Case ID: ohio-st_39/html/0079-01.html
Source: Caselaw Access Project
Author: {"author": "MoIlvaine, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Miller v. Sullivan.
    Wliere an agent enters into a contract without disclosing his principal or agency, the principal, if he takes advantage of the contract, must do so subject to all the rights and equities, of which the other contracting party, who had no knowledge of the agency, might avail himself as against the agent, assuming the latter to be a principal.
    Error to the District Court of Hamilton county.
    The original action was brought by Milton II. Miller, in his lifetime, against J. L. Sullivan & Co., in the superior court of Cincinnati, to recover the value of 11 hogsheads of leaf tobacco, alleged by the plaintiff to have been his property, which defendants had sold and converted to their own use.
    The facts as found by the trial court are too voluminous to be transcribed here, but the following will be sufficient to an understanding of the opinion of this court.
    For a long time previous to September, 1868, one Robbins, who was a manufacturer of leaf tobacco, had been a heavy customer of J. L. Sullivan & Co., who were tobacco warehousemen and dealers in and auctioneers of leaf tobacco, at Covington, Kentucky. The mode of dealing was thus : All the.tobacco
    bid off by Robbins at the auction sales, was knocked down to him, by the auctioneer, as bought by Robbins, but by request of Robbins, made by him to the book-keeper of defendants, who kept the account of sales in the auction room, the tobacco was not all so entered in the books, some of it being entered in the name of Robbins, some in the name of Selfridge & May, some in the name of Saunders, and some in the name of Henry Queen, who was the book-keeper.
    In the summer of 1868, Robbins became embarrassed and got to be slow pay, and becoming .largely indebted to defendants, they refused to sell him any more tobacco unless satisfactory arrangements were made for payment. Thereupon it was agreed between Robbins and the defendants, that Robbins should continue to buy, and give his acceptances for his purchases, and that the defendants should retain the tobacco .in their possession, in their warehouse, as security for payment, until payment was made.
    This arrangement was made about the month of August, 1868, and, at the time it was made, Robbins was indebted to the defendants to the extent of six or seven thousand dollars for purchases previously made, and the defendants still had, of those purchases, a large amount of tobacco in their warehouse, which, under the agreement, was to remain in their possession, as well as subsequent purchases, as security for payment by Robbins, of his indebtedness then existing and thereafter to arise.
    It was the practice, both before and after the agreement last above mentioned, to enter tlie sales made to Eobbins upon the books of defendant in the name suggested by Eobbins to the book-keeper, for the reason, as stated by Eobbins, that lie did not want other deal el’s to know how much tobacco he was buying ■
    This request of Eobbins to have his purchases so entered in the sales-book, and the compliance therewith by their bookkeeper, were unknown to the defendants until after the tobacco here in controversy had been purchased, when it was discovered by the defendants, and immediately stopped, as will be hereinafter shown.
    The bills and tickets for the tobacco, bought by Eobbins, were made out from and according to the entries made in the auction sales-book, and therefore in the different names shown by that book to have been purchasers, but all these tickets and bills were given to Eobbins.
    About September 1, 1868, while this state of affairs was existing, and this course of dealing was going on, between Eobbins and the defendants, the plaintiff in this case, being acquainted with Eobbins, asked his advice as to the investment he desired to make, and Eobbins advised him to invest his money in leaf tobacco. Miller had no knowledge of or experience.in the tobacco business, but, having confidence in Eobbins, accepted his advice, and, thereupon they agreed that Eobbins should buy leaf tobacco for Miller, on speculation, Miller furnishing the money and keeping control of the tobacco. The tobacco was to be held until they should think it profitable to sell. Eobbins was to have no right to sell without Miller’s consent, and Miller was to rely on Bobbins’ judgment and experience in buying and selling. The profits were to be equally divided. Nothing was said about losses, but it was agreed that in case they should not be able to sell for what they paid, Eobbins was to work up the tobacco in his factory, and allow Miller the cost, so that he should not suffer any loss.
    Miller bad no knowledge of the condition of affairs existing between Eobbins and the defendants, and knew nothing about the entry of names, other than Eobbins, as purchasers of tobacco bought by him in the books of defendants, and the making out in pursuance thereof of tickets and bills in accordance therewith.
    Subsequent to this agreement with Miller, Robbins bid off at defendant’s auction sales at different times, forty-three hogsheads of tobacco in the aggregate, and had them entered in defendants’ books in the name of Miller, took bills of sale and unsigned tickets for delivery in Miller’s name, gave his own acceptances for the purchase money and had the bills marked “paid,” left the tobacco in defendant’s warehouse as security for his indebtedness to defendants as per agreement, and delivered the bills and tickets to Miller.
    The bills and tickets for all the tobacco, except seventeen hogsheads, were afterwards returned by Miller to Robbins, who, upon payment of all his acceptances given on account of the forty-three hogsheads, removed from the warehouse all the tobacco except the seventeen bogheads, which were left in defendants’ possession as security for other indebtedness, in accordance with the previous agreement.
    Miller, upon receipt of the bills and tickets from Robbins, paid the amount thereof to him, and upon the return of the bills and tickets charged Robbins with the amount of the same. No part, however, of the money paid by Miller to Robbins was used in payment of Robbins’ indebtedness to defendants.
    After Robbins’ purchases had been entered in the name of Miller, it first came to the actual knowledge of the defendants, that Robbins had procured any purchase made by him to be entered upon their books in any other name than his own. Thereupon, J. L. Sullivan, a member of the firm, called upon Robbins for an explanation, and was informed by him that the names so entered as purchasers were merely “ men of straw ” and that his only purpose in having such names entered on the books as purchasers, was to mislead other dealers as to the amount of his purchases. The defendants, thereupon, immediately stopped the practice and caused the entries upon the books to be changed so as to show the purchaser to have been Robbins, in accordance with the understanding of the book-keeper at the time the entries were made.
    Neither, any member of the firm of J. L. Sullivan & Co., nor any of their clerks ever knew, or heard of M. H. Miller,' outside of these transactions, until subsequently, when the defendants notified Robbins, that in default of payment, they would sell the tobacco ; he then told them, who M. II. Miller was, and that he held the bills and tickets for part of the tobacco.
    Defendants sold the seventeen hogsheads of tobacco, but the proceeds were insufficient to satisfy their claim against Robbins, who then was, and ever since has remained, insolvent.
    The foregoing facts control the case. The superior court rendered judgment for defendants and the judgment of that court was affirmed by the district court.
    
      Hagans & Broad/well, for plaintiff in error :
    1. The claim of defendants that they supposed Miller was only a “ man of straw,” that Robbins was the real purchaser, as Robbins had been in the habit of purchasing of them in fictitious names, amounts, we think, to no defense at all. The giving of the name of Miller to the defendants as purchaser was, if not actual notice, sufficient to put them, on inquiry; and they violated the law if the real nature of the transaction had been as they say they supposed or believed it to have been, and subjected themselves to heavy penalties for so doing. 15 U. S. Stat. at Large, 151-158.
    The case presents the plain question of an estoppel in pais, 26 Ohio St. 639; Story on Agency § 433; Dalzell v. Odell, 3 Hill, 219 ; Wank v. Jenkins, 52 Ohio St. 567 ; Packard v. Sears, 6 A. & E. 469; Hack v. Kemball, 16 Me. 146; Stroble v. Smith, 8 Watts, 280 ; Smith v. Warder, 7 Harris, 424; Procter v. Keith, 12 B. Mon. 252; Pickering v. Bast, 15 East, 38; Dyer v. Pearson, 3 B. & C. 38; Am. Law Reg. May, 1870, 315, 316; Brown v. Bank, 30 Md. 39; Wyatt v. Marquis of Hertford, 3 East, 147; Muldon v. Whitlock, 1 Cow. 290; Heald v. Kenworthy, 10 Ex. 739; Beardsley v. Foot, 14 Ohio St. 414; Nye v. Denny, 18 Ohio St. 247.
    3. On the findings of fact by the court, the defendants had actual notice of Miller’s prineipalship and Robbins’ agency. 2 Bouv. L. Die. 236; 1 Story’s Eq. Jur. § 399; Wade on Notice, §§ 3, 5, eb seq.
    
    4. There was sufficient circumstantial evidence to put defendants on inquiry. Whitbread v. Jordan, 1 Y. & C. Ex. 303 ; Hankinson v. Barbour, 29 Ills. 80; Lewes v. Bradford, 10 Watts, 67; Williamson v. Brown, 15 N. Y. 354; Fiske v. Porter, 39 N. Y. 70; Wade on Notice, 88 et seq.
    
    Dealing with Robbins as they did, and putting it in his power to induce Miller to part with his money on the faith of the receipted invoices and delivery tickets, they are chargeable with notice of Robbins’ agency, and must abide the consequences of their carelessness or negligence. They must be held to have been advised that these purchases in’ the name of Miller were bona fide purchases for Miller. They did this deliberately and purposely, and they are now estopped from claiming that Miller must bear the loss.
    
      H. G. Whitman, for defendants in error:
    I. If the relation of principal and agent existed between Miller and Robbins, Miller was an undisclosed principal, and as such, was bound by the agent Robbins. Rabone v. Williams, 7 T. R. 360; Story on Agency, 8th edition, §§ 390, 404, 420; 1 Parsons, 62, 63, and cases cited, note A; George v. Claggett, 7 Durnford & East (T. R.) 359; Locke v. Lewis, 124 Mass. 7; Warren v. McKay, 1 Meeson & Welby, 591; Harrison v. Roscoe, 15 Meeson & Welby, 231; Violet v. Powell, 10 Ben Monroe, 349; Huntington v. Knox, 7 Cushing, 371 ; Miller v. Sullivan, 26 Ohio St. 641.
    2. There was no estoppel in pais. 6 Hill N. Y. 534; 7 Ohio St. 105 ; 10 Penn. 531; 14 Ohio St. 119; 18 Ohio St. 42; Id. 254 ; 2 Parsons on Contracts, 793-801.
    3. But it is claimed by plaintiff that the defendants are estopped by the tickets and the receipted bills for the purchases of September 1 and 16, given to Robbins, and by him to Miller, and that Miller had a right to rely on them, in bar ,of defendant’s claim on Robbins. But this is not so. There is no estoppel from them to prevent the defendants from explaining them. All the cases show they (the bills) are such papers as may be explained. 4 Ohio, 341, 347; 6 Ohio, 248; 19 Ohio St. 419; 2 Parsons Cont. 555; 4 Harris & J. 355; 5 Johns. (N. Y.) 309 ; 7 Id. 311; 9 Id. 309 ; Ohio Code, § 3G; as amended, § 1, 75 Ohio L. 605.
   MoIlvaine, J.

We think the judgments of the courts below were right.

The transactions upon which the plaintiff bases his claim against defendants were conducted exclusively by Robbins as agent for plaintiff. If the relation between plaintiff and Robbins was not disclosed to defendants, the law is, that the plaintiff must take the contract subject to all the rights and equities of which the defendants might avail themselves against Robbins if ho were in fact principal. If Robbins had been a principal in the transactions, the right of defendants to sell the tobacco to satisfy their claim against him would not be questioned.

Robbins at the time of making the purchases assumed the character of a principal, an attitude wholly inconsistent with that of agent for either a known or an unknown principal. His purchases were made subject to a condition previously agreed upon by and between the parties, that the tobacco purchased should remain in possession of the vendors as security for acceptances given for the purchase-money and other indebtedness from the purchaser to the vendors. True, the sales were entered in defendant’s books as made to M. II. Miller. So procured to be made by Robbins upon representations to the bookkeeper that the names of purchasers to be substituted for his own were illusory. Such had been the previous practice, unknown indeed, to defendants, but corrected as soon as discovered. To the minds of defendants, charging them with the knowledge of their bookkeeper, these names represented “men of straw.” For this state of things plaintiff’s agent was responsible. Neither the defendants nor any of their clerks had ever heard of plaintiff as a reality. No laches can be attributed to them, sis they acted upon the best information which under the circumstances could be supposed to exist.

It is contended, however, that by dealing with Robbins as they did, by placing in his hands bills of sale in Miller’s name indorsed “ paid,” whereby Miller was induced to part with his money, the defendants are estopped from denying the agency of Robbins and that Miller was his principal.

When this case was before this court, as reported in 26 Ohio St. 639, it was held that a vendor of property to a known agent by receipting the purchase money, whereby the principal was induced to pay the amount to the agent, is estopped from denying the truth of the receipt, as against such principal, but it was also intimated that no estoppel would arise where the fact of agency was unknown to the vendor. And we now think that the delivery to Robbins of the bills in the name of Miller marked “paid” does not, under the circumstances amount to any proof of knowledge on the part of the defendants of the relation of principal and agent between the plaintiff and Robbins.

It is also contended that jAiintiffs’ case is strengthened by the fact that the internal revenue 'laws, in force at the time, required all sales of tobacco under like circumstances, to be entered in the books of the vendor in the real name of the purchaser, under penalties. The claim is that Miller had a right to assume from the form of the bills of sale that he was known to the defendants as the purchaser in fact.

It may be that defendants were technically guilty of a violation of the act of Congress, but whether they rvere or not the act of Congress does not constitute’a muniment of plaintiff’s title to the tobacco. His title, as against the defendants, must rest on the fact that Robbins was his agent and that defendant knew that fact, or had knowledge of such facts as put them upon inquiry, and were guilty of negligence in not making such inquiry. Upon these questions the court below found against the plaintiff.

The evidence is not set forth in the record, but a statement of primary facts as found by the superior court is set forth, and we think the ultimate fact which was in issue between the parties was properly deduced from the statement in the record. namely, that the relation of principal and agent as between the plaintiff and Robbins was not disclosed to the defendants.

Judgment affirmed.