Case Name: Lyon vs. Tams & Co.
Court: Arkansas Supreme Court
Jurisdiction: Arkansas
Decision Date: 1850-07
Citations: 11 Ark. 189
Docket Number: 
Parties: Lyon vs. Tams & Co.
Judges: 
Reporter: Arkansas Reports
Volume: 11
Pages: 189–212

Head Matter:
Lyon vs. Tams & Co.
Where a gratuitous agent collects money for his principal, he is liable for Its loss only in case of gross negligence on his part.
If he attempt to transmit the money without instructions from his-prineipal, authorizing him so to do, and it be lost in transitu, he is liable for its loss, unless the principal ratify the act of transmission.
The legal effect of a subsequent ratification of such unauthorized act, is equivalent to a previous delegation of authority to do the particular act, the ratification relating back to the inception of the transaction — unless rights of third persons intervene.
A ratification may be implied or express, but there can be no ratification binding on the principal unless it be made with a full knowledge of all the material circumstances of the case.
Hence the rule that implied ratification extends only to such acts of the agent as ara known to the principal at the time, and if the ratification be without such knowledge of material facts, it will not be obligatory, whether this want of knowledge ■ arise from designed or undesigned concealmant of the agent, or from his mere innocent inadvertence — and this, whether tile question arise between the¡principal and his agent, or between the former and third persons.
Plaintiffs, merchants of Philadelphia, made defendant, of Batesville, Ark., their gratuitous agent to collect a debt due them by a firm at Batesville ; defendant collected the money, and on the next day, without' instruction, sent part of it, with a shipment of produce to a house of commission merchants in New Orleans, with instructions to sell the produce immediately, and with the proceeds, and money sent, to purchase a draft for the amount collected for plaintiffs by defendant, and forward it to plaintiffs at Philadelphia. Defendant also wrote to plaintiffs immediately, informing them that he had collected the amount of their claim, and remitted it to the house in New Orleans with instructions to transmit to them by draft without delay, hut did not communicate the mode of remittance from Batesville to New Orleans: Held, that in view of the relative situation of the parties in point of locality, the ordinary mode of making remittances from Batesville to the eastern cities by shipment of produce to New Orleans, &c., the failure of defendant to communicate to plaintiffs the mode of remittance adopted by him, between Batesville and New Orleans, was not a circumstance so material as to invalidate a subsequent ratification of the act of remittance.
When the agent in such cáse makes a remittance without authority, and informs the principal of the remittance, the dissent of the principal must be expressed in a rea-sonabletime after receiving information of the remittance, otherwise the act will be regarded as ratified by implication ; and the circumstances of each particular case will be considered in determining the degree of promptitude incumbent on the principal.
In this case the remittance was made, in tho mode above stated, about the middle of April, and the plaintiffs promptly informed thereof — they did not complain of tho mode of remittance, or attempt to repudiate the act, until August following ; and in the mean time, in the latter part of May, the house in New Orleans through which the remittance was attempted to be made, had failed : Held, that by this delay to repudiate the act of remittance, they impliedly ratified it.
When no mode of remittance is prescribed by the principal, the law prescribes a mode, and that is, that it shall be transmitted in that mode in which a man of ordinary prudence, skill and dllligence would adopt, in view of the current and usage of trade at his locality for the transmission of his own money.
It is incompetent for a witness to give his opinion as to the legal liability of the agent in such case.
Held, that plaintiffs were entitled to recover of defendant the difference between the amount collected by him for them, and the nett’amount of the proceeds of produce shipped to the house in New Orleans added to the money sent with the produce» because the produce was used by defendant as a means of remittance, and plaintiffs were not liable to loss from fluctuations in market.
Appeal from, the Independence Circuit Court.
' James Tams, Earvin Tams and John Tams, merchants and partners under the style of Tams & Co., brought an action of assumpsit against; Aaron W. Lyon, in the Independence circuit court.
Declaration alleged that on the 24th day of April, 1846, defendant was indebted to plaintiffs in the sum of $865 31, for money before that time by them lent and advanced to defendant, and laid out and expended for him &c. And also in a like sum for money by defendant had and received to and for the use of plaintiffs.
Plaintiffs filed a bill of partículas, as follows :
“ To cash received by said defendant for the use of plaintiffs in 1846, $865 31.”
The defendant pleaded non-assumpsit, the cause was submitted to a jury, and verdict in favor of plaintiffs for $995 06 damages.
Defendant moved for a new trial on the grounds :
1. That the verdict was contrary to evidence, and instructions of the coui’t.
2. Contrary to law.
3. Excessive damages.
4. The refusal, and giving of instructions by the court.
5. The exclusion of evidence offered by defendant.
Motion overruled, and bill of exceptions taken by defendant setting out the evidence, instructions &c.
On the trial plaintiffs proved by Edwin S. Bun’, that they were merchants of Philadelphia; that, to the best of his recollection, in the spring of the year 1845, possibly of 1846, the defendant presented a claim to him in favor of the plaintiffs, which was a note for $895 03, and which he said he had received from the plaintiffs, with a request to call on him, Burr, and Tucker, against whom the claim was, for payment; and that he, Burr, offered to pay it if the defendant would deduct ten per cent, of the amount, the usual attorney’s fee for collection.
And proved by Isaac Tucker that the claim was contracted by him, in the name of Burr and himself in anticipation that he and Burr would go into partnership, by purchase of goods from the plaintiffs of upwards of $900, and that he, Tucker, about the middle of April, 1846, paid on the claim to Capt. Porter $800 in gold and silver, and from $60 to $61 or $62 in bank paper, ten per cent, on the whole amount being deducted.
Plaintiffs proved by Wm. Byers, of thefirm of Byers & Patterson, attorneys at law, that sometime in the fore part of the month of August, 1846, plaintiffs sent to him and Patterson the claim upon which the suit was brought for collection. That on the 18th August, 1846, he called on the defendant, in Batesville, and demanded of him the money collected by him for plaintiffs of Burr & Tucker. Defendant admitted to witness that he had received the money of plaintiffs from said Burr & Tucker to the amount of $865 31; that the plaintiffs had sent him the note on Burr & Tucker to present, and receive the money as aforesaid, and that in receiving the money, he had acted as the friend of the plaintiffs without intending to charge them anything for his trouble. That he had immediately shipped to New Orleans produce consisting of corn, wheat and cotton, and about $300 in money to Walton & Sheafe, his commission merchants, and instructed them to sell the produce immediately, and with the money and proceeds of sales of produce, to buy a draft on Philadelphia to the amount of money which he had received of Burr & Tucker, and to forward the same to the plaintiffs; but that said Walton & Sheafe had not obeyed his instructions. And that a few days before that time he, the defendant, received an account current from Walton & Sheafe acknowledging that they had in their hands, and which stood to his credit, upwards of $700, and enclosed to said defendant about $80, proceeds of sales of cotton; and the next day defendant sent to witness a notice in writing, as follows: . .
“ Batesvjlle, August 19, 1846.
■ Mr. Byees — Dear Sir : In answer to your request of yesterday, respecting the disposition made of amount received of Burr & Tucker, in favor of James Tams & Co., Philadelphia, permit me to state that I forwarded, in April last, to Walton & Sheafe about $300 in cash, near 1,000 bushels of corn, 352 bushels of wheat, and four bales of cotton, with directions to sell immediately and forward a draft for the amount received to Mr. Tams. My reason for consigning produce instead of money for that debt was the safety of Mr. Tams : the produce was insured, the money could not be. Contrary to my expectations, since the failure of the house they have retained the money and proceeds of produce, except the sales of cotton, which was received about two weeks since, amounting to about $73 70. Sheafe acknowledged, under date of May 29, an indebtedness for cash and produce of $788 17. If he had sold according to instructions, the amount would have been nearly or quite $100 more, but I have now some reason to believe that he was anticipating a failure, and intended to hold on to all he could get.
Respectfully, yours,
A. W. LYON.”
Which was read to the jury without objection.
Mr. Byers further testified, that, at the time he made said demand, defendant offered to pay over to him, as plaintiffs’ attorney, the said sum of $73 70, and wished him to take Walton & Sheafe for the amount in their hands, which he refused to receive, unless the defendant would pay over to him the entire sum of money demanded, and refused to recognize the transaction between defendant and Walton & Sheafe as binding upon plaintiffs —the amount demanded by him was $865 31, which defendant refused to pay.
Defendant proved by Williams, captain of the steamboat Gen. Morgan, that, in April, 1846, defendant shipped on said boat to Walton & Sheafe, commission merchants of New Orleans, a quantity of wheat, corn and cotton, and at the same time sent, by witness, to Walton & Sheafe, $300 in specie, with a letter of instructions to them, and also verbal instructions, to sell the produce immediately, and, with the proceeds thereof and the speeie sent, to purchase a draft, and send it immediately to the plaintiffs in Philadelphia; which produce, specie, instructions, &c., witness promptly conveyed to New Orleans, and delivered them to Sheafe, of the firm of Walton & Sheafe, who promised witness to execute the instructions immediately.
That, on his next trip down with said boat, defendant again requested witness to call upon Waitón & Sheafe, and urge them to purchase the draft, and send it to plaintiffs immediately, if they had not already done so; or to withdraw the funds from their hands, and purchase a draft himself, and send it on to plaintiffs. That when witness reached New Orleans, (which was in June, 1846,) he called upon Sheafe, (Walton having gone to Mexico in command of a regiment of volunteers,) and Sheafe then told him that he had not closed the business so he could then settle it up, but that he would purchase the draft, as he had been at first instructed, and send it in a short time to plaintiffs in Philadelphia.
Witness further testified that, at the time defendant shipped said produce to Walton & Sheafe, they stood as fair, and their character was as good as any house of like kind in New Orleans; and that most of the business of White and Arkansas rivers was intrusted to and done with them as commission merchants. That witness, at that time, did not know of any exchange to be then had at Batesville on the eastern cities; and that the brother of witness, a merchant of Batesville, and others of that place, generally made their remittances of money to Philadelphia, and other eastern cities, by sending to New Orleans and having a draft purchased there, and from thence remitted to the east.
That defendant had said produce insured, and shipped in his own name.
On cross examination, witness stated that he could not recollect positively and precisely what the instructions were that he delivered to Walton & Sheafe. That defendant then said it was safer to send the produce than the money; and that the produce would be sufficient for the purpose for which it was sent; and that Walton & Sheafe failed after they had received the said produce. The market for produce in New Orleans was fluctuating.
Fontaine, a witness for defendant, testified that he had been engaged in the mercantile business in Batesville, and formerly in St. Louis, Mo., and that merchants of both places sometimes make their remittances of money to the eastern cities in money, and sometimes in produce, by way of New Orleans; and that, in the spring of 1846, and generally, it was, and is, very difficult to get drafts, bills of exchange, or other safe means of remittances to the eastern cities at Batesville. That such remittances from Batesville were oftener made in produce than in money by way of New Orleans; and that produce, when insured, was considered the safest mode of making such remittances. It had not been the custom to take a bill of lading for money shipped From Batesville to New Orleans.
Fontaine and Foivler also testified that at, and for some time before, the middle of April, 1846, the house of Walton & Sheafe was reputed to be solvent, of good character, and did the principal commission business of White and Arkansas rivers.
Fontaine said, on cross examination, that his remarks, as to remittances in produce, were applicable only to the business, and operations of the house with which he was connected.
Defendant’s attorney then propounded the following question to Fontaine:
“ According to the custom of merchants, where one merchant in Arkansas collects money for another doing business in an eastern city, without compensation and merely for accommodation, and such money is lost in the transmission to the east to the merchant, then is, or is not, the one so making such collection considered responsible to the other for such loss, unless he has been guilty of gross negligence ? ”
Which, on objection by plaintiffs, the court refused to permit the witness to answer, and defendant excepted.
Defendant then read to the jury, without objection, the follow ing letters, written to'him by plaintiffs, touching the matter in controversy ;
“ Philadelphia, March 9, 1846.
Mr. A. W. Lyon, Batesville, Ark.:
Dear Sir — We take the liberty of enclosing to your address a note against Burr & Tucker, dated 16th October, 1844, at six months, for the sum of $907 93. We have written to them once or twice upon the subject of this account, but have not had an answer. We have always considered the house perfectly solvent, and will thank you to call upon them for payment, which they will no doubt make. Should you think that there is any doubt about their stability, and they refuse to make settlement, be good enough to hand over the note to a reputable lawyer for early collection. You can either leave the matter discretionary, or give the attorney instructions to take immediate proceedings, as you may judge best. The note, of course, bears interest six months after date. Trusting you will give this your early attention, and that we may have it in our power to reciprocate, we remain
Very respectfully, JAMES TAMS & CO.”
Philadelphia, April 24, 1846.
Mr. A. W. Lyon, Batesville, Ark.:
Dear Sir— Your favor of the 4th inst. is to hand, and contents examined. We are at a loss to know upon what grounds Mr. Burr claims an abatement of 10 per cent, for paying the money without suit. The profit of the entire bill would not average more than this per centage, and we cannot afford to sell goods for nothing and extend a credit of 18 months. To save the delay, &c., consequent upon a suit, we will take 5 per cent, off the gross amount, charging, as usual, interest after six months; or we will forgive the twelve months interest already due, and give up the note by their paying the amount of the face of it, say $907. We hope this proposition will induce Messrs. Burr & Tucker to make an early settlement with you. In fact, were we not much pressed for funds at present, we should not have made them such an offer; and, in no case, unless your recommending or deeming the claim doubtful, shall we submit to a deduction of 10 - per cent.If we knew the stability of Burr & Tucker, we could certainly judge as well as any other men whether or not it were wise to accede to their proposal; but, in the absence of any such information, are perfectly satisfied that you should judge for us in this instance, and, from the close of your letter, we should suppose the sooner the proposition was accepted the better. If you must hand over the note for collection, we, of course, add interest after six months until the time of payment, and we request that you will instruct the lawyer to take early and vigorous means to effect settlement. * * * * * *
Respectfully, «fee., JAMES TAMS «fe CO.”
Philadelphia, June 1, 1846.
Mr. A. W. Lyon, Batesville, Ark.:
Deah Sir — We write to inform you that we have not yet heard from your friends, Walton & Sheafe, N.Q., in reference to our claim against Burr <fe Tucker, collected and remitted there by you. We are at some loss to account for this delay, as there has been no difficulty at New Orleans in procuring drafts upon the east, and you wrote us that you instructed them to remit without delay. As Mr. Burr must have paid you in specie, or its equivalent, we do not know of any unnecessary delay which shall have occured in the transmission. We will be glad to hear from you upon receipt.
Respectfully, &c., TAMS & CO.”
Plaintiffs then read, in evidence, the deposition of Charles H. Sheafe, as follows, in substance :
“ I was a member of the late firm of Walton & Sheafe, of New Orleans, La. Said firm failed in the month of May, 1846. In the same month, said firm received, from the defendant, of Batesville, Ark., money and produce. I cannot state tbe amount or quality of either, because I have not the books or papers of said Walton & Sheafe in my possession. The proceeds of said produce, and the money so received, were, by the defendant’s direction, to be remitted to some one in'the north: I do not remember where or the name of the person to whom such remittance was to be made. Said produce was sold as soon as my judgment dictated to me that I should sell. I do not think that said funds were ever remitted as directed. I do not recollect of any ' other instructions given to me by defendant. I have no recollection that any body ever called on me for said funds.
On cross-examination by plaintiff's counsel. — The wheat in question was sold some time in the month of May or June, 1846. None of the proceeds were ever remitted to plaintiffs or defendant. I do not know what become of the proceeds: suppose they came into the possession of the firm of Walton & Sheafe. Said firm was dissolved in the latter part of May, 1846, about the time that the wheat was sold. The firm of Tams & Co. did not write to me about said wheat or proceeds ; I never received a letter from them in my life; the firm of Walton Sc Sheafe never had any transactions with Messrs. Tams Sc Co.”
Plaintiffs also read, in evidence, the deposition of James B. Walton, in substance, as follows :
“ My occupation is that of a merchant here in New Orleans, La. I was formerly one of the firm of Walton Sc Sheafe, merchants of this place. Said firm, now in liquidation, has in their hands $750 belonging to Mr. A. W. Lyon, of Batesville, Ark. I do not recollect that said firm paid over any amount to Captain Williams. About $200 of said sum was placed in our hands in cash, and the remainder thereof is from sales of produce belonging to said Lyon.
The sum in cash was placed in our hands some time previous to my departure for Mexico, in May, 1846; the produce was sold after my departure. Mr. Lyon gave no instruction, that I recollect of, in relation to the money and proceeds in question. I never had any individual communication with him. Whatever ■; instructions he may have given were undoubtedly given to Mr, Sheafe, who attended to the out-door business of the firm. The funds in question stand to the credit of Mr. A. W. Lyon on the books of said Walton & Sheafe. Nothing has ever been paid over to Mr. Lyon of the amount aforesaid — about $750. No one representing himself as the agent of Messrs. Tams & Co., ever called for the funds in question — that is, no such person ever called upon me, or upon the firm, so far as I know. The exact sum now standing to the credit of, and balance due to, Lyon is $788 17.
Isaac Tucker, recalled by plaintiffs, stated that the said money so paid to said Porter, 'was paid to him after night, and the said steamboat, Gen. Morgan, then lying at Batesvilie, left for New Orleans on the next morning, about the middle of April. And at the time the said Lyon presented the claim for payment, Burr & Tucker were paying off all claims presented to them at par, and on the same day had so paid an eastern claim for upwards of $1,800.”
The above was all the evidence introduced on the trial.
On motion of defendant, the court instructed the jury as follows :
“1. If the jury believe, from the evidence, that defendant collected money for plaintiffs to a certain amount, he is not in law bound to remit to said plaintiffs the identical money received by him for them, but only money to the same amount, and of equal value in par funds, or lawful money.
“2. An agent who acts gratuitously, and without compensation from his principal, in the collection of money, is not, in law, accountable therefor to the principal for its loss in the transmission, unless he has been guilty of gross negligence.
“ 3. An agent so collecting is not held bound to the principal with as much strictness as when he collects for compensation.
“ 4. Where such agent remits money so collected to his principal in a mode according to, or against, instructions of his prin cipal, if the principal approve and sanction such mode after-wards, any subsequent loss is his and not the agent’s.
“ 5. As the plaintiffs have introduced in evidence the statements, verbal-and written, of the defendant, all of such statements are evidence, as well that which may be in the defendant’s favor as that which is against him.
“ 6. If the jury believe, from the evidence, that defendant transcended his authority in remitting the amount of the money collected to the plaintiffs in money and produce, to be sold by a commission house in New Orleans, and the proceeds to be immediately remitted in a draft to the plaintiffs, if the plaintiffs, alter being advised of it by the defendant, did not dissent therefrom within a reasonable time; such neglect to dissent amounts in law to a sanction and approval of the defendant’s act.
“ 7. That, whether defendant was authorized or not to deduct 10 per cent, from the amount of the claim, is not in controversy in this suit, and not to be considered by the jury, as the defendant is only sued for money received on the claim.”
Defendant also moved the court to instruct the jury as follows :
“If the jury believe, from the evidence, that, after the defendant transmitted the money and produce to Walton & Sheafe, he advised the plaintiffs of it by letter, and they acknowledged the receipt of this letter by another letter to the defendant, without objecting to or disapproving of the mode of remittance adopted by defendant, it amounts in law to an approval or affir-mance of such mode of remittance.”
Which instructions the court refused to give, and defendant excepted.
On motion of plaintiffs, the court instructed the jury as follows :
“1. If an agent, who acts gratuituously, transcends his authority, he is liable to his principal for any loss that may accrue from the acts of said agent unless the principal afterwards af-firrms the act of the agent.
“ 2. That if the jury believe, from the evidence, that Lyon was duly authorized to present the claim to Burr & Tucker, and receive the money, by the plaintiffs, and that Lyon did receive the money, and attempted to transmit it, without authority from the plaintiffs, he is liable for the same.
“ 3. That if the jury believe, from the evidence, that Lyon received the money from Burr & Tucker, was authorized by the plaintiffs to remit the money received by him from Burr & Tucker, and that said Lyon, instead of remitting the money, remitted produce without special authority from the plaintiffs, they must find for the plaintiffs.
“ 4. The rule that a gratuitous bailee is only liable in cases of fraud or culpable negligence, only applies to cases where the agent or bailee acts within the scope of his authority.
“ 5. If the jury believe, from the evidence, that Lyon received the money, and afterwards converted it into produce, without the authority or subsequent sanction of the plaintiffs, he thereby made himself a principal debtor, and his character of agent or bailee then ceased.
“ 6. That creditors shall be allowed to receive interest at the rate of six per cent, per annum, on money lent, or money due on settlement of accounts from the day of liquidating or ascertaining the balance due thereon, on money received for the use of another and retained without owners knowledge of the receipt thereof, and on money due and withheld by an unreasonable and vexatious delay of payment or settlement of accounts.”
To the giving of which instructions defendant excepted.
The cause was determined before the Hon. Wm. C. Scott, J., in March, 1849. Deiendant appealed.
Fowler, for the appellant.
The appellant was a gratuitous agent and the remittance of the money being left to his sound discretion, the law only required of him the exercise of a sound, honest judgment. (Courcier vs. Ritter, 4 Wash. C. C. R. 551. Kingston vs. Kincaid, id. 457. Story on Agency, sec. 198. 1 Liv. on Agency, 342, 343.) He is not reprehensible unless for gross negligence. (1 Saund. Pl. & Ev. 69. 1 Liv. on Agency, 352, 337. Graves vs. Ticknor, 6 New Hamp. 540. Stanton vs. Bell, 2 N. C. Rep. 150. Picket vs. Pearsons, 17 Verm. Rep. 477.) Where his instructions are not special, he is authorized to exercise his agency according to the usages of the place, the market, circumstances, and in the usual manner. Van Alen vs. Vanderpool et al. 6 John. Rep. 72. Russell et al. vs. Hankey et al. 6 Term Rep. 13. 1 Saund. Pl. & Ev. 70. Story on Agency, sec. 77, 58.
Where an agent informs his principal of his acts, the principal will be held to have recognized and ratified them unless he expresses his dissent within areasonable time. 4 Wash. C. C. R. 553. 2 Kent’s Com. (4 Ed.) 615. Smith vs. Lasalles,2 Term R. 188, note (a). Cairnes et al. vs. Bleecker, 12 J. R. 305. Fowler vs. Stevenson, 1 John. Cas. 112. Story on Agency, sec. 95, 258. 1 Liv. on Agency, 49, 50, 393, 394. 10 Ala. Rep. {N. S.) 770.
The instructions given on motion of the plaintiffs below, were too broad, abstract, and well calculated to mislead the jury. The defendant, having adopted the usual means of remittance from the place where the money was collected, as well as the safest, having transmitted it to a house in high standing, and advised his principal immediately and they by their silence having recognized his acts, cannot now be held liable, as for gross negligence.
Byers & Patterson, contra.
A bailee without reward is liable only for fraud or gross negligence, while he acts within the scope of his authority; but he becomes immediately liable when he exceeds his authority. So a special agent, if he exceeds his special and limited authority, acts at his own risk and is himself liable — such acts are not binding upon his principal. {Stotp on Agency, secs. 126, 17,20, 73, 131,133. 3 Black. {Ind.) Rep. 436. Meigs {Tenn.) Rep. 502 Story on Agency, page 141. Ib. sec. 165 to 169, 170. Paley on Agency, 150. Salk. R. 96. 1 Domes R?p. 40. 3 Eng. 230. 5 Pick. R-p. 389.) And in this case the special authority given to the defendant below, was to collect, not remit the money: the act of remittance then was not binding upon his principals. As to the degree of diligence required of the agent, see Story on Agency, sec. 182 to 200; and as to his liability to his principal, sec. 217 to 235.
A ratification by the principal of the unauthorized acts of his agent can be only where the agent has communicated the true state of the case — silence or acquiescence has not the effect of ratification where there has been an omission or suppression of material facts. Story on Agency, sec. 252 to 261.
In this case it appears that the defendant below did not remit the money received by him for the plaintiffs, but that he invested it in produce for his own use which he shipped to New Orleans, and that this investment was not commuuicated to the plaintiffs. This was a material fact and the acquiescence does not ratify the mode of remittance. But the letter of the plaintiffs does not ratify the remittance at all — it does not recognize Walton & Sheafe as their agents; it is a mere letter of inquiry of the defendant, and it is apparent that they still looked upon him as their agent.

Opinion:
Mr. Justice Scott
delivered the opinion of the court.
This case is presented on bill of exception to the overruling of a motion for a new trial. It appears from the testimony that the appellant, a merchant of Batesville, Ark., became the gratuitous agent of the appellees, who were merchants of the city of Philadelphia, to compromise a claim of the appellees on Burr & Tucker of the former town, and to receive from them the proceeds in money to the use of the appellees. It does not appear that any instructions were given to the appellant to transmit the money from Batesville to the city of Philadelphia, and none can be implied from the nature of the transaction. The appellees, however, wrote to the appellant that "if in fact they were not much pressed for funds" at that time they would not have made to Burr & Tucker such an offer of compromise. But this letter does not justify any farther inference than that the appellant was to receive and keep appellees' money as their gratuitous bailee.
The contract then was a deposit, a naked bailment of money to be kept for the bailor without recompence; and consequently, if the appellant, alter the receipt of the money, had remained r passive and the money had been lost from his possession, his liability would have depended upon the ascertainment of the fact whether or not the loss had been caused by gross negligence on his part. He did not, however, remain passive, but attempted without authority to transmit the money to the appel-lees and it was lost by the failure of his agent in New Orleans while in transitu, between Batesvillo and Philadelphia. This attempt was made the next day alter the receipt of the money and the appellees were promptly advised through the mail of the remittance. But however honorable and praiseworthy was this elfort to anticipate the expressed wants of the appellees and in this to do them kindness, the law from enlarged views of sound public policy sternly animadverts upon this well meant procedure; and holds the plaintiff liable for the loss unless he can extricate himself by some subsequent ratification of his unauthorized act. The question in such case being, not whether the party has acted from good motives and without fraud, but whether he has done his duty and acted according to the confidence reposed in him. For having exposed his principal to a"j risk to which he did not consent, by shifting upon another the/ personal trust and confidence reposed in himself; and thus go-| ing beyond the confines of his authority, the source of which was his principal's opinion of his personal prudence, skill and integrity, his unauthorized act disrobes him of all cover from the principle of law we have just mentioned — there being no place for its application to results which flow from unauthorized acts.
Butaratification of this unauthorized act of remittance will save him from loss if it shall appear in the sequel that by this means he has had a sufficient new delegation of authority and has faithfully discharged his corresponding duties. Because the legal ef- feet of the subsequent ratification, of a given unauthorized act is equivalent to a previous delegation of authority to do that particular act, the ratification relating back to the inception of the transaction. This being the universal legal effect of ratification unless perhaps in cases where third persons acquire rights after the given act is done and before it receives the recognition and sanction of the principal, its retrospective efficacy in such cases being subservient to such intervening rights.
The vital question then in the case at bar the solution of which must result in the fixing of loss upon one of the two innocent contending parties, is whether or not the appellees ratified the attempted remittance.
The authorities, all agree, that although ratification may be implied as well as express, nevertheless there can be no ratification binding upon the principal, which was not made with a full knowledge of all the material circumstances of the case. (9 Peters R. 629.) Hence the rule that implied ratification extends only to such acts of the agent as were known to the principal at the time, (Thorndike vs. Godfrey, 3 Greenl. 429); and if the rati ideation be without such knowledge of material facts it will not be obligatory whether this want of knowledge arise from designed or undesigned concealment or misrepresentation of the agent, or from his mere innocentinadvertance : and this, whether the question arise between the principal and his agent, or between the former and third persons. Story on Agency, sec. 243, p. 288, 289.
Then, in the case at bar was there any concealment of any fact or circumstance connected with the attempted remittance material for the appellees to know? It was communicated to them that the amount of their claim against Burr & Tucker had been collected and remitted to Walton & Sheafe, of New Orleans, with instructions to them to transmit to the appellees at the city of Philadelphia, without delay, by draft upon the east. But the mode of remittance between Batesville and New Orleans was not communicated. In order to estimate the materiality of the fact not communicated and consequently never ratified, as rati- ideation can only be of the facts communicated, the relative situation of the parties in point of locality and every other point of view must be considered. Among these it may be important to remember that the appellees were in Philadelphia, a great commercial city, and the appellant, their agent, at Batesville, an inconsiderable town in the interior of Arkansas, where commercial facilities were few. A place, which had scarcely been reached by the spray of commerce, much less had the depths and shoals and currents of trade at this point, been marked upon the great commercial -chart, so as to afford the appellees any data for the approval or disapproval of any mode of remittance that might have been adopted by their agents and communicated to them, or for the suggestion of a mode themselves. Then, so far as their interest was concerned it was surely to their advantage to be committed t© no particular mode of remittance — at most but an incident to the power of remittance — as they thereby secured a guarantee of such a mode as the appellant, as a man of ordinary prudence and skill, with full knowledge of the course and usages of trade -in this particular region, would adopt for remittances of his own money to New Orleans.
Not so, however, to the same extent, either as to the bailee in New Orleans, or as to the mode of remittance from that city to Philadelphia; for as to these particulars the appellees from their commercial position enjoyed facilities for data upon which to form correct conclusions. But even as to these latter particulars, we would hesitate before we would declare that a failure to communicate, even them, would invalidate a ratification of an act of remittance which had been communicated only in general terms, as that it had been made through a respectable commercial agent in New Orleans. And this for the reason that we have already given, that is to say, the mode of remittance is. but incidental, and when noneis prescribed by the principal, it is distinctly prescribed by the law. Then we cannot regard the failure of the appellant to communicate to the appellees the mode of remittance that he had adopted between Batesville and New Or leans as a circumstance so material as to work the invalidation of the subsequent ratification of the unauthorized act of remittance, if any such ratification was made :and whether or not there was such ratification, the law and the testimony will determine.
Judge Story, in his work on Agency, when speaking of the efficacy of silence and acquiescence to work a ratification, says (sec. 225,p. 302,) " In the ordinary course of business between merchants and their correspondents, it is understood to be the duty of the one party receiving a letter from the other to answer the same within a reasonable time, and if he does not, it is presumed that he admits the propriety of the acts of his correspondent and confirms and adopts them. This presumption seems now in favor of commerce to be universally acted upon. And therefore if the principal having received information by letter from his agent touching the business of the principal, and does not, within a reasonable time, express his dissent to the agent, he is deemed to approve his acts and his silence amounts to a ratification of them."
And again, he says, (Sec. 253, p. 297,) when speaking of implied ratification by the acts and proceedings of the principal in pais, "It is by no means necessary that there should be any positive or direct confirmation. And, for this purpose, the acts and conduct of the principal are construed liberally in favor of the agent." And, among the numerous authorities cited by him to sustain these positions, is the case of Bredin vs. Duberry, (14 Serg. & Rawle 30,) where the court, by Gibson, J., says : "I take it to be indisputable that a principal who neglects promptly to disavow an act of his agent by which the latter has transcended his authority, makes the act his own. He is bound to disavow it at the moment the fact comes to his knowledge." This latter enunciation of the rule seems too strongly expressed for general application, although in many cases where the agent has placed himself in a predicament where loss may accrue to him from delay on the part of his principal to disavow the act, or where the transaction may turn out a profit or loss according to the cir cumstances, there would seem much of justice in its application. For it would seem unjust and unreasonable in the principal, by delaying his election to be bound or discharged to secure himself the profit or avoid the loss according to the event; and by this means work an unmerited injury to an honest and well-intentioned agent, who has acted in the premises with the best motives and in good faith. Prince vs. Clarke, 1 Barn. & Cress. 186. Courcier vs. Ritler, 4 Wash. C. C. R. 553.
The safer general rule, however, would seem to be that which Judge Story enunciates, and which is well sustained by almost all the authorities, that is, that the dissent must be expressed in a reasonable time after the information has been received, and thus the circumstances of each particular case will be regarded in determining the degree of promptitude incumbent upon the principal. As, if the danger of loss by delay be imminent, any thing short of an instantaneous disavowal would be unreasonable, and if not. so great, then a corresponding abatement of the rigour of the rule graduated upon principles of justice and fair dealing.
In the case at bar, the remittance to New Orleans was made about the middle of April, and it is fairly inferable from the letter of the appellees of the date of the first of June, (as it seems suggested alone by the "delay" on the part of Walton & Sheafe,) that the appellees had been promptly advised of this unauthorized act of remittance, yet there is no evidence in the record that they ever complained of it, excepted to it, or attempted to repudiate it until some time in the " fore part of the month of August" following. In the mean time, in the latter part of the month of May preceding, Walton & Sheafe had failed. Then, if the position of ratification in this case was rested solely upon this ground, there would seem clearly abundant reason to hold that this repudiation was unreasonably delayed, and that the conduct of the appellees amounted to a complete ratification.
But the appellees were not all this time silent, although they did not complain of, or disavow, the act of remittance, which, as we have seen, was promptly communicated to them; for on the first of June, they wrote to the appellant, not to complain of or disavow this act, but to inform him that the money had not yet been received by them and to make inquiry in the premises, but intimate in no way their dissatisfaction with any act of the appellant. As, at the date of this letter, they had been in possession of the advice of remittance a sufficient time to become weary of delay, and had this circumstance of " delay" to arouse their suspicion that there might be something wrong in some quarter, they certainly had time enough to reflect upon the affair and make their election whether or not to repudiate or confirm. And the event proved that if they had promptly repudiated, the appellant might have probably saved himself from loss. Because, upon the hypothesis, which we have seen is well based, that the advice of remittance was promptly given, intelligence of repudiation might have reached the appellant, in the due course of the mails, by the middle of May at the most; and the evidence shows that the produce, or some part of it at least, was not sold until about the last of that month.
This letter, then, when considered in connection with all the testimony in the case, would seem to amount of itself to a ratification.
How, then, has it happened that the jury, in the face of the law and the testimony, has found a verdict against the appellant ? Manifestly this has occurred from their having been misdirected by the court in some of the instructions, and their minds drawn off from the true point at issue m the case. And these misdirections mainly relate to the matter of remittance in produce, which legitimately cut no important figure in the case.
The second instruction asked for by the appellees, ought to have been refused in the terms in which it was asked, because, unless it had been qualified as the first was, it was well calculated to mislead the jury.
The third instruction was much more objectionable, as it was inevitable that if the jury regarded it at all, they would be lead estray. And the same remark may be made as to the fifth of' these instructions. All this is manifest when we recur for a mo- menfc to some of the principles already laid down and to the testimony.
We have seen that the legal effect of ratification is the investiture of new authority relating back to the inception of the transaction; and that, at the very least, remittance from Bates-ville to Philadelphia by the way of New Orleans, was ratified. How, then, stands the case ? Clearly in this wise: Originally, the appellant had authority only to collect and keep the money; but now, by virtue of ratification, he has additional authority to remit it to the appellees in Philadelphia.by the way of New Orleans. And no mode of remittance having been prescribed originally or subsequently by ratification, the law itself prescribes a mode : and that is, that it shall be transmitted in that mode in which a man of ordinary prudence, skill and diligence would adopt in view of the current and usage of trade at his locality, for the transmission of his own money. The true question, then, was not whether the remittance was made in any one given mode, because none such had been prescribed either by the principal or by the law, but whether or not, in adopting the mode that was actually adopted, the appellant was guilty of gross neglect. For, having been clothed with authority to remit by the operation of the law of ratification, he was again enrobed with the covering of this principle, of which, in the outset, he had disrobed himself by an act of remittance which was then unauthorized. After the ratification, the appellant stood in reference to the question that we are now considering identically as if he had been originally invested, not only with authority to collect the money, but also had then coupled with this authority an additional authority to remit the money from Batesville to Philadelphia by the way of New Orleans. This being so, he had but so to perform the duties incumbent upon him as to be clear from the legal imputation of gross neglect. And the evidence abundantly shows that he did so. The character of the agents selected in New Orleans, was, at the time of the selection, unexceptionable ; and the mode of .remittance adopted alike un exceptionable in view of the circumstances of the case and the course and usages of trade.
The fact that the produce shipped was not shipped in the name or on account of the appellees, but of the appellant, so much pressed in argument as a circumstance against the appellant, is, on the contrary, a pregnant circumstance in his favor, as it show's clearly that, so far from the appellees' money having been invested in the produce, that the latter was but the medium of its transmission to New Orleans — a mere conduit pipe through which it passed to that city — and a much safer mode of remittance than by the actual transmission of the specie itself, as it appears from the testimony that it was impracticable to insure the latter and that the former was actually insured.
These instructions, then, had a direct tendency to mislead and bewilder the jury, and draw off their minds from the true issue in the case, and to turn them upon matters of no import as connected with the issue. In all this there was manifest error. But there was no error in the. refusal to permit the witness, Fontaine, to answer the question propounded to him that was saved by exception.
Under the pleading and evidence in this case, the appellees had a right to recover the $73 70, paid over by Walton & Sheafe to the appellant, because this was a part of their money which had been remitted to that house through the medium of the produce. And they also had a right to recover- the additional sum of the difference between the aggregate sum made up by adding the $300 in specie to the nett amount of the proceeds of the produce (which aggregate sum was necessarily the true amount of the actual remittance) and the sum of $865 31, which was the sum collected from Burr & Tucker. That is to say, if that aggregate sum was $788 19, as it seems to have been by the deposition of Walton, then, as $865 31 was the amount collected of Burr & Tucker, it results that $77 14 was the additional sum that they had a right to recover. And this because the money of the appellees was never actually invested in produce, so as to subject them to profit or loss by the fluctuation of the market, as it would have been if a bill of exchange on New Orleans had been purchased in Batesville in their name; but this adventure in the produce was an adventure of the appellant: And the office of the testimony going to show that the produce, added to the $300 remitted, was worth more when it was shipped from Batesville than when it was sold in New Orleans, is only to relieve the appellant from the imputation of bad faith in giving advice to the appellees that the whole of their money had been remitted, when, in truth, either from the fluctuation of the market or bad conduct of Walton & Sheafe, the whole sum had not been remitted by the sum of $77 14.
In the light of these views, then, it is our opinion clearly that the court below erred in refusing the motion for a new trial, and for this error the judgment must be reversed, a new trial awarded, and the cause remanded to be proceeded with.