Court Opinion

ID: 3703969
Source: CourtListenerOpinion
Date Created: 2016-07-06 06:41:28.921615+00
Date Added: 2024-06-11T15:40:55.710460
License: Public Domain

I concur in the majority opinion which holds that the earnest money deposited with the agent in two installments, in the total amount of $250, was authorized by the contract, and, in legal effect was payment to the sellers, defendants herein. It is my opinion that the further payment to the broker of "closing money," so referred to in the amount of $250, was made at the plaintiffs' risk at the time it was made, for the reason that such payment to the broker, a special agent, was not contemplated by the contract and, therefore, in legal effect, was not a payment to the defendants. I shall state my reasons as briefly as possible.
It is a general rule that where one deals with an agent, he is bound to ascertain the extent of his authority and he has no right to assume that the authority of such agent is unlimited. This principle has wide application in the law of agency, and is strictly applied where one deals with a special agent.
In the instant case, the sale and purchase contract consists of a printed form, presumably supplied by the real estate broker. Pursuant to its terms, the purchasers, plaintiffs herein, agreed to pay $9,900 for the real estate of the owners, defendants herein, as follows: $25 "to apply on purchase price" and "purchasers *Page 430 
further agree to pay in cash the additional sum of $225" upon acceptance by the owners, the payments being referred to in the contract as "earnest money." The contract provided also that these payments to the broker "shall be applied to the purchase price."
The contract provided further that "balance of purchase price to be paid as follows: $250 on closing. Balance by G. I. loan for $9,400."
By reason of the express terms of the contract, it is apparent that the earnest money in the amount of $250 deposited with the agent, as expressly provided for in the contract, together with the amount of the G. I. loan of $9,400, did not equal the purchase price, and that a further cash payment should be made by plaintiffs. This further payment was provided for in the contract in language somewhat informal but expressive of the intention of the parties that it should be made at the time of closing the sale and purchase of the property.
Notwithstanding that the broker is a special agent in the instant case, and bound by the terms of a written contract between his principals and prospective purchasers, the majority opinion holds that the plaintiffs could, on the theory of apparent authority, make further payment to the broker, contrary to the clear intention of the parties as expressed on the face of the contract.
If the doctrine of apparent or implied authority were applicable to the situation presented on the record here, it seems to follow that the plaintiffs without peril could have made payment to the broker of any other amount, even to the extent of the remainder of the purchase money, and thereupon stand on the claim that such payment was payment to the principal, and demand relief accordingly. In my opinion, the doctrine of apparent authority can have no application *Page 431 
in the instant case, as the rights and duties of the parties and the broker had been reduced to writing.
However, even if the plaintiffs had not been parties to the contract, which expressly conferred specific authority on the broker, they were bound to ascertain whether or not the broker was authorized to receive payment of purchase money for and on behalf of the defendants. The rule is stated in 2 Ohio Jurisprudence (2d), 85, Section 49, as follows:
"One who deals with a known agent should not blindly trust the agent's statements as to the extent of his powers, but should use reasonable diligence and prudence to ascertain whether the agent acts within the scope of his authority. He must act in good faith, respecting every restriction upon the agent's authority of which he may have, or should have, notice. The law indulges in no bare presumption of agency, and an agency can not be established merely by declarations of the agent."
The record discloses that there was a telephone conversation between the buyers and the sellers relative to the payment of "some closing money." There is a conflict as to the nature of this conversation, but it does appear that defendants did not authorize plaintiffs to make further payments to the agent. In any event, the defendants would hardly be estopped to challenge the authority of the broker to receive further payments under the circumstances, nor would the express terms of the contract be altered or modified by this procedure.
Briefly stated, my conclusion is that in the light of the contract, the payment to the broker of earnest money, as stipulated therein, was payment to the defendants for which plaintiffs are entitled to reimbursement. No further payments to the broker were provided for in the contract and it follows that the subsequent *Page 432 
payment of $250 made by plaintiffs to the broker was made at plaintiffs' peril and, not being within the contract, was not a payment to the defendants. In my opinion, the judgment of the trial court should be reversed and a new trial ordered.