Case Name: Ozark-Badger Company v. Roberts
Court: Arkansas Supreme Court
Jurisdiction: Arkansas
Decision Date: 1926-11-01
Citations: 171 Ark. 1105
Docket Number: 
Parties: Ozark-Badger Company v. Roberts.
Judges: 
Reporter: Arkansas Reports
Volume: 171
Pages: 1105–1110

Head Matter:
Ozark-Badger Company v. Roberts.
Opinion delivered November 1, 1926.
Williamson & Williamson, for appellant.
Henry & Harris, for appellee.

Opinion:
Hart, J.,
(after stating the facts). The first assignment of error is that the court erred* in allowing testimony to be introduced to the effect that it was customary for lumber companies like the Ozark-Badger Company to allow their general managers to spend reasonable amounts of money in attending the conventions of lumber associations and for the entertainment of .prospective customers while there. We think the court erred in admitting this testimony. There was a written contract between the parties, which defined the duties of the general manager and fixed his salary at a definite sum, to be paid monthly. Nothing whatever was said about allowing him an expense account for the purpose of entertaining prospective customers.
It is a fundamental proposition of law that a person can only be bound by the authorized acts of his agent. Where an agency is created by contract, the nature and extent of the authority of the agent must be ascertained from the contract itself, except where it is ambiguous,, and cannot be extended by parol evidence of the usage of agents of other companies. In other words, where there is no ambiguity in the language of the contract, evidence of usage is not admissible in respect to what the contract expressly declares. Evidence of custom or usage is admissible "to show the intention of the parties in all those particulars which are not expressed in the contract, or which are expressed in unusual or technical terms." 17 C. J. 516; Kimball v. Brawner, 47 Mo. 398; Porter v. Patterson, 15 Penn. St. 229; Patridge v. The Insurance Company, 15 Wall. (U. S.) 573; and Greenleaf on Evidence, 15th ed., § 292, 294.
This court has recognized the general rule that, where the language of a contract is neither technical nor ambiguous, proof of usage in respect to the contract is not needed as an aid in its construction, and its admissibility would amount to establishing the principle that a custom may add to or vary a contract. Runyan v. Runyan, 101 Ark. 353, 142 S. W. 519; In re Paepcke-Leicht Lumber Co., 106 Ark. 400, 153 S. W. 833; and Batton v. Jones, 167 Ark. 478, 268 S. W. 857.
We have not copied the contract here, and do not deem it necessary to do so. It is sufficient to say that it employed Roberts as general manager of the Ozark-Badger Company at a stated salary, payable monthly, and defined his duties. There is nothing whatever in its terms from which it might be inferred that the company intended that Roberts should attend meetings of lumber associations, and charge his expenses in going there and entertaining prospective customers to the company. There being no ambiguity in the language of the contract, evidence of the usage of other lumber companies situated in the- same locality, as to the allowance of like expenses to their agents, was not admissible.
In this connection it may be stated that Roberts, as general manager of the company, would have the authority to send an employee of the company to Little Rock and to other nearby places for the purpose of selling lumber and transacting other business for the company, and allowing them the expenses of the trip, such as railroad fare and hotel bills. If Roberts had the authority to delegate this duty to another employee and to charge the expenses of the trip to the company, he could perform the same services himself and charge his expenses to the company,
' The court told the jury that, in the management and control of the plant of the company, Roberts had the right to spend money to further the interests of the com-pany, and that he might include in his expense account railroad fare, hotel bills, and the cost of entertaining customers while attending the meetings of lumber associations in Chicago. Under the principles above announced, such instructions were erroneous and necessarily prejudicial to the rights of the company, and therefore call for a reversal of the judgment.
. Finally, it is insisted by counsel for Roberts that the company is precluded from recovering these amounts, although they are illegal. This contention is predicated upon the fact that Roberts charged them in his expense account on the books of the company and that the president and the secretary of the company had access to the books of the company when they visited the min plant, and might have discovered these charges if they had examined the books. In answer to this, it is sufficient to say that the president and the secretary were not. required to examine the books for the purpose of ascertaining whether or not Roberts had been guilty of wrongdoing in his operation of the mill and had charged up illegal expenses to the company. In this connection, it will be remembered that both the president and the secretary of the company testified that they did not know anything about Roberts having charged the contested statements as proper expenses upon the books of the company until the president went to Wilmar, after Roberts had resigned, for the purpose of settling with him.
For the errors in the admission of testimony and in instructing the jury, as indicated in the opinion, the judgment must be reversed, and the cause remanded for a new trial.