Court Opinion

ID: 8191284
Source: CourtListenerOpinion
Date Created: 2022-09-09 23:14:18.380259+00
Date Added: 2024-06-11T16:40:37.195386
License: Public Domain

The following opinion was filed April 18, 1914:
Winslow, O. J.
(concurring). The principle that one cannot, with knowledge of the facts, retain the avails of an unauthorized contract made 'for him by another assuming to act as his agent and repudiate the responsibilities of the contract, is so well understood that it needs no restatement. This constitutes agency by ratification, and it is just as effective to charge the principal with responsibility for the acts of *543tbe agent in tbe transaction as original authority. McDermott v. Jackson, 97 Wis. 64, 72 N. W. 375; Twentieth Century Co. v. Quilling, 136 Wis. 481, 117 N. W. 1007. I do not understand tbat there is any intention to depart from that principle in tbe decision of tbe present case. The trial court came to tbe conclusion tbat. Bates assumed to act for Foster in tbe sale of tbe stock, and tbat when Foster, with knowledge of Bates’s alleged fraud, retained tbe $1,000 which tbe Bates-0denbrett Company afterwards sent him, be ratified tbe entire transaction and became liable for tbe fraud perpetrated by Bates in selling tbe stock to Tripp. If tbe trial court’s premise be right tbe conclusion must also be right, but I understand tbat tbe decision of tbe court in this case is based on tbe proposition tbat tbe premise is not right, i. e. Bates was not in fact acting for Foster, nor did be assume to be so acting. If it were to be held tbat Foster is liable for Bates’s misrepresentations in tbe present case, we think it would be a serious shock to tbe commercial world and tend to unsettle a very well recognized business custom. Such a bolding would mean tbat whenever a creditor takes collateral security from a debtor and consents tbat tbe debtor may dispose of tbe collateral and apply tbe proceeds on tbe debt, the creditor, though taking no part in tbe transaction and really indifferent as to its success, may be compelled to return the consideration or respond in damages for bis debtor’s fraud. Probably there is and always will be a very large amount of collateral held under just such arrangements. It cannot be justly said in such a case tbat in making sale of tbe collateral tbe debtor or bis agent is acting for tbe creditor. Under ordinary circumstances tbe creditor is indifferent in tbe matter; be bolds tbe property as bailee for a particular purpose. He is not interested in its sale, but simply in tbe payment of tbe debt. If tbe debtor can obtain tbe money to make tbe payment by selling tbe collateral be is willing to take tbe money; if tbe debtor can obtain tbe money *544to pay tbe debt in other ways, tbe creditor is equally willing-to take it. Of course, tbe creditor may himself take an active part in tbe sale of tbe collateral, and in this case a different proposition would arise; but where, as in tbe present case, tbe creditor simply bolds tbe collateral as security, taking no part whatever in tbe sale thereof, except to transfer it when' requested and to receive from bis debtor payment of' tbe debt, we think it cannot be justly or fairly said that the-person making tbe sale has assumed to act or has in fact acted as tbe creditor’s agent in tbe transaction. So understood,, this decision does not in any way discredit the well established legal results of tbe ratification of an unauthorized contract by retention of tbe avails thereof.
BarNES, J. I concur in tbe foregoing.
ViNjE, J. I concur in tbe foregoing opinion of Chief’ Justice WlNSLOW.