Court Opinion

ID: 7097102
Source: CourtListenerOpinion
Date Created: 2022-07-24 12:12:06.043262+00
Date Added: 2024-06-11T16:13:17.284991
License: Public Domain

Beck, J.
dissenting. I. The evidence shows that the party making the contract of warranty, set up by defendant, was not the agent of plaintiffs, and that their agent who had, or was entitled to, the possession of the machine at the time of the sale, had no authority to make a contract of that kind binding upon plaintiffs, nor was he authorized to appoint agents who should possess such authority. Plaintiffs, therefore, are not bound by the contract relied upon by defendant.
II. But it is argued that as plaintiffs accepted thé notes executed for the machine and are now seeking to enforce them they cannot deny the authority of the j>arty who acted as their agent in the transaction. Without inquiry whether this would be true in the absence of other facts it is very plain that under the circumstances of the case it cannot be. The notes were delivered by the party taking them to plaintiffs’ agent, and by him forwarded to plaintiffs. It does not appear that the agent had notice of the contract of warranty when he received the notes it is shown that the plaintiffs had no notice thereof when they accepted the notes.N Surely the agent’s acceptance of the notes, in order to bind his principals by the terms of the warranty, if he could do so at all, should be upon notice of the contract, and the act of the plaintiffs in receiving the notes, in Order to operate in the same way, should also be with notice.. Plaintiff’s’ agent, having no authority to enter into a contract of *523warranty, could not bind his principals by any act ratifying such a contract made by one not an agent.
III. I have no occasion to dispute the correctness of the principle of law announced by the majority of the court in the foregoing opinion. Where one acts as an agent of another person in making a ' contract, such person, if he accepts the benefit of the contract, is bound thereby although no relation of agency in fact existed. By accepting the benefits of the contract, the person for whom it was made ratifies it. But this principle has no application to the case before us, for its facts do not bring it within the scope of the doctrine. The acceptance of the note of defendant was by plaintiffs’ agent, who had no authority to make a contract of the kind set up by defendant. Surely the agent could not .bind the principals by ratifying an unauthorized contract which he had. no authority to make in the first instance. The contract which an agent may ratify, and thus make binding upon his principal, must be such an one as the agent has authority to make. This proposition of law, it seems to me, cannot be disputed.
The fact that plaintiffs received the notes in suit from their agent, does not bind them by the act of the person making the contract, who was not their agent. They had no knowledge of his connection with the contract. They were authorized to believe that the notes were taken under a contract made by their agent in accord with the authority they had conferred upon him. To hold the plaintiffs boiind by the contract under the doctrine of ratification would be to render them liable on account of a transaction of which they had no knowledge and to which their attention was in no manner directed: They were not required to make inquiry as to the time of the sale of the reaper, for there was no circumstance to cause them to suspect that it was not made by their agent, .in accord with the authority conferred upon him; there was nothing to arouse inquiry.
Eor these reasons I reach the conclusion that the evidence before the court below sustains the judgment for plaintiffs apj>ealed from.
*524Day, <J.
The complications of this case grow out of its peculiar facts. Allen had been the agent of plaintiffs for the sale of machines and was authorized to sell with warranty. But, before the sale in question was made, Allen’s agency was terminated, and Woodward was constituted agent with no authority to warrant. Notwithstanding these facts Allen sold the machine, with a warranty, and turned the notes for purchase money over to Woodward, from whom the plaintiffs received them. It does not appear that plaintiffs had any inovdedge of Allen’s agency in the matter, until the facts were disclosed in the testimony on the trial. If plaintiffs had received the notes for the machine from Allen, it might well be claimed that they had ratified his acts in full. For being ¡advised that he had acted without authority, it would be incumbent upon them to ascertain the extent of the unauthorized act. But plaintiffs received the notes from Woodward, their duly appointed agent, without notice that Allen had anything to do in the matter. They had the right to accept the notes, assuming that Woodward had made the sale in conformity with the authority conferred upon him. If Woodward had even adopted the act of Allen, and made it his own, the plaintiffs did not adopt and ratify this act by merely accepting the notes. The distinction between the adoption of the act of one who assumes without authority to act as agent, and the acceptance of the benefits of a contract made by one who is vested with special and limited powers, is fully recognized, and well defined in Davenport Savings Bank v. The N. A. Fire Ins. Co., 16 Iowa, 79, cited in the majority opinion. In this case the court say, “ When one assumes without authority to act for another, if that other wishes to avail himself of the acts of the agent, he must adopt the whole or none. 'Not so, however, where the agent is duly appointed and vested with special or limited powers. Whatever he does in such case, beyond his authority, is void, unless ratified, and that without affecting the validity of what was done wifiiin the scope of his powers.” The only agent whom plaintiffs knew in the premises was Woodward. By accepting the notes from Woodward they did not adopt any act which he was expressly forbidden to perform, and of which *525they had no knowledge; and a fortiori, it seems, they did not thereby adopt any act of an assumed agent, of whose existence they had no knowledge.
It may be that a party who undertakes to enforce an executory contract must adopt, and consent to be bound by, all that his agent has done in the premises. But if such a rule should be applied to executed contracts, the doctrine that an agent can bind his principal only within the scope of his authority would in many cases be ignored. When the notes were received for the sale of the machine in this case, the contract was executed, to as full an extent, in my opinion,- as if the price had been paid in money. If these notes are subject to any defense, it is\^ because the plaintiffs are bound by the warranty of their assumed agent, Allen, or by the act of their agent Woodward, in accepting the notes. If they are bound by the warranty, so as to subject the notes to a defense, then, if they had negotiated the notes to innocent holders, it must be that they would be liable to an independent action for a breach of warranty. And, if liable under such circumstances, then they would be liable if they had been paid in money. And, if this be so, then an agent who has no authority to warrant, and who is expressly forbidden to waz’rant, may in all cases bind his principal by a warranty, since the only manner in which he can escape liability is to refund the purchase money and rescind/ the eontz’act. In Finn v. Harrison, 3 T. R., 760, it is said, “ If the owner of a horse wez*e to send a stranger to a fair with expz’ess directions not to warrant the hoz’se, and the latter acted contrary to the ordez1, the purchaser cozzld only have recourse to the pez’son who actually sold the horse, and Bze owner would zzot be liable on the warranty, because the servant was not acting within the scope of his employment.” See, also, Pickering v. Burk 15 East., 45, cited in 1 Parsons on Contracts, 5th edition, page 61.
I think the court did not err in holding that the plaintiffs zvere not bound by the unauthorized acts of Allen and Woodward.