Court Opinion

ID: 8191283
Source: CourtListenerOpinion
Date Created: 2022-09-09 23:14:18.378461+00
Date Added: 2024-06-11T16:40:37.193856
License: Public Domain

Tbe following opinion was filed April 16, 1914:
Maeshall, J.
(dissenting). I dissent from tbe decision in this casé, and more particularly, from tbe reasoning upon which it is based. I apprehend I am not alone in regard to tbe latter.
To give a clearer view of tbe facts than tbe court’s statement affords I will give them as they appear to me. Defendant held $5,000, par value, of .the corporate stock of tbe *539Automobile Company of wbicb Bates was manager. It was important for tbe company; but more particularly for appellant, to realize on tbe stock. It was for sale for the purpose' of paying a debt to appellant who held tbe stock as pledgee but possessed tbe legal title thereto. Bates, as manager of tbe company, and without tbe knowledge of appellant, assumed authority to sell tbe stock and did so, depending upon appellant to ratify tbe sale by turning over tbe certificate, properly indorsed, so tbe title could be vested in respondent, tbe vendee, in consummation of the sale. Such consummation took place by means of fraudulent representation made by Bates. He did not pretend to own tbe stock or that it belonged to bis company. He stated that it was in tbe bands of a third party from whom be could get it so as to complete tbe sale. By means of tbe fraud, respondent’s money was obtained and paid over to tbe company to be rendered to appellant, as owner of the stock, after consummation of tbe sale. Appellant was notified of tbe sale agreement and requested to indorse and turn over tbe certificate so as to enable tbe company to make delivery upon such agree; ment. He complied, and later received tbe consideration from tbe company wbicb respondent bad paid to it. Up to this time appellant was ignorant of tbe means employed to effect tbe sale. Later that was brought to bis attention and a return of tbe consideration parted with by respondent demanded. With full knowledge of tbe facts restitution was refused. Then this action was brought.
Now why does not tbe principle, with wbicb I suppose all are familiar, apply in favor of respondent ? Tbe trial court so decided, reasoning from numerous decisions of this court, as we shall see. Here is tbe rule as commonly stated:
“A person is liable for tbe fraudulent act of bis agent in tbe conduct of bis business whether be authorized such acts originally or adopted them by taking the benefit of tbe act with knowledge of tbe facts or retained such benefit with such knowledge, or was enriched by such act without original *540or subsequent knowledge of the wrong committed in his interest.”
“A person cannot retain the avails of an unauthorized contract, made for his benefit by another assuming to act as his agent, and repudiate the responsibilities of such contract, and any attempt to do so, with full knowledge of the facts, constitutes a ratification of the unauthorized act, and creates a liability on the part of such person to the same extent as if such contract were originally authorized.” McDermott v. Jackson, 97 Wis. 64, 76, 72 N. W. 375.
One cannot have the benefit of a transaction and repudiate its responsibilities. Ratification of the assumption of authority as to the principal thing by taking the benefit of the transaction and retaining the same with knowledge of the facts ratifies not only such principal thing but the manner of acquiring it. If the taker insists upon vitality of the major element he subjects himself to the subsidiary features as regards civil remedies. Fraser v. Ætna L. Ins. Co. 114 Wis. 510, 517, 90 N. W. 476; Glassner v. Johnston, 133 Wis. 485, 493, 113 N. W. 977; Stelting v. Bank of Sparta, 136 Wis. 369, 371, 117 N. W. 798; Twentieth Century Co. v. Quilling, 136 Wis. 481, 487, 117 N. W. 1007. Now how does that apply to the facts here ?
Appellant, as it must be observed, held the stock to all intents and purposes as owner. No one could sell it without his' permission. The company, through Bates, necessarily assumed to have such permission and appellant acquiesced in all it did, from first to last, though not having given any express authority. Let it be conceded, that Bates acted for the company in a measure, yet it is undisputed that he also acted for respondent, actually or by assumption of authority and, certainly, in his interest. What difference does it make that the company received the money and then paid it to appellant? That is commonly the case where a person, pretending to be the agent, or to act in the interest of another, without disclosing his representative capacity, receives the *541consideration from a third party and turns it over to such other who may be entirely ignorant of the matter until tender of such consideration. The receipt of it relates back to the assumption of authority and gives original validity to it, only waiting upon refusal to disaffirm and restore the former situation in case of the contract having been fraudulently made, upon being fully informed of the facts in that regard.
■ The whole transaction here, even if, ostensibly, for the company, was, evidently, chiefly for appellant. Certainly it, through Bates, acted for him in enabling him to realize on his collateral. It was not specially benefited by the transaction for it only exchanged a liability on the note held by appellant for one on the stock. Appellant was the only one really enriched in such transaction. He was favored to the impoverishment of respondent by just so much as the latter paid and which eventually reached the pocket of appellant. Why do not Bates, the company, and appellant stand on the same platform as the trial court held ?
The court says, substantially, that Bates was not the agent of Foster either by appointment or ratification. There was no agency because Foster never appointed any agent in the matter. He could not be bound by what he had no knowledge of. That seems to have been said without appreciating the elementary principles before stated. Agency by ratification of an unauthorized' act, by keeping the fruits thereof after knowing of the facts, is about as well known as anything in the law of agency. Why say there was no .agency because no appointment nor ratification? Was it overlooked th^t if a person, after being informed of the facts as to another having perpetrated a fraud in his interest upon a third person, retains the fruits thereof, he thereby ratifies the act of such other and becomes liable for the wrong though entirely innocent of any original sin ?
McDermott v. Jackson, 97 Wis. 64, 72 N. W. 375, covers the whole subject involved here. It followed Morse v. Ryan, *54226 Wis. 356, 361, where the court substantially said: If a person accepts the benefit of a contract made by one professing to have authority to act for him, he thereby ratifies the means by which it was obtained and such ratification is equivalent to previous authorization. He cannot object to evidence of fraudulent representations made in procuring* the same, on the ground that the actor was not his agent, or that the representations were not authorized. That was followed in Burke v. M., L, S. & W. R. Co. 83 Wis. 410, 415, 53 N. W. 692, and again in Garlick v. Morley, 147 Wis. 397, 399, 132 N. W. 601, where it was said: “Ratification may appear circumstantially as well as expressly. It may be presumed by conduct such as by carrying out the contract and accepting the benefits in like manner as if the person assuming to be authorized to represent him had authority in fact.”
Thus, it will be seen, that this court has over and over again proclaimed and applied the principle which the trial court supposed ruled this case. Why was it wrong? The opinion of the court is silent on that. It does not refer to the stated principle or any principle or any authority which at all fits the case, so far as I can see. It is said there was no agency because no original authorization or- subsequent ratification, quite ignoring, seemingly, the existence of the facts so often held sufficient to work ratification in law with all the consequences of original authority.