commissioner in chancery was imposed upon and defrauded by B. F. Johnson. The commissioner was an officer of the chancery court, and there is no reason to believe, from the facts presented, that he had any knowledge whatever that B. F. Johnson was acting in bad faith either to the commissioner or his pretended principal, R. M. Johnson. The proof is, that subsequent to the completion of the sale, R. M. Johnson refused to sanction the acts of B. F. Johnson, but the state was not informed, through her officers, of the fraud practised by B. F. Johnson until R. M. Johnson filed his petition to rescind the sale. Hence it is manifest, that the state was not a participator in the fraudulent contract of B. F. Johnson. R. M. Johnson intrusted him with the amount of money now in controversy; he used the money for his own purposes, for he says that “he contemplated purchasing the tract in section thirty-one, provided it could be had at a price within his means, and the legal effect of his purchasing for R. M. Johnson was to make himself fhe purchaser; he misapplied the money, "and was thereby guilty of a breach of trust as between himself and R. M. Johnson; and B. F. Johnson having made himself liable for the purchase money of the land, and paid the first instalment thereon, according to the terms of the sale, without any fraudulent participation by the state, the latter is only responsible to B. F. Johnson for the money paid by him, because the law, under such circumstances, casts the entire contract upon the agent. R. M. Johnson must look to B. F. Johnson for the damages consequent upon his breach of agency, trust and duty. B. F. Johnson paid this money fraudulently to the state, but R. M. Johnson cannot recover it from the state, unless the state can be shown to have been cognizant of the fraud, which is not pretended in the record. This is the only state of case where it could be so recovered under these circumstances, unless, indeed, the money had been stolen from R. M. Johnson, and he could identify it.

An agent, made so for a particular purpose and with limited power, cannot bind his principal if he exceed his power, and whoever deals with such an agent, takes the peril of the contract being authorized by the principal. But we do not pretend to hold R. M. Johnson to the contract. R. M. Johnson says, that he gave his instructions verbally to B. F. Johnson to purchase the land, and afterwards wrote him from Kentucky to the same effect, and B. F. Johnson confirms his statement. There was no express letter of attorney, and all the commissioner could do was to inquire of B. F. Johnson as to his authority. Now the maxim of equity well applies here, that he who has enabled a person to do. an act which must be injurious to himSelf or to another innocent party, shall himself suffer the injury rather than the innocent party who has placed confidence in him. R. M. Johnson trusted B. F. Johnson not merely the most, but altogether. He trusted him with the agency, and he trusted him with his money; and he who trusts most, must suffer most. The contract is not rescinded, because the only contract that can stand in law is the contract with B. F. Johnson. The supposed contract with R. M. Johnson, being void and a nullity, stands as if none such was ever' made, and hence as between the state and B. F. Johnson, the money paid was his 'money, although he procured it by a breach of trust, and the bond, although executed by him as agent, was his own bond, and an action can be maintained upon it as if it were executed by him personally. 3 John. Cas. 70; 13 John. R. 307 ; 7 Wend. 315; lb. 106; 2 Greenl. 358; 2 Kent, Comm. Lect. 41, p. 631, 632; Chitty on Cont. 211 ; Story on Agency, § 264, n. 1. If the contract were void as to both B. F. Johnson and R. M. Johnson, I should have no hesitation in decreeing a repayment of the money; but so long as B. F. Johnson is or may be held liable and bound to it, I think R. M. Johnson must look to his faithless agent, in whom he reposed full confidence, for the breach of his duty and the amount he intrusted to him.

I accord with the chancellor in his decree declaring the sale and purchase void as to R. M. Johnson, but confirming it as to B. F. Johnson, and in refusing to refund the money to R. M. Johnson; and this the more, since in this court it is desired by counsel of both sides, that we should decree upon the whole case as to all the parties.