Case Name: Ulrich v. McCormick et al.
Court: Supreme Court of Indiana
Jurisdiction: Indiana
Decision Date: 1879-05
Citations: 66 Ind. 243
Docket Number: 
Parties: Ulrich v. McCormick et al.
Judges: 
Reporter: Indiana Reports
Volume: 66
Pages: 243–247

Head Matter:
Ulrich v. McCormick et al.
Principal and Agent. — Payment of Promissory Note to Servant of Agent, after Revocation of Agency. — Notice.—Instruction.—In an action by the payee, against the maker, on a promissory note, wherein payment was pleaded, the evidence established that the note had been executed by the defendant for the price of a chattel sold and delivered to him by an agent appointed by the plaintiff to sell such chattels and collect such notes ; that such agency was subsequently revoked, and a new agent appointed, but the defendant had no notice thereof; that subsequently the defendant called at a place where the former agent carried on his individual business, to pay off the note ; and that, such agent being absent, his servant searched for the note, failed to find it, and, having gone and seen his employer, by direction of the latter received, and receipted to the defendant for, the amount of the note, in the name of his employer.
Held, that an instruction that such payment was invalid was erroneous.
Held, also, that such payment, if made in good faith and without notice of the revocation of such agency, was valid.
From the Huntington Circuit Court.
L. P. Milligan and A. Moore, for appellant.
F. Heiner, G. H. Chapman and U. J. Hammond, for appellees.

Opinion:
Perkins, J.
Suit by the appellees, against the appellant, upon a promissory note, of which the following is a copy:
" $200. Chicago, III., Sept. 17th, 1873.
" On or before the 1st day of January, 1874, for value received, the undersigned promises to pay C. H. McCormick & Bro., or order, at their office in the City of Chicago, Illinois, two hundred dollars, with-per cent, per annum, from July 1st, year as above, without relief from valuation or appraisement laws. It is also stipulated, that, should the collection of this note he enforced by law, a reasonable amount shall he allowed the holder as attorney's fees. "Without interest if paid when due.
" John H. Ulrich.
" Post-office: Huntington, Huntington Co., Ind."
Answer, payment; reply in denial; trial by jury; ver diet for plaintiff, and judgment, over a motion for a new trial, on the verdict.
The reasons therefor, stated in the motion for a new trial, were:
1. Verdict contrary to law ;
2. Verdict contrary to evidence ;
3. Verdict not sustained by evidence ; and,
4. Error in the instructions given to the jury.
In the assignment of errors, three are specified, viz. :
1. The court erred in overruling the motion for a new trial;
2. The court erred in its instructions to the jury ;
3. The court erred in not giving the jury further instructions applicable to the evidence in said cause.
Further instructions, it may be observed, were not asked by counsel.
A bill of exceptions contains the evidence.
The issue in the cause, as we have seen, was upon the payment of the note.
All the questions presented on this appeal fairly arise upon the first assignment of error, viz., that of overruling the motion for a new trial.
There is no conflict in the evidence. The note in suit, as appears upon its face, was executed September 17th, 1873, and was payable on or befoi'e the 1st day of January, 1874, at the office of the payees, in Chicago, Illinois. The note was executed in Huntington county, Indiana, and delivered to William R. Jones, then the agent, in said county, of McCormick & Bro., the appellees, who resided at Chicago, 111., for the sale, in said county of Huntington, of the said McCormicks' Reaper, and the collection of the notes that might be given on such sales, which notes he retained, as such agent, in said Huntington county. Such is the fair inference from the evidence in the cause.
The note in suit was given for the price of a. reaper purchased by said Ulrich of said agent, Jones.
On the 10th of November, 1873, McCormick & Bro. revoked the appointment of agency then held by said Jones, took from him all notes and papers connected with the agency, and placed them in the hands of Buchanau & Co., of Huntington, in said county of Huntington, who were then appointed agents in place of said Jones, and were directed to give notice to the makers of said notes accordingly, but they failed to give notice to Ulrich, the. appellant, till the 10th day of February, 1875. On the 31st day of December, 1873, Ulrich called at the store of said WiHiam R. Jones, and asked for the note in suit, saying that he wished to pay it. Said Jones was not in the store ; was said to be at his house sick; but his son Willis was in the store. He was his father's clerk in the store. He looked for the note, but could not find it. Says Ulrich, in his testimony: "Willis told me the note was not there, when I asked him for it. He said he would receipt me the money I paid him, and it would be all right. I told him to destroy the note or hand it to me. After he said his father was too sick to get it for me, I paid him the money to stop interest."
The following is the receipt:
" Huntington, Ind., Dec. 31st, 1873.
" Received of John II. Ulrich, on note given to W. R. Jones for the McCormick Reaper, two hundred dollars, due Jan. 1st, 1874. Wm. R. Jones,
" $200. Willis."
Willis testified that he went out to see his father about the matter, and acted therein pursuant to his directions.
The court instructed the jury thus:
"Whenever a party undertakes to do any act as the agent of another, if he does .not possess any authority from the principal, or if he exceeds the authority delegated to him, he will be personally responsible therefor, to the person with whom he is dealing, for or on account of his princi pal. When Ulrich, dealt with Jones as the agent of plaintiffs, he did so at his peril; and if it turned out that Jones was then no longer the agent of plaintiffs, then Ulrich has no remedy against plaintiffs, and payment to Jones was not payment to McCormicks, in fact or in law." Which were all the instructions given in the cause, on the subject of agency, and to the giving of which defendant at the time then and there excepted.
The above instruction was erroneous. It went upon the theory that payment to an agent was void, after his agency had been revoked, in the absence of notice of the revocation.
In Wharton on Agency and Agents, it is said that " The. revocation of an agency becomes operative as to the agent from the time it is actually made known to him but " Third parties dealing bona fide with one who has been accredited to them as an agent, are not affected by the revocation of his agency unless notified of such revocation." Chap. 2, sec. 110:
In Diversy v. Kellogg, 44 Ill. 114, it is decided, that,—
" Where a party is shown to have been the agent of another in a particular business, and continues to so act within the scope of his former authority, it will be presumed that his former authority still continues, and will bind his principal unless the persons with whom he acts have notice that his agency has ceased."
In this case the agency of Jones extended to the receiving payment of the note. The maker had not received notice of its revocation, nor of the withdrawal of the note from his custody. The above rule of law is founded in reason, common sense and justice.
The rule is involved in the case at bar; for, if the appellee paid the note in question to Jones, in good faith and without notice of the cessation of his authority as agent, the payment was a satisfaction of the note. But the question still remains, was the payment bona fide ? or were the circumstances under which the payment was made such as to indicate the contrary, — to put Ulrich on his guard ? Ulrich seems to have paid the note, supposing Jones still had it in his possession, hut was too sick to look for and get it for him. These will he questions for the jury on another trial. See Rathbone v. Sanders, 9 Ind. 217, and The Howe Machine Co. v. Simler, 59 Ind. 307.
As to Ulrich, Jones was, so far as appears, still the agent to receive payment of the note, and still had it in his possession. Willis, the clerk, did not inform Ulrich that the note was not in possession of William R. Jones, hut that it was not in the store. Willis appears to have been a clerk in the store, not in the business of the McCormick agency. He did not receive payment of the note as agent, but simply as a servant of his father, ministerially. Suppose his father had been at the store, and before Ulrich came in to pay the note, Jones, as we have said, still having it in his possession as to Ulrich, had said to Willis: " Receive that money for me, and receipt him for it in my name, I am busy just now, and will soon send the note to Ulrich; " would this be creating Willis a sub-agent ? Let this point be all the time borne in mind : Jones was, as to Ulrich, still the agent to collect the note. Ulrich had the legal light to pay the note to him, and such payments made in good faith would extinguish the note.
The judgment is reversed, with costs, and the cause remanded for further proceedings in accordance with this opinion.
Petition for a rehearing overruled.