Case Name: EL PASO LIVE STOCK COMMISSION CO. v. COLORADO LIVE STOCK COMMISSION CO.
Court: United States Court of Appeals for the Eighth Circuit
Jurisdiction: United States
Decision Date: 1909-04-27
Citations: 171 F. 20
Docket Number: No. 2,855
Parties: EL PASO LIVE STOCK COMMISSION CO. v. COLORADO LIVE STOCK COMMISSION CO.
Judges: Before SANBORN and ADAMS. Circuit Judges, and RINER, District Judge.
Reporter: Federal Reporter
Volume: 171
Pages: 20–29

Head Matter:
EL PASO LIVE STOCK COMMISSION CO. v. COLORADO LIVE STOCK COMMISSION CO.
(Circuit Court of Appeals, Eighth Circuit.
April 27, 1909.)
No. 2,855.
Principal and Agent (§ 103 ) — Rights of Third Persons — Acts Done in’ Reliance of Statements by Agent — Implied Authority.
Plaintiff sold a herd of 1,300 cattle to a third person, who gave a draft on defendant, a live stock commission company, for $2,000 to apply on the purchase price. This draft plaintiff took to a bank and requested the cashier to telephone defendant and ascertain whether it would pay the draft. On being told by the cashier that the draft was given for cattle which had been shipped, defendant agreed to and did pay the draft. Two days later, having been told by the bank that the draft would be paid, plaintiff made a partial delivery of the cattle, which were shipped to defendant by the purchaser, who gave another draft on defendant for over $10,000 in full payment therefor. Defendant received the cattle, but, on being advised of the second draft, refused to pay it or to surrender the cattle on demand to plaintiff without repayment of the $2,000. Defendant had no knowledge of the actual transaction, but supposed the draft to have been given in whole or part payment for cattle which had been shipped to it; nor had it any such relations with the purchaser as would authorize him to make the drafts. SelcL, that plaintiff was bound by the statements made by the bank as its agent, and chargeable with knowledge that defendant accepted and paid the first draft on such statements, and in reliance on the supposed shipment to it of the cattle, to which it had the right to look for security and repayment, and that the plaintiff was not entitled to recover the cattle without repayment of the amount of such draft.
[Ed. Note. — For other cases, see Principal and Agent, Dec. Dig. § 103.*]
Sanborn, Circuit Judge, dissenting.
In Error to the Circuit Court of the United States for the District of Colorado. .
John H. Knaebel, for pláintiff in error.
E. F. Twitchell (Frank C. Goudy, on the brief), for defendant in error.
Before SANBORN and ADAMS. Circuit Judges, and RINER, District Judge.
For other Cases see same topic & § number in Dec. & Am. Digs. 1907 to date, & Rep’r Indexes
Rehearing denied July 12, 1909.

Opinion:
RINER, District Judge.
This was an action in replevin. The parties were arranged in the Circuit Court as they are arranged here, the plaintiff in error being the plaintiff and the defendant in .error being the defendant, and will be hereafter referred to as plaintiff and defendant, respectively.
The record shows that on the 17th of September, 1906, the plaintiff had about 1,300 head of Mexican cattle in a pasture, known as the "Hall pasture," near Fountain, Colo.; that on that day A. G. Putnam purchased these cattle from Charles F. Hunt, president of the plaintiff company, agreeing by an oral agreement to pay therefor the sum of $13.75 per head, excluding the calves, which were to be delivered with the other cattle without additional charge therefor. The negotiations for the sale and purchase of these cattle were carried on at "the Pike's Peak Club in the city of Colorado Springs, and, after an agreement had been reached between the parties as to price per head to be paid for the cattle, conditions of delivery, and time of delivery, Putnam gave Hunt a draft on the defendant company for $2,000 to apply upon the purchase price of the cattle. The negotiations were completed, as the record shows, about 12 o'clock noon on the 17th day of September, and that, immediately upon its receipt from Putnam, Hunt took the draft to the Exchange National Bank of Colorado Springs and asked the bank to telephone the drawee, the defendant, and inquire if the draft would be honored.
Hunt testified:
"Q. About what hour of the day of the $2,000 draft was it handed to you by Mr. Putnam? A. I think it was about Í2 o'clock; we went oyer to lunch together; I think it was about 12 o'clock at noon. Q. Where were the cattle at that timo? A. Running at large in tho pasture. Q. Did you take that draft: as a matter of course, without inquiry, or did you inquire about it? A. 1 immediately went to the bank. Q. What bank? A. The Exchange National Bank of Colorado Springs, and deposited it to the credit of my company. I asked them to telephone the drawee, the Colorado Live Stock Commission Company, if he would honor the draft, and the bank cashier reported to me that they had — " 4
At this point objection was made, and the witness then said:
"They reported favorably; the draft was paid."
On cross-examination, he testified:
"Q. You say the trade was finally consummated at the Pike's Peak Club? A. Yes, sir, on the 17th. Q. And by that trade he was going to take all of your cattle? A. That was the trade. Q. He gave you, then, a payment of $2,000 by this draft? A. Yes, sir. Q. That $2,000 was to apply upon tho purchase price of the cattle? A. Yes, sir. Q. That was oil the 17th? A. Yes, sir, the 17th. Q. And that same afternoon, was it, that you deposited the draft- — or the next day? A. The same day before I went to-lunch. I walked down to the bank and had them telephone, and made the deposit. Q. That was in tho Exchange National Bank? A. The Exchange National Bank; yes, sir. Q. You stated that you requested them, at the time of depositing it, to telephone to tho Colorado Live Stock Commission Company, upon whom it was drawn? A. I did. Q. Did they telephone before they entered it as a credit upon your book? A. They did not. Q. Do you know which one telephoned? A. I don't know which telephoned; the cashier is the gentleman with whom I talked. Q. How long after that before they reported to you that they had telephoned with reference to the draft? A. I think it was that evening, if not the next morning before I returned to the pasture."
And after being cross-examined as to some other matters, he was again asked on cross-examination:
"Q. Referring for a moment to the telephone conversation by the cashier or employe of the Exchange Bank at the time this $2,000 draft was given, will you state just what you told him to telephone? A. I can state it as T remember it? Q. Yes. A. The import of it was that I asked him to telephone the Colorado Live Stock Commission Company if they would honor this draft — Mr. Putnam's — of $2,000. Q. Was there anything said at the time about its being for cattle? A. Nothing at all. Q. You didn't say anything at that time? A. I did to the bank, yes; I told the bank I had sold my cattle; what they said I don't know. Q. You don't know what they said at the time? A. No. Q. But did they telephone for you? A. Yes, sir. Q. In regard to this draft? A. They said so."
Elijah Bosserman, president of the defendant company, testified on direct examination:
"Q. I show you Exhibit C, which is a draft for $2,000 on the Colorado Live Stock Commission Company, and drawn in favor of the plaintiff in this case, dated September 17, 1906, signed by A. G. Putnam. When did you first have knowledge of that draft? A. I first had knowledge of that draft through, I suppose it was, the Exchange Bank at Colorado Springs that called me up on the phone. Q. Well, some one did call you up on the phone? A. Yes, sir. Q. Bid they state what bank it was? A. I think it was the Exchange Bank; they said, 'This is the Exchange National Bank,' or something to that effect. Q. Bid the bank, at the time it telephoned you, say that this draft was drawn by A. G. Putnam, and did they say what it was drawn, for? A. Yes, sir. Q. What did they say it was drawn for when they asked you if you would pay it? A. They said it was for the payment of cattle. I asked them if they had made shipment, and they told me, 'Yes.' Q. So when the draft came in it was paid? A. Yes, sir."
And on cross-examination:
"Q. You paid that draft on the faith of the credit of the bank at Colorado Springs, or on the faith of the signature of A. G. Putnam? A. They told me it was for cattle, and I paid it; I told them I would pay it if it was for cattle for immediate shipment, which they told me it was. Q. Who told you that? A. The bank; he said he was cashier of the bank."
The draft was paid on the 19th of September at Denver, and, on the 20th, Putnam drew another draft on the defendant for the sum of $10",615, and on the same day 25 cars of cattle, numbering substantially 843 head, were shipped by Putnam, consigned to the defendant. The cattle arrived at Denver on the morning of the 21st, and on that day the defendant was informed by Putnam that he had drawn a second draft for $10,615. This was the first information received by defendant that any such draft had been drawn. The defendant decíined to pay it, and it was protested. Hunt came to Denver, made demand upon defendant for the cattle, which the defendant declined to surrender until the $2,000, the amount of the first draft, which it had paid was returned; this Hunt refused to do and brought this action to recover possession of the cattle.
The sole question, under the facts disclosed by the record, is whether the plaintiff was entitled to the possession of the cattle without refunding the $2,000 paid to the plaintiff by the defendant upon the first draft. It would be interesting indeed to here review the learning upon the rights of consignors, consignees, and factor men and the rules of law applicable to the right of recission between parties to contracts, and to notice at some length the very able discussion of the cases relating to these subjects found in the briefs of counsel, but in the view we have taken of this case it becomes unnecessary to do so. It must be borne in mind that the defendant was not a part}', but a stranger, to this contract between Putnam and the plaintiff; that it had no information which would tend in the slightest degree to cause it to suspect that such a contract had been made, or that any draft other than the $2,000 draft was involved in the transaction; or that any other number of cattle, in excess of the number which the $2,000 would pay for, had been purchased by Putnam from the plaintiff.
Mr. Bosserman testified, in explanation of how he came to honor the $2,000 draft, that lie supposed that Mr. Putnam had bought some bulls and cows for substantially that amount. Neither was there anything in the course of dealing between the parties, as disclosed by the record, tending to show that Mr. Putnam or any one else had the right to suppose that any such credit as that represented by the second draft would be extended to him by the defendant. It is true the record shows that on former occasions the defendant had advanced money to Putnam to purchase cattle, in small amounts, never to exceed two or three thousand dollars, and then always upon cattle for immediate delivery and when lie had made arrangements beforehand for the credit. When the 81-3 head of cattle were received, in view of the assurances given by the bank at the time the draft for $2,000 was paid, that the cattle were for immediate delivery, the former course of dealing between Putnam and the defendant, and from the fact that it had no intimation that any other draft had been drawn, Mr. Bosserman might well have thought that the only interest the defendant had in the cattle was in the number purchased by the money advanced by defendant, and that Mr. Putnam had made other arrangements for the balance.
We think it clearly appears from the record that, if the defendant had been fully informed of the entire transaction, it would have declined to honor the first draft for $2,000. It was not so informed, but was led to believe that the $2,000 was to be applied in payment for cattle to be immediately shipped. It is true that Mr. Hunt said that he did not expressly authorize the bank to assure the defendant that the money was to be applied in payment for cattle to be immediately shipped. His testimony upon that question, when called in rebuttal, was:
"Q. Did you ever send any message to Uie defendant, or authorize any bank, or individual, to send any message to the effect that the $2,000 draft was drawn against any shipment of cattle? A. I never did, sir, in regard to that."
. And on cross-examination, while on the stand in rebuttal, he testified :
"Q. Yon testified this morning, didn't you, that you told the bank to call up Mr. Bosserman and see about the $2.000 draft? A. Yes, sir. Q. And see whether it would be paid? A. Yes, sir. Q. I believe you also testified that you had told the bank that you had sold the cattle? A. Yes, sir, that 1 had sold my herd."
lie did, however, authorize the cashier of the bank to make the inquiry, and the record shows that he proceeded no further toward carrying out the contract until he received a report from the bank, and he nowhere tells us what that report was, except, in a general way, that it was favorable, and although called in rebuttal, after Mr. Bosserman had testified as to the condition upon which the draft would be paid, he does not say that the hank did not communicate that fact, and all that Mr. Bosserman said upon the subject to him.
No-principle is better settled than, as said in Dickerson v. Colgrove, 100 U. S. 578, 25 L. Ed. 618:
"That lie, who by his language or conduct leads another to do what he would not otherwise have done, shall not subject such person to loss or injury by disappointing the expectations upon which he acted."
This doctrine, while it originated in courts of equity, has often been applied to cases arising in courts of law. Dickerson v. Colgrove, 100 U. S. 580, 25 L. Ed. 618; Kirk v. Hamilton, 102 U. S. 68, 26 L. Ed. 79.
If Hunt had himself telephoned to the defendant instead of asking the bank to do it, and received the answer which the bank received and gave the assurance which the bank gave, there could be no doubt, we take it, in the mind of any one, but that he would be estopped from denying that the money was to be applied in payment for cattle for immediate shipment, to the amount of the draft, and that the defendant had the right to be reimbursed out of the proceeds of the sale of the cattle shipped to it. Did the fact that he authorized the bank to communicate with the defendant instead of doing it himself change his position or release him from the obligation to refund this money? We think not. He handed the draft to the cashier of the Exchange National Bank, informed him that he had sold his cattle, and authorized the cashier to ascertain whether or not the draft would be paid, and did not move further in the matter until he received the report of the cashier. We think it is safe to assume, in the- absence of any denial by him, and from the knowledge common to every one as to the manner in which banks conduct their business to avoid personal liability, that the report of the cashier advised him fully of the condition upon which the draft would be paid.
It has been often decided:
"That, where one holds another out to the world as Us agent, In determining the liability of the principal the question is not what authority was intended to be given to the agent, but what authority was a third person dealing with him justified, from the acts of the principal, in believing was given to him." Griggs v. Seldon, 58 Vt. 561, 5 Atl. 504; Walsh v. Hartford F. Ins. Co., 73 N. Y. 5; Dodge v. McDonnell, 14 Wis. 553; Webster v. Wray, 17 Neb. 579, 24 N. W. 207; Columbia Mill Co. v. National Bank of Commerce, 52 Minn. 224, 53 N. W. 1061; Lister v. Allen, 31 Md. 543, 100 Am. Dec. 78.; Carmichael v. Buck, 10 Rich. (S. C.) 333, 70 Am. Dec. 226; Howell v. Graff, 25 Neb. 130, 41 N. W. 142; Milne v. Klen, 44 N. J. Eq. 378, 14 Atl. 646; Stovall v. Com., 84 Va. 246, 4 S. E. 379; Routh v. Agricultural Bank of Mississippi, 12 Smed. & M. (Miss.) 161.
The only interest the defendant had in the cattle was either in separate cattle amounting in value to $2,000, or in the total number shipped to the extent of its special interest of $2,000, and we do not think it can be said that it was obliged to separate the cattle when the cattle were all demanded by the plaintiff before the replevin suit was brought, because it was not known by the defendant in what way the cattle had come, and the distinct understanding with the plaintiff was that the draft for $2,000 was paid on condition that the cattle would be shipped immediately for its protection in the payment of it. We say "the distinct understanding with the plaintiff," because the plaintiff authorized the cashier of-the bank to speak for him and in quire about the draft before he entered upon a delivery of the cattle, and, when the inquiry was made, it was made in pursuance of the authorization of Hunt; when the answer came, it was in pursuance of the inquiry, and it must be held, therefore, that all were fully authorized.
The judgment of the Circuit Court is affirmed.