Case Name: Benjamin v. Holgate, Appellant
Court: Superior Court of Pennsylvania
Jurisdiction: Pennsylvania
Decision Date: 1912-07-18
Citations: 51 Pa. Super. Ct. 104
Docket Number: Appeal, No. 34
Parties: Benjamin v. Holgate, Appellant.
Judges: Before Rice, P. J., Henderson, Orlady, Head and Porter, JJ.
Reporter: Pennsylvania Superior Court Reports
Volume: 51
Pages: 104–115

Head Matter:
Benjamin v. Holgate, Appellant.
Principal an d agent — Contract made by agent — Rescission—Ratification.
1. When a principal has received money or property from his agent of which the latter had obtained possession in pursuance of a contract with another which he, as agent, had no authority to make or whose authority is denied, the principal must either return the money or property, or hold it subject to the contract through which it was obtained. Where one adopts a contract entered into without his authority, he must adopt it altogether. He cannot ratify the beneficial part, and reject the remainder.
2. In an action of assumpsit where it appears that the several defendants, béing jointly interested in the stock of a corporation, authorized one of their number to make sales of a certain number of shares of stock, and that the agent had contracted with the plaintiff to sell to him some of these shares, for which the plaintiff paid the money, but never received the certificates, all of the defendants are liable to the plaintiff for the return of the money which he had paid. They cannot deny the authority of their agent, and at the same time retain the money which their agent had received for their use and benefit.
Practice, C. P. — Amendment—Parties.
3. Where five parties are sued as defendants, and at the trial counsel for the defendants states to the court that.there is not sufficient evidence to hold one of the defendants, and counsel for the plaintiff immediately moves to amend by striking out the name of the defendant referred to, and the court allows such amendment, the court commits no error in permitting a verdict and judgment to stand against the other four defendants. In such a case even if the trial judge committed error in deciding that the evidence in the case, both that re ceived before and that received after the amendment, was insufficient to hold the other defendant, the four defendants against whom the judgment went, have no standing to complain of the error in the appellate court, inasmuch as it was their own action which induced and contributed to the ruling of the trial judge.
Argued March 7, 1912.
Appeal, No. 34, March T., 1912, by defendants, from judgment of C. P. Lackawanna Co., Jan. T., 1909, on verdict for plaintiff in case of Fred R. Benjamin v. M. H. Holgate et al.
Before Rice, P. J., Henderson, Orlady, Head and Porter, JJ.
Affirmed.
Assumpsit to recover back money had and received. Before Savidge, P. J., specially presiding.
At the trial there was evidence tending to show that M. H. Holgate acting for himself and Victor Koch, H. A. Kaufhold and A. B. Dunning, had contracted to sell certain shares of stock of a mining company to plaintiff; that plaintiff had paid Holgate for these shares, but had never received the certificates.
Benjamin’s case was tried with three other cases brought, respectively, by A. F. Biesecker, Helen Decker and a Mrs. Gorman.
The court charged in part as follows:
[Now I say to you that if you believe there was this undertaking to deliver the stock when the money was paid, and there was an understanding that the money should be paid immediately or within a few days, which as I said to you was not in accordance with the subscription fist, and they did pay the money, and that they then demanded this stock from time to time, and finally in September or October, 1907, and there was a failure to tender the stock until March of the next year, the plaintiffs had a right to rescind the contract and have their money back, and your verdict ought to be for the plaintiffs in the proportion in which each contributed to the fund which went to pay for this stock, namely, $400, to Benjamin, with interest from the time the money was paid to'the present time; $300 to Mr. Biesecker, with interest for the same period, and $200 to Mrs. Gorman, and $100 to Helen Decker, with interest to each for the same period.] [10]
[Therefore, the whole question in this case will be whether or not there was this agreement to deliver the stock when the money was paid — a variation and modification of the agreement of the subscription list. The defendants deny there was any such agreement. They say it was always understood and never anything different was understood from that which was provided for in the subscription list; that is, that the stock was to be delivered when the title was passed upon and approved by the directors of the corporation. Every allegation of the plaintiffs as to the modification of this agreement — of the subscription list — is denied by Mr. Holgate, and he explains the clause in the receipt of February, 1907, by saying that was written in a number of receipts which were made out by Mr. Wells, attorney, or his clerk, and that the spirit of the whole proceeding was.that all the stock should be delivered in accordance with the subscription fist; that that was a mistake, and, in short, in every particular he denies any undertaking to deliver the stock other than as provided for in the subscription list. He admits, if I remember correctly, that they asked him for the stock on one or more occasions. Am I correct in my recollection of that, gentleman? If I am not, I wish you would correct me.
Mr. Rymer (of counsel for defendants). No, your honor; he denied that any demand was made upon him for the stock certificates.
The Court: I believe he denied that any demand was made upon him at any time for the stock. I was under the impression that he had been asked for the stock, and that he told them it could not be delivered until the titles had been passed upon. Well, counsel seem to be agreed that that did not take place, and without looking up the testimony I say to you that he denies all demand made upon him for the stock. Now, if you believe his testimony, then there can be no recovery in favor of the plaintiffs, and upon this you will take into consideration all the facts and circumstances surrounding this case. You will consider not only the testimony of the parties, but you will take the stock subscription list into consideration, and consider the fact as bearing upon the question whether or not there was a change as to the time of delivery; the fact that there had been a change as to the time of payment. By the subscription list, as I said to you before, the delivery was to be given when the payment was made; and the payment was postponed until the title should be approved by the directors. By their dealings the payment was made immediately, or practically immediately, and the plaintiffs say that it was agreed then that the stock should be delivered then; and the defendants say it was not to be delivered until after the title had been approved. Now, upon that finding in the case will depend your verdict, and I leave the case with you, expecting that you will consider it in all its details.] [11]
[Gentlemen of the jury, the case plainly shows that Holgate’s three codefendants, Kaufhold, Koch and Dunning, did not know in what form the receipts were given or taken or, for that matter, did not know to whom, or just in what manner this stock was being sold by their agent, or their general partner, so to speak, in this undertaking — Holgate; but, in my judgment, that makes no difference; they were all partners to this undertaking, and they put the matter of selling the stock into Mr. Holgate’s hands, and they were bound by whatever he did in the matter. That is enough for me to say to you, gentlemen, in this regard. While it is true that they did not know about these matters, the details of what he was doing, and just how the work was being accomplished by him, yet it makes no difference under the circumstances whether they knew or not, they are bound by his actions; he was one of them, and was carrying out their joint project.] [12]
Defendants presented these points:
5. The plaintiffs in this case having declared on a joint cause of action, unless you find that all of the defendants made the agreement claimed by the plaintiffs in this case, or authorized it to be made by their agent, then your verdict must be for the defendants. Answer: Refused. [4]
6. An agent has no power, except that which is delegated to him, or which impliedly flows from the power .specially delegated to him, and even if you should find that M. H. Holgate made the agreement which the plaintiffs in this case claim, yet, unless the same was authorized, either specifically or impliedly by the other_ defendants in this case, your verdict should be for the defendants. Answer: Refused. [5]
7. A person dealing with an agent must deal with him within the scope of his apparent authority, and the burden is upon the plaintiff to prove that the agent acted within the scope of his apparent authority, and if the evidence fails to satisfy you by its fair weight and preponderance that all of the defendants sanctioned or authorized the agreement as claimed by the plaintiffs in this case, then your verdict should be for the defendants. Answer: Refused. [6]
The jury returned a verdict in the aggregate amount of $1,230 in the four cases, upon which judgment was entered.
Errors assigned were (4, 6, 10, 12) above instructions, quoting them.
John F. Scragg, with him Patterson & Rymer and Warren, Knapp & O’Malley, for appellants.
— The plaintiffs having declared against all of the defendants jointly, and Schlager having been interested in the subject-matter of the suit equally with the other defendants and having ratified their acts and having joined in the affidavit of defense with the other defendants in a common defense, pleading no issue matter in his personal discharge, the verdict should have been against all or none of the defendants: Donellyn v. Graham, 77 Pa. 274; Burgess v. Sherman, 147 Pa. 254; Van Zandt v. Winters, 22 Pa. Superior Ct. 181; Swanzey v. Parker, 50 Pa. 441; Nelson v. Lloyd, 9 Watts, 22; Coughenour v. Suhre, 71 Pa. 462; American Bank’s App., 153 Pa. 98; Murtland v. Ployd, 153 Pa. 99; Williams v. McFall, 2 S. & R. 280; Pittsley v. King, 206 Pa. 193; Boltz v. Muehlhof, 37 Pa. Superior Gt. 375; Schoneman v. Fegley, 7 Pa. 433.
Where the party insisting on rescission has by his own act prevented performance he will not be allowed to rescind. Where both parties are in default, neither can rescind on the ground of nonperformance by the other: Campbell v. Shrum, 3 Watts, 60.
The burden of proof was upon the plaintiffs to establish the agency and the extent of it: Moore v. Patterson, 28 Pa. 505; Twelfth St. Market Co. v. Jackson, 102 Pa. 269; Am. Underwriters’ Assn. v. George, 97 Pa. 238; Seiple v. Irwin, 30 Pa. 513; Slonecker v. Garrett, 48 Pa. 415; Singer Mfg. Co. v. Christian, 211 Pa. 534.
Houck & Benjamin and M. A. McGinley, for appellees.-—
After the plaintiffs had amended without objection, striking out Schlager, the action was as though he had never been a party: Hoskinson v. Eliot, 62 Pa. 393; Burgess v. Sherman, 147 Pa. 254; Sturzebecker v. Inland Traction Co., 211 Pa. 156.
The relation established between Holgate and his co-defendants at the time of the contract in issue, under the undisputed evidence, was such as to invest Holgate' with authority to make the contract alleged and proved by the plaintiffs: Mundorff v. Wickersham, 63 Pa. 87.
There being no dispute as to the facts forming the basis of the authority of Holgate to make the contract in issue, and the facts being such that reasonable minds could draw but one conclusion from them, there was nothing to submit to the jury but their legal effect, which was properly done: Elliott v. Wanamaker, 155 Pa. 67; Bowman v. Bradley, 151 Pa. 351; Gulick v. Grover, 33 N. L. J. 463; May v. Assur. Co., 27 Fed. Repr. 260; South Bend Toy Mfg. Co. v. Ins. Co., 3 S. D. 205 (52 N. W. Repr. 866); Parr v. Mfg. Co., 117 Wis. 278 (93 N. W. Repr. 1099); Kane v. Belknap, 70 Hun, 211 (24 N. Y. Supp. 167).
The basis of liability for the act or declaration of an agent, is the fact that the principal has accepted the benefits of the agent’s act or declaration; where that basis is made to appear by testimony the legal consequence is established: Wheeler & Wilson Mfg. Co. v. Aughey, 144 Pa. 398; Chicago Cottage Organ Co. v. McManigal, 8 Pa. Superior Ct. 632; Meyerhoff v. Daniels, 173 Pa. 555; Wojciechowski v. Johnkowski, 16 Pa. Superior Ct. 444; Savory v. North East Borough, 26 Pa. Superior Ct. 1; McNeile v. Cridland, 168 Pa. 16.
July 18, 1912:

Opinion:
Opinion by
Porter, J.,
The plaintiff brought this action of assumpsit to recover the purchase money paid by him for stock in a mining corporation, alleging that the defendants had contracted to deliver the certificate for the stock upon his payment of the contract price, that he had completed the payment of the full amount of the purchase money on February 25, 1907, that he had repeatedly thereafter demanded that the defendants deliver to him the stock certificate which they had failed to do, that on or about September 15, 1907, he demanded of the defendants that they deliver to him the stock certificate or repay him the money which he had paid for it on or before the last day of September, 1907; that defendants failed to comply with this demand, and that on March 12, 1908, he had caused the defendants to be notified that he rescinded the contract for the purchase of the stock and demanded a return of his money, and that defendants having failed to repay the money he brought this action to recover. The plaintiff recovered a judgment in the court below and the defendants appeal.
The appellants do not question the right of the plaintiff to rescind the contract and demand a return of his money, nor that he took the si eps necessary to work a rescission, if there was a valid contract, binding on all the defendants, to deliver the certificate for the stock at the time of the payment of the purchase money therefor. Their contention is that no evidence was produced tending to establish an obligation upon the part of all the defendants to deliver the stock certificate on February 25, 1907. The plaintiff had in the transaction dealt with Holgate, who assumed to act for himself and the other defendants. The plaintiff produced evidence sufficient to warrant a finding that at the time of the origin of the negotiation, when the first payment on account of the stock was made, on February 19, 1907, Holgate had represented to him that he (plaintiff) should make the final payment in a few days, and the certificate for the stock would then be delivered; that plaintiff did make the final payment, on February 25, 1907, and that Holgate then delivered to him a written receipt, stipulating for the delivery of the certificate forthwith. Holgate denied that he had, at the time of the first payment, represented that he would be ready to receive the final payment and deliver the certificate in a few days, and testified that the inclusion of the clause, in the receipt dated February 25, 1907, stipulating for the delivery of the certificate upon the final payment then made, had occurred through a mistake. The issue of fact arising from this conflict of evidence was fairly submitted to the jury. The verdict determines that Holgate, representing that he was acting for himself and the other defendants, sold the stock in question and contracted to deliver the certificate therefor upon payment of the full amount of the contract price; that upon the faith of this agreement the plaintiff, on February 25, 1907, paid to the defendants, through Holgate, the full amount which he had agreed to pay for the stock. The appellants assert that even if Holgate did make the contract, purporting to be made for himself and his codefendants, thus established by the verdict, the plaintiff was not entitled to recover in this action, for the reason, as they contend, that the contract was binding only upon Holgate, as it was made without the knowledge and consent of the other defendants, and as this action was against all the defendants, jointly, the court should have entered judgment in favor of the defendants non obstante veredicto. They assert, in their "statement of the questions involved," that the assignments of error which refer to this branch of the case present this question: "Can one of the joint defendants hold the others by agreement made without their knowledge or consent, changing the original agreement of sale of stock?" The final effect of the finding of the jury upon the disputed facts must, in this case, be determined and controlled by the facts which were undisputed.
The appellants admitted that they had all joined in an undertaking to promote a mining operation; they had formed a corporation, of which they had absolute control; they, as the corporation, had entered into a contract to purchase from themselves as individuals certain property for which they were to be paid in stock of the corporation, which stock was to be issued to them, or to some of their number. An undivided interest in the property which they had thus agreed to convey to the corporation was owned by an outside party, and in order to enable them to raise funds to buy that outstanding interest, they entered into an arrangement among themselves to sell 4,800 shares of the stock, which, as individuals, they were entitled to receive from the corporation as payment for the property. All of the defendants joined in authorizing Holgate to make sale of these 4,800 shares of stock, in which they were all jointly interested, and to receive payment for the same from the parties to whom he made sales. Holgate, acting for all the defendants under the authority thus conferred, did make sale of a part of the stock to this plaintiff and did receive the money of plaintiff in payment for the same. The money which Holgate thus received was by all of the defendants admitted to have been applied to their joint use. There is no question that the defendants have all joined in appropriating to their joint use the money which Holgate, acting as their agent, received from this plaintiff, and the verdict establishes that the defendants failed and refused to perform the contract upon which their agent received the money. This plaintiff is not seeking to enforce the contract specifically; he is not asserting the right to recover damages because of the failure of the defendants to deliver to him stock at a time when he might have sold it at an advanced price. He seeks only to recover the money which he paid, upon the ground that the defendants failed to perform the contract upon which he paid the money to their agent. The question in this case is really not whether all the defendants were bound by the contract which Holgate made on their behalf; it is whether they are entitled to retain plaintiff's money, after having refused to perform the contract upon which it was received by their agent. When a principal has received money or property from his agent, of which the latter had obtained possession in pursuance of a contract with another, which he, as agent, had no authority to make, the principal must either return the money or property or hold it subject to the contract through which it was obtained. Where one adopts a contract entered into without his authority, he must adopt it altogether. He cannot ratify the beneficial part and reject the remainder: Mundorff v. Wickersham, 63 Pa. 87; Wheeler & Wilson Co. v. Aughey, 144 Pa. 398. The defendants having disaffirmed the contract made by Holgate, as their agent, were not entitled to retain the money which the plaintiff had paid upon the faith of that contract.
The second question argued by the appellants involves the propriety of the action of the court below in permitting a verdict and judgment to stand against the four persons at present defendants, which did not also include, as a defendant, a fifth party. The plaintiff had brought the action against the four appellants and Walter Schlager, as' defendants. After all the evidence had been submitted at the trial he moved to amend the record by striking out Schlager as a defendant, which motion the court below al lowed. The defendants took no exception to the allowance of the amendment. The amendment was one clearly allowable within our statutes relative to amendments, and, as a mere matter of pleading, the amendment of the record involved no error: Ganzer v. Fricke, 57 Pa. 316; Penna. R. R. Co. v. Keller, 67 Pa. 300. The appellants ^ssert in this court, however, that the evidence at the trial in the court below established that if the appellants were jointly liable Schlager was also liable jointly with them. The evidence at the trial disclosed that Schlager had been in Cuba at the time when the four appellants entered into the arrangement under which Holgate acted in selling the stock. There was no positive testimony that Schlager had joined in authorizing Holgate to make sale of stock. Schlager thus stood in a relation to Holgate somewhat different than that of the other defendants. This was the condition of the case when, after all the testimony upon both sides had been presented, the learned counsel representing these appellants, acting on behalf of his clients, made this statement to the court below: "It seems to me, your honor, that there is not sufficient evidence here to hold Mr. Schlager in this case." The learned judge of the court below then said: "I am going to let Mr. Schlager out: I don't think the evidence connects him sufficiently, to hold him." Counsel for the plaintiff then moved to amend the record by striking out the name of Walter L. Schlager as a defendant in the case. This motion the court allowed. Counsel for the appellants then said: "We plead surprise, and ask that a juror be withdrawn, and the case continued. We relied upon the principle and theory of the law that when men are sued jointly, they must be recovered against jointly, and if there is no testimony to warrant a joint recovery, a verdict must be directed for the defendants. We had other testimony which we could have presented, but feeling confident that there was no testimony that would include Mr. Schlager in this, and relying upon that we rested." The court thereupon asked where the witnesses were, whereupon counsel for defendants can didly admitted that they were then in court, and the court reopened the case and permitted them to introduce the testimony of such witnesses. The testimony subsequently introduced has no bearing on the question here presented. It thus appears that upon the conclusion of the testimony at the trial the defendants presented the contention that there could be no recovery against the five defendants sued, for the reason that there was no evidence sufficient to sustain a finding that Schlager was jointly hable with the other four. The assertion of defendants was that there was no evidence before the court tending to establish the joint liability of Schlager, with the other defendants, and that, therefore, the plaintiff was not entitled to recover. The court seemed inclined to agree with the contention of the defendants, and the plaintiff thereupon took the defendants at their word and discontinued as to Schlager. The contention of the appellants in this court, that the evidence established that Schlager was jointly liable, refers to the very same evidence that they asserted in the court below was not sufficient to sustain a finding that he was liable. It is not necessary for us to inquire as to the correctness of the ruling of the court below upon this point; its action was induced and contributed to by the appellants and for it they were responsible; even if it was erroneous they have no standing to complain of it in this court: American Life Insurance Co. v. McAden, 109 Pa. 399; Pantall v. Rochester & Pittsburg Coal & Iron Co., 204 Pa. 158. All the specifications of error are overruled.
The judgment is affirmed.