#### The General Cartage and Storage Company *v.*Cox.

*Corporation for the storage of goods*— Insurance *of goods incident to storage*— Agreement *to insure goods for bailor*— By *agent for bailee without express authority*— Liability *of corporation*— Agency.

A corporation engaged in the business of storing goods for hire is bound by a stipulation to effect insurance on goods stored with it, the stipulation being incident to a contract of bailment executed in its name by an agent who, though without express authority to stipulate to insure, is by it held out to the public as authorized to make contracts for storage in the conduct of its business, the bailor acting in good faith and without notice of any limitation upon the agent’s authority.

(No. 9399

Decided May 22, 1906.)

Error to the Circuit Court of Cuyahoga county.

Cox brought suit in the court of common pleas against the Storage Company to recover for a breach of its alleged contract to procure insurance on goods stored by him with it and destroyed by fire while uninsured. He alleged that on October 4, 1902, the parties entered into a contract whereby the Company, which as its name indicates was a warehouseman, agreed to store in its warehouse his household goods of the value of $850.00 and to have the same insured in the sum of $500.00 while they should be in its possession; that he delivered the goods to the Company in pursuance to said contract; that it failed to procure any insurance whatever on them, and that on about January 10, 1903, a fire occurred to said warehouse and the goods were wholly destroyed.

The Company answered admitting its corporate character; the reception of the goods for storage *285and their destruction by fire; and denying all the other averments of the petition.

On the trial of the issues to a jury the plaintiff’ introduced evidence tending to show that having ordered that vans of the Company he sent for his goods, and the vans not having arrived, he hastened to the warehouse of the Company and inquired of a young man on duty in the office and apparently in charge of it where the manager was. He was told that the manager was up stairs and would he sent for. Shortly an employe of the Company named H. E. Smith, who was a stranger to Cox appeared in response to the summons and said that he was the manager. Cox then explained his insistence that the vans should he sent promptly for his goods because he had procured tickets for New York and the time for the departure of his train was near at hand and that before going he desired to see his goods properly in place in the warehouse and to effect their insurance. In response to the latter suggestion Smith said: “Let us take care of that for you.” After some conversation as to the character and rates of the proposed insurance Cox accepted the suggestion thus made to him and Smith said: “We cannot hand you the policy now hut will send it to you.” Smith then made a written memorandum of the amount of the policy desired and of the New York address of Cox and added that as he had a hank account in Cleveland, he could send a check for the premium when he received the policy. A few days later a letter written on the head of the Company and bearing its name in the proper place for its signature, attested, “per H. E. S.” was sent to Cox at his New York address stating that insurance for $500.00 had been effected hut *286that the policy was not forwarded because of doubt as to the precise amount of insurance which he desired. The testimony offered by the Company was that Smith was not manager for it but in his absence acted in his stead; that it was not engaged in the business of insuring goods left in its care; that it had given Smith no authority to bind it by contracts of this character and that he did not report to it any insurance which he effected upon goods deposited with it. The value of the goods was proved by Smith as alleged. The jury returned a verdict for the plaintiff and the defendant’s motion for a new trial was overruled. On petition in error the circuit court affirmed the judgment of the court of common pleas.

*Messrs. White, Johnson, MoCaslin & Gannon,*for plaintiff in error.

If anything is well settled it is that neither the fact nor extent of a pretended agency may be proven by statements, declarations or admissions of the person claimed to be an agent. If this fundamental principle needs any citation of authority, we call your Honors’ attention to the following: Meehem on Agency, sec. 100.

The declarations of the alleged agent are not competent to prove such agency although they are accompanied by acts purporting to be acts of agents. 1 Jones on Evidence, sec. 256: Tiffany on Agency (1903), p. 247.

His power to make admissions rests upon the very fact that he is agent and has authority to make the statement which constitutes the admission. To receive his statement as an admission of that authority would be to proceed in a circle. Tiffany *287on Agency (1903), pp. 256-7; 1 Am. & Eng. Ency. Law (N. S.), p. 690; Reinhard on Agency (1902), sec. 353; *Belting Co.*v. *Gibson,*68 Ohio St., 442.

If the admissions of an agent are incompetent to establish his agency, so is his conduct; and this, letter in the absence of any proof of the person who wrote it was not proper evidence for the purpose of fixing a liability upon the defendant company. Huffcut on Agency (2 ed.), 178, sec. 137.

The rules as to the liability of a principal for the acts of his agent, and the liability of a master for the acts of his agent are, in effect, the same. *Belting Co.*v. *Gibson,*68 Ohio St., 442.

If the servant step aside from his master’s business for however short a time, to do an act not connected with such business, the relation of master and servant is for the time suspended. *Railroad Co.*v. *Little,*67 Ohio St., 91.

True it is that he lightly touched upon the subject in his charge to the jury, but the error of the admission of this testimony and the error of his refusal to charge as requested were not cured by such reference in the general charge. Huffcut on Agency (2 ed.), 178.

All the testimony is to the effect that no officer of the defendant company knew that Smith was-engaged in the business of insuring its customer’s goods, and this testimony remained uncontradicted, and the jury should have returned a verdict in accordance therewith.

The authority of an agent seems to be express, implied or apparent. Express authority, of course, speaks for itself. Implied authority is in addition to that which is expressed, and is authority to do-those things usually and necessarily incident to the *288expressed powers. 1 Am. *&*Eng. Ency. Law (2 ed.), p. 988.

It is manifest in this case that Mr. Smith had no express authority to do the act claimed, inasmuch as all the testimony shows he was simply a bookkeeper employed for that purpose.

In order, then, to hold the defendant company, it was necessary to establish that the act was within his implied or apparent authority.

It cannot be said under the testimony in this case that the act of insuring the goods was usually and ordinarily connected with the business of storing goods, in view of the fact that the evidence discloses that such a thing was never done. Therefore, the power could not have been implied as a part of the business.

Was the act, then, within the apparent authority of Smith?

A liability upon the basis of an act committed within an agent’s apparent authority rests in its last analysis upon the doctrine of estoppel. The apparent authority which will bind the principal binds him because there has been some act of commission or omission on his part which the law will not permit him to deny, and by which the rights of other persons have been affected. 1 Am. & Eng. Ency. Law (2 ed.), p. 989; Tiffany on Agency, p. 183.

There was nothing in this case in the way of an act of omission or commission on the part of the defendant company by which Smith was held out as having any authority in regard to insuring goods; but it is manifest that in so agreeing to insure, Smith was not acting within the course of his employment as bookkeeper, was not serving his *289principal, and was not acting within the scope of his authority. The reasonable conclusion is that in agreeing to insure the plaintiff’s goods, he was the plaintiff’s and not the defendant’s agent. *Rice*v. *Peninsular Club,*56 Mich., 82; *Lumber Co.*v. *Williams,*73 Mich., 86; *Bank*v. *Graham,*109 Mass., 519; *Edwards*v. *Dooley,*120 N. Y., 540; Huffcut on Agency (2 ed.), 178, sec. 137; *Bank*v. *Bank,*6 Circ. Dec., 452; 10 C. C. R., 233; *Railway Co.*v. *Wiseman,*1 Circ. Dec., 134; 1 C. C. R., 246.

In conclusion we believe that the ultimate question involved in this case is finally disposed of in the case of *The Bradford Belting Co.*v. *Gibson,*68 Ohio St., 442.

*Mr. E. J. Thobabén,*for defendant in error.

It is well settled that a warehouseman or corporation engaged in the warehouse business may act as insurers of goods placed in the warehouse while so placed, or they may insure as bailees and be liable to their bailors for the proceeds of the insurance.

*Watkins*v. *Durand,*1 Port., 251; *Savage*v. *Insurance Co.,*36 N. Y., 655; *De Forrest*v. *Fulton Ins. Co.,*1 Hall, 136; *Sideways*v. *Todd,*2 Stark, 400; *Home Ins. Co.*v. *Warehouse Co.,*93 U. S., 527; *Walters*v. *Insurance Co.,*5 El. & Bl., 870; *Hough*v. *Insurance Co.,*36 Md., 398; *Insurance Co.*v. *Jackson,*16 B. Mon. (Ky.), 242; *Lee*v. *Adsit,*37 N. Y., 90; *Siter*v. *Morris,*13 Pa. St., 218; *Pelzer Mfg. Co.*v. *Insurance Co.,*41 Fed. Rep., 271.

"Where warehouseman agrees to insure property stored with him, he is liable to the owner for any loss arising from his failure to do so. *Deming*v. *Merchants Cotton Press Co.,*90 Tenn., 306; *Lan**290*caster Mills*v. *Cotton Press Co.,*89 Tenn., 1; *Cole*v. *Favorite,*69 Ill., 457; *Conover*v. *Wood,*48 Minn., 438.

It is incident to the business of a warehouseman to insure or cause insurance to be effected on property within his warehouse.

The corporation (plaintiff in error) created the situation by which defendant in error was led to rely upon the contract made with the corporation by the man apparently in charge of its business at the time he called there, and who actually, for the time being was in charge of its business. The business transacted was within the usual course of business of the corporation, and from .appearances thus created by plaintiff in error, Smith had full authority to transact all business for the corporation which the corporation itself had a right to transact.

This leaving Smith in charge of its office and putting it in his power to transact business in the name of the Company creates an .apparent authority which the corporation is estopped to deny. Huffcut on Agency (2 ed.), secs. *52-52a; Insurance Co.*v. *Kelly,*24 Ohio St., 345.

Plaintiff in error says it never authorized Smith to have property stored in the warehouse insured or to agree to have it insured.

The question as to whether an agent was acting for the principal is a question of fact to be submitted to the jury, and the master cannot exempt himself from liability because the agent disregards the rules laid down by the master. *Railway Co.*v. *Little, 67*Ohio St., 91; Thompson’s Ohio Trial Evidence, sec. 428; citing *Kehm*v. *Insurance Co.,*11 Dec., 739-746.

*291Notwithstanding private instructions, a person held out as general agent, and which conduct raises an implication of agency, will have authority consistent with the usual course of business in which he acts as agent. 1 Am. & Eng. Ency. Law (2 ed.), p. 992; *Doan*v. *Duncan,*17 Ill., 272; *Insurance Co.*v. *Advance Co.,*80 Ill., 549; *Insurance Co. v. Eshelman,*30 Ohio St., 648.

The agency was established by the circumstance of Smith being left in charge of the business,' and this conversation was such a part of the transaction that it was necessary in order to explain the actions and situation of the parties. It was made at a time and under such circumstances that it was a part of the *res gestae*of the whole transaction. If it had been ruled out or disregarded, the conduct of the defendant in error and of the agent, in the position he had been placed by the principal, would have been meaningless. The acts of the parties would have been ‘ ‘ dumb. show. ’ ’ *Insurance Co.*v. *Tobin,*32 Ohio St., 77; Elliot on Evidence, sec. 252; Huffcut on Agency (2 ed.), secs. 138-139.

The Company, by placing Smith in charge of its office with all the appearance of possessing the power which he exercised, would work a fraud on innocent persons dealing with him relying on his apparent authority as agent.

They are estopped on the principle that a person cannot show his own fraud in order to relieve himself from liability..

If they had been permitted to show secret instructions limiting the apparent authority of its agent, an authority which he apparently had and which was impliedly given him by the conduct of the principal, it would have worked a fraud on defendant in *292error. Huffcut on Agency sec. 52; Thompson’s Ohio Trial Evidence, sec. 428; *Insurance Co.*v. *Kelly,*24 Ohio St., 345; 1 Am. *&*Eng. Ency. Law (2 ed.), p. 990.

Shauck, C. J.

It cannot be claimed upon the evidence that the Storage Company was accustomed to insure goods left in its care, nor that Smith had express authority to make the particular contract set out in the petition or like contracts for insurance with others who deposited their goods with the Storage Company. Nor can it be said that such authority was implied in the sense that the making of the contract to insure was indispensable to the execution of his authority to receive goods for the Company on bailment. Nor should there be any dissent from the legal proposition which counsel for the Company advances in support of the criticisms of the rulings of the trial judge as to the competency of evidence and his instructions to the jury, viz., that the authority of an agent cannot be proved by his own declarations. But the question by which the liability of the Storage, Company must be determined is, was it within Smith’s apparent authority to make the contract counted upon in the petition? It does not seem important that Smith was not in fact the Company’s manager, for he appeared in that capacity at the time of this transaction when the manager was absent, and it is clear that in the absence of the manager he was authorized to act in his stead in the reception of goods for storage. His authority would not have been greater if he had regularly occupied the position of manager for the Company. Counsel for the Company insist that in determining whether Smith *293had such apparent authority to make the contract for insurance that Cox might rely upon it, it is the conduct of the Company that is to be considered. The soundness of this proposition should be conceded for it is supported by the decided cases and by the reasons involved. The Company fixed the character of its business and employed Smith in the capacity in which he was presented to those who appeared in response to its invitation to the public to store goods with it for hire. It was not an employment of a transient character or to represent it in the conduct of an isolated transaction, but in the general conduct of a business of established and defined character and scope. In the relation into which the parties were brought by the regular and usual conduct of that business the bailee, though not authorized to issue policies of insurance, was authorized to secure insurance upon goods stored with it even without the express assent of the bailor and to effect such insurance for the benefit of both parties to the contract of bailment. If insurance is effected by the bailee apparently for his own exclusive benefit he will nevertheless by legal construction be held to be a trustee for the bailor as to the surplus. The frequency with which this authority is exercised by bailees of the character of plaintiff in error is suggested by the reported cases. A number of them are cited in the briefs submitted in the present case and they are in entire accord with respect to the doctrine stated. It is to the relation into which the parties were thus brought by the express and confessedly authorized contract of bailment in connection with the facts found in the statement of the case that we are to apply the rules of law respecting the apparent authority of an agent. A correct *294.statement of the matured view of that subject will show that it does not have exclusive regard to the immunity of the principal without consideration of the rights of those who accept his invitation to enter into contract relations with him. That view is comprehensively and accurately stated in *Johnston*v. *Milwaukee and Wyoming Investment Co.,*46 Neb., 480. “Where a principal has by his voluntary act placed an agent in such a situation that a- person of ordinary prudence, conversant with business usages, and the nature of the particular business, is justified in assuming that such agent is authorized to perform on behalf of his principal a particular act, such particular act having been performed the principal is estopped as against such innocent third person from denying the agent’s authority to perform it.” It is an obvious limitation upon the liability of the principal that he who deals with the agent must act in good faith, respecting every restriction upon the agent’s authority of which he may have notice. The most careful scrutiny of the record in the present case discovers no suggestion of the want of usual prudence or good faith on the part of the bailor. . The rulings of the trial judge respecting the competency of evidence and instructions to the jury are consistent with these views and the judgment is affirmed.

*Affirmed.*

Price, Crew, Summers, Spear and Davis, JJ., concur.