•CASE 41 — ACTION BY THE OLD WOOLEN MILLS CO. AND OTHERS AGAINST PRANCES L. PEYTON.— March. 20.

#### Peyton v. Old Woolen Mills Co., &c.

Appeal from Ballard Circuit Court.

B. J. Bugg, Circuit Judge.

Judgment for plaintiffs, defendant appeal.

Be-versed.

1. Principal and Agent — Liability of Principal — Evidence—Statements of Agent — The fact of agency, and the actual or apparent scope of the agent’s authority to hind his principal, cannot be shown by proving what such agent said or represented as to the extent of his authority.

2. Evidence — Declaration of Agent — A principal is hound by the admission or declaration of his agent only when made during the continuance of the agency, and in regard to a transaction then in hand and being executed.

3. Same — Knowledge of Agent’s Acts — On the issue &s to whether defendant was a member of a firm indebted to plaintiff, evidence of acts of defendant’s general agent m conducting the business, such as listing defendant’s property for taxation in her name, and keeping a bank account in her name, under circumstances presumably within her knowledge, was relevant to show her ownership of the property.

4. Same — On the issue as to whether defendant, was a member of a firm indebted to plaintiff, evidence of'what was said in defendant’s absence by her general agent in conducting the business, to 'creditors, as to her ownership of the property, and his statements in making reports to a mercantile agency to the effect that defendant was a member of the firm, was incompetent.

5. Estoppel — Pleading—Necessity—An estoppel must be pleaded to be available.

J. M. NICHOLS & SON for appellant.

*362ROBBINS & THOMAS and J. B. WICKLIFFE for appellees.

OPINION op the Court bt

Judge 0’Rear

— Reversing.

Appellant, who is a married woman, liad been engaged in tire mercantile business at Oscar, Ky., prior to 1900. In the latter year the store building and stock of merchandise were destroyed by fire. The house was rebuilt directly, and. within a few months a new stock of general merchandise w'as bought, and a merchandising business conducted at that stand, of the same nature and in the same name as before. Mrs. Peyton’s name in her business was generally used simply as “F. L. Peyton.” Her husband had previously conducted the business for her. She previously had but little to do with it. After the fire in 1900 and when the new business was begun, the. style of the concern was “F. L. Peyton.” Her husband’s name was Frank Peyton. He claims it was Frank L. Peyton. Perhaps it was'. But it seems that ordinarily he omitted the “L. ” in the signature of his own name. Mrs. Peyton owned a farm, some-houses in Oscar, and other property. She was solvent. Her husband was then and is yet insolvent and without credit. An interest in the store was sold to one Webb, and the style of the firm changed to Peyton, Webb & Co. The stock of merchandise owned by this concern was also destroyed by fire. Suits were brought by creditors of the firm, wholesale merchants who had sold it the stock of merchandise, against appellant, M’rs. Frances L. Peyton, to charge her as a partner upon the firm’s indebtedness. She denied that she was or ever had been a member of the firm. The new business was conducted by Frank Peyton *363just as bad been done, so far as. Ms personal management went, when Mrs. Peyton owned it. The sole issue made by the pleading's was whether -appellant was a member of the firm of Peyton, Webb & Co.

Frank Peyton’s conduct in his business is blameworthy in the extreme. He undoubtedly misled, and intended to mislead, the wholesalers to believe that it was his wife’s business. The use of the old style of the concern, the inserting of the same middle initial in the business name, and dropping it in his personal transactions, the manner in which he listed the property for taxation, the representations he made to creditors about the matter, the concealment of the fact that his solvent wife, with an established credit, had withdrawn from the business, and that he, an insolvent without credit, under the same name and the same management, Was the only person responsible for the debts contracted in the business, leave little room for do.ubt that he intended an imposition on the creditors of that concern nothing short of actual fraud. But, if this fact were even clearer than it is, it would afford no ground, for charging the fault of it to his wife, unless she, too, participated in it, by purposely suffering it, or authorizing it, to aid in the deceit. We may say in passing that there was considerable evidence that appellant was in fact the “F. L. Peyton” who was a member of the firm and that she herself so recgonized and treated the matter. It is not our purpose to discuss this phase of the case, though, further than may be necessary in the treatment of the legal questions which we will dispose of, as we conceive the decisions of the facts to be a matter for the jury under the guidance of proper instructions and competent and relevant evidence.

*364There was considerable evidence introduced by appellees that Prank Peyton, not in the presence of his wife, represented that she, and not he, was the member of the firm of the name of “F. L. Peyton.” It was also shown that in giving in the property to the county assessor for taxation, he listed all the property, her lands and the stock of merchandise, in the name of “F. L. Peyton,” that in making reports to the R. Gr. Dun mercantile agency he showed that it was Mrs. Peyton who was the member of the firm. All of this evidence was introduced as substantive evidence in support of appellee’s contention that appellant, Mrs. Peyton, was in fact the F. L. Peyton who conducted and was a member of the firm who conducted that business. This class of evidence was objected to by appellant, and was admitted over her exceptions. It was so extensive in volume, and so damaging in character and probable effect, that there is no doubt of its being reversible error, if error at all.

Appellees’ contention is that, as appellant put her husband in the position and held him out as her agent, she is bound by his acts and statements made in that business, as if done and made by her in person. It is undeniably true that where one acts in a matter by an agent, the latter’s action in the matter, if within the real or apparent scope of his agency, is as binding on the principal as if done by the principal himself. But it is always necessary to first establish the fact of the agency, and to show the actual or apparent scope of the agent’s authority. This cannot be done by proving what the agent said or represented as to the extent of his authority. Morgan’s Heirs v. Marshall, 7 J. J. Marsh, 316; Bruen v. Grahn, 5 Ky. LawRep.312; *365Dieckman v. Weirich, 73 S. W. 1119, 24 Ky. Law Rep. 2340; Cent. Penn. Tel. Co. v. Thompson, 112 Pa. 131, 3 Atl. 439; Francis v. Edwards, 77 N. C. 271; Galbreath v Cole, 61 Ala. 139; Mussey v. Beecher, 3 Cush. (Mass.) 517. It must be rare that what one' claiming to be the agent of another, said out of court of the nature and extent of his agency, can be admitted as evidence of such agency against the principal. The whole doctrine of an agent’s, admission against the principal’s interest binding the latter rests upon the idea that it is of the res gestae, the representation or statement of the agent, in such cases, being the ultimate fact to be proved, and not the admission of some other fact. A party’s own admissions against his interest may be given in evidence against him whenever made. But the admission nr declaration of his agent binds him only when made during the continuance of the agency and in regard' to a transaction then in hand and being executed. Green-leaf on Evidence, section 113. When the principal fact to be established is the liability (but not its extent) of one as principal in a transaction, what another, though his agent, may have said by way of" admission concerning such principal’s liability is hearsay; is not part of the res gestae, and could not well be within the scope of an agent’s authority tó make. 1 Phil, on Evidence (Am. Ed.) 402. The agent, of course, may as a witness testify to the fact and.scope of his agency, unless otherwise Incompetent as a witness, po, Ms agency may be shown by circum:’ stances, or by proof of the conduct of the'principal’s acquiescence, approval and the like of the agent’s acts. . Such evidence goes to establish that the alleged' principal is principal, as well as to show the scope of *366the agency. The question being discussed is not whether an agent’s statement in the course of a transaction, and concerning it, is- receivable as evidence against the principal, but whether such a statement is receivable at all to prove the fact of the agency, which is to connect the principal with the matter. It is stated in Evans on Principal and Agent, page 187: “As a general proposition, what one man says, not upon oath, cannot be evidence against another man. The exception must arise out of some peculiarity of situation, coupled with the declarations made by one. An agent may undoubtedly, within the scope of his authority, bind his principal by his agreement, and in many cases by his acts. What the agent has said may be what constitutes the agreement of the principal; or the representations or statements made may he *the foundation of the inducement to*the agreement. Therefore, if writing is not necessary by law, evidence must be admitted to prove that the agent made a certain statement. So, with regard to acts done, the words with which these acts are accompanied frequently tend to determine their quality. Nevertheless, the admission of the agent cannot be assimilated to the admission of the principal. A party is bound by his own admission, and is not permitted to contradict it; but it is impossible to say a man is precluded from questioning or contradicting anything any person has asserted as to him, as to his conduct, or his agreement, merely because that person has been an agent of his. An agent can act only within the scope of his authority; hence, declarations or admissions made by him as to a particular fact are not admissible as evidence against the principal, unless they fall within the nature of the agent’s *367employment as agent; unless, for instance, tliey form part of the- contract which he has entered into and is employed to negotiate on behalf of the principal Hence, what is said by an agent respecting a contract or other matter in the course of his employment is good evidence to affect tire principal, but not if it is said on another occasion.”

In the case at bar the objectionable evidence was not admissions made by Frank .Peyton as the agent" of his wife, in the course of his. agency, concerning the particular transactions in suit; i. e., the purchase of any of the bills of goods sued for. That Frank Peyton purchased the goods is not denied. Nor is there an issue as to the terms of the contracts. If there were, and if Frank Peyton’s agency were established, directly or circumstantially, what he said in the course of the transactions respecting their terms would be receivable as evidence against his principal. But no' such inquiry is involved here. On the contrary, it is, simply, for whom was Frank Peyton acting in making the purchases ? What he said in the absence of appellant, and of which she was ignorant, cannot be evidence against her under any rule of evidence that he was acting for her. Although it may be assumed as otherwise proved that Frank Peyton was the general agent of his wife in conducting that mercantile business, yet what he said in her absence respecting the fact that she was- principal and he her agent only, cannot be received as evidence that she was principal. Such statement is not properly a part of any transaction involved in the issue being tried and therefore was not part of the res-gestae. What Frank Peyton did toward managing appellant’s property, such as listing it for *368taxation in her name, is, when shown to have occurred as' in this case, under circumstances presumably within her knowledge — for she must have known that, as she did hot attend to that duty, some one did it for her- — was relevant to show that the property was ' hers;' not because Frank Peyton said it was, but because by her adoption of his act she also1 asserted it was hers. That he kept the bank account in her 'name, a fact shown to have been known to her, was also relevant upon the same principal. But what he said to' merchants and reported to the mercantile agency were not relevant as against her, and it was error to have admitted that character of evidence to the jury.

In the course of the court’s instruction to the jury ' they] were told that, although appellant was not in fact a member of the firm when the goods being sued for were sold to it, yet if she had previously been a member of it, or conducted the business under the name of F. L. Peyton, but'had withdrawn without giving actual notice to creditors and those who have ' been selling goods to the firm, by which failure they .were' induced to extend credit to the firm,' she was nevertheless liable. Such liability is imposed not because the defendant in fact bought the' goods, or authorized it, but upon the' ground of- estoppel; that having misled another by her conduct into a belief to ' his.'hurt, she will not be allowed to deny what she had ‘thus induced him to believe was so. The principle is sound.’ But no such claim was made in the pleadings in this cáse. Before an estoppel is Available it -must be pleaded. Faris v. Dunn, 7 Bush, 276; Stacy v. Holiday, 5 S. W. 481, 9 Ky. Law Rep. 517; Ray v. Longshaw, 4 Ky. Law Rep. 904; Excelsior Coal *369Mining Co. v. Virginia, etc., Co., 66 S. W. 373, 23 Ky. Law Rep. 1834; 8 Ency. Pl. & Pr. 7; Herman on Estoppel & Bes Judicata, 1447.

This must be so, because the doctrine is not that the fact is so and so, but the defendant is liable, notwithstanding it is not so, because he has misled the plaintiff to believe it was. It is one instance where the law allows, a recovery in spite of the truth. But if a recovery is sought on such ground, it is but just that the other party should be apprised that the claim is asserted on that ground, and not on one absolutely inconsistent with it, and requiring a distinctly different character of proof to repel the recovery.

The objection to the depositions does not appear from the record to have been erroneously overruled.

For the reasons indicated, the judgment is reversed, and cause remanded for a new trial under proceedings not inconsistent herewith.