Siemens Regenerative Gas Lamp Co. v. Horstman

The evidence of agency and authority was held sufficient to submit to the jury in a case where the alleged agent sold goods with the agreement that he would take them back at half price if they proved unsatisfactory. It seems that receiving the benefit of a contract operates as an estoppel to prevent the repudiation of the authority of the agent who made it.

Error, No. 25, July T., 1888, to C. P. No. 3, Phila. Co., to review a judgment on a verdict for plaintiff in an action on the case, by F. .0. Horstman et al., trading as William H. Horstman & Sons, against The Siemens Regenerative Gas Lamp Co., to recover a sum alleged to have been agreed upon, on failure of certain lamps, purchased by plaintiffs, to prove satisfactory, at March T., 1886, No. 409. Plaintiff offered in evidence the following letter, which was admitted without objection: “The Siemens Regenerative Gas Lamp Co., “ The Sole Manufacturers for the United States of the “ Siemens Patent Regenerative Gas Burner. “Office and Factory, “N. E. Cor. Twenty-First and Washington Avenue. “Address all correspondence to the Company. “Philadelphia, December 22d, 1884. “ Messrs. Horstmann & Sons. “ Gentlemen : We will place in your mill eight No. II. burners, with pipes complete,, like the two that are now in there, guaranteeing these burners not to consume over twenty-four feet of gas per hour each. We will put in the storeroom No. I. burner and one No. II. burner, being the same kind of fixtures that are in the factory, with the exception the reflectors will have a brass band around them, to give it a finish, all of them put in complete and ready for use, for $664. This includes all items of expense, with the exception of any little carpenter work that may be required in the storeroom, or the changing of the gas pipe- in the room...... We have endeavored to get these figures for work and material down at actual cost. Should you favor us with your order for the same, we will give your work our immediate attention, and endeavor to have it all finished by the time you want to use it. “Yours respectfully, “ J. W. Baker, Gen. Agt. “819 Filbert.” “ Per W. J. B.” The following letter, addressed to plaintiffs, written upon a similar letter-head, dated Jan. 5, 1885, and signed “J. W. Baker, Gen. Agt.,” was given in evidence, under objection and exception: “ Gentlemen : If you put the Siemens Burners in the mill and store, and, after using them for one year, you find they do not answer your purpose, or that they get out of order, I will purchase them back from you at one-half the price they cost you in putting them in.” [1] The lamps were put in and, on Feb. 21, 1885, the following letter, signed “ E. Stine, Manager,” written on a letter-head of the company, was received by plaintiffs : “ Gentlemen : We are desirous that our Siemens lamps shall, at all times, be in proper working order, and give perfect satisfaction. With this object in view, an employee of this company will make regular calls for the purpose of examining the lamps, and, when necessary, place them in good order. “ Please accord to him the privilege of inspection. Should anything occur in the meantime requiring prompt attention, please notify us at once.” In Dec., 1885, plaintiffs notified Mr. Stein that the lamps were not satisfactory. Soon after that, the following letter was received by plaintiffs: “ The Siemens-Lungren Co., “ Manufacturers of Regenerative Gas Burners, “ N. E. Cor. 2ist and Washington Ave. "Address all correspondence to the Company. “Philadelphia, 188 “ Mr. Clarkson, care Horstman Bros., City. “Dear Sir: Mr. Baker called here to-day, and, from his explanation regarding the purchase of the Siemens Lamps, we do not feel inclined to interfere in this matter. Mr. Baker claimed that his agreement with you was to satisfy you as to the durability of the lamp; that you- were not sure on that point when you purchased it. In referring to the statement that you made, that you desired to first have a lamp placed in order to test it, and that he insisted they should all be placed at once, he claims that you are mistaken on that point, for the lamp was put up on trial, and that it was perfectly satisfactory; afterwards the order was given for the rest of them. We are very sorry that, after continuing in the use of the lamps with apparently satisfactory results for nearly 10 months, you so suddenly conclude they are not what you- want. “ We remain, very truly, “ E. Stein, Pres!' The evidence was further to the following effect: The sign of “ The Siemens Regenerative Gas Lamp Co.” was over the door at 819 Filbert street when one of the plaintiffs called there in 1884. Up to the fall or winter of 1884, Mr. Baker was sole manager of the defendant company. No notice was given to the public that he had ceased to hold that position. Baker advertised himself in “ The Press” as “general agent” for the company, using as part of this advertisement a woodcut furnished by the company. Stine, the secretary and treasurer of defendant company at that time, knew of these advertisements. , The bills for the lamps were paid directly to the company in checks drawn to the order of the company, and the receipts were given in the name of the company. Defendant offered evidence to the effect that Baker was simply a salesman, selling on commission, at the time the sale was made to plaintiffs; that he had no authority to make the contract upon which suit was brought; and that defendant was ignorant of the making of such a contract. E. Stein, called for defendant, testified, in part, as follows: “ Q. What were Mr. Baker’s duties in-1884 or 1885 ? A. He had the title of manager, but it related, by our by-laws, chiefly to the establishment of agencies. I think my duties as- defined by the by-laws gave me general management of the affairs of the company. Q. Where was the office of the company? A. The first office was at 819 and 821 Filbert street. The premises were leased for a term of years. When we found the space too small for us there, we moved to Twenty-first and Washington avenue, and vacated 819 and 821 Filbert. Q. When did you move? A'. I would have to refer to a memorandum to give the date. Q. About when ? A. I think the lease of the premises dates from about June, 1884. We moved to Washington avenue in June or July, 1884. Q. You moved from Filbert street? A. Yes, sir; we could not rent the premises or occupy them. They were vacant, and we were endeavoring to lease the premises. We had a three-year léase. Q. Did or did not Mr. Baker have power to make sale of goods for the company ? A. Mr. Baker had the right to sell goods on commission. The understanding was simply a verbal one — that he would have the right to sell these lamps, and we would pay him a certain commission on the sales. A customer purchasing a lamp was to be approved by us, we were to collect the money, and then pay him a commission, all of which was done in the Horstman case. Q. You billed the goods direct to the customer and paid him a commission? A. Yes, sir. Q. At the time you billed these goods to the Messrs. Horstman, did or not you know anything about the contract in this case ? A. Not a thing. We had not the remotest conception of it, because it was specified that if parties were responsible, no consideration was permissible or permitted; We would not sell before we knew the parties’ condition. Q. Do you remember Mr. Clarkson calling on you? A. Yes, sir. Q. What took place at that interview ? It was in consequence of that that you wrote that letter? A. I have a recollection of saying I knew nothing about the transaction, and that the company had nothing to do with it. I said I would send for Mr. Baker and find what arrangement had been made. I think at the time Mr. Clarkson didn’t know Baker’s address. Q. Mr. Baker always dates his letters in ink, ‘819 Filbert Street.’ When was it that the company left Filbert street and moved to Washington avenue? A. As early as July, 1884. It may have been a little later than that. Q. Did Mr. Baker continue to occupy, or have desk room, in Filbert street when the office of the company had .been abandoned ? A. Mr. Baker wanted to locate himself in some office, as he had other business. He had a gas stove and a gas burner of his own, and was also going to sell our lamps. He asked permission to occupy the room until somebody would take it. He simply kept a desk in there and attended to his business. If the place was rented the next day, Mr. Baker thoroughly understood he was to leave the next day. We had our large signs taken away when we moved to Twenty-first and Washington avenue. There may have been a small sign left on the side.” The charge of the court was as follows, by Finletter, P. J.: “ As a general thing, an agent for the sale of goods is authorized to make the terms of sale. In this case, it is not denied that Baker was the agent of the defendants to make the sale. It is for the jury to say, from the evidence, he had the authority to make the terms of this sale; and, if you believe he had, the plaintiffs are entitled to a verdict for the amount claimed, with interest.” [4] The defendant presented the following points, which were declined by the court: “ 1. In this case, the plaintiffs cannot recover without showing affirmatively that J. W. Baker was authorized by the defendant to make for it such a contract as that sued on. There is no such evidence, and therefore your verdict must be for defendant.” “ 2. The construction of the contract sued upon in this case is for the court, and I instruct you that it does not bind the Siemens Regenerative Gas Lamp Company, the sole defendant in this case, and therefore your verdict should be for the defendant.” The assignments of error specified, 1, the admission of the letter of Jan. 5, 1885, quoting it in full, but not the bill of exception; 2, 3, the refusal of the points, quoting them; and, 4, the charge of the court, as above, quoting it. While an agent authorized to sell has the implied authority to fix the terms of sale, it is obvious that the implication extends no further than to such terms as are usual and according to the course of business. For instance, an ordinary salesman has doubtless the implied authority to sell upon credit, but this implied authority must of necessity be restricted to the credit usual in the business in which he is engaged, and if he goes beyond that and undertakes to sell on, e. g., a year’s credit, the buyer certainly can not hold the principal to so notoriously unusual a bargain without affirmative proof of authority in the agent. If this is not so, then any sales agent can ruin his employer. In the case in hand, there was no proof of such authority whatever, and, on the contrary, the absence of it; and the entire ignorance of the lamp company, of the making of the contract sued on, was distinctly and affirmatively shown and was wholly uncontradicted. It is true that Baker, the salesman, wrote under his name “ Gen. Agt.,” but such assertion was no evidence of the fact. The fact of agency cannot be proven by the declarations of the alleged agent, nor by his acts done without the knowledge or authority of the principal: Telephone Co. v. Thompson, 112 Pa. 118-131; Whiting v. Lake, 91 Pa. 349-354. And, even if there was evidence that he was a general agent, it was competent for the defendant to rebut the presumption and to prove the precise extent of his authority. The agent can only bind his principal within the scope of his authority: Telephone Co. v. Thompson, 112 Pa. x 18-133, and the cases there cited and reviewed. Except that the plaintiffs in error delivered the lamps upon the defendants’ order sent through Baker, there was no evidence of any agency whatever on his part — and such delivery imputed only an agency in him to sell upon usual terms. Afterwards the lamp company showed, by clear and uncontradicted testimony, that Baker was not, at the time of the contract sued on, its general agent, and had no connection with it except the authority to sell its lamps on commission. His office was in another place from its office, which of itself showed he had no official connection with it. It is true he had at one time been general manager— not agent — but while he was such he had nothing to do with selling goods, and he had ceased to be manager before the time of making the sale to Messrs. Horstman & Sons. The lamp company billed the lamps to Messrs. Horstman direct,' and payment was made by them directly to it, and there was nothing in the transaction to mislead the purchasers as to Baker’s authority in the premises. In addition to this, th.e contract sued on was a very unusual one. The right to return the lamps on the part of Messrs. Horstman was absolute and at their option solely, and extended over a very unusual length of time. It is a misnomer,, and misleading to speak of the terms of the contract as part of the “ terms of sale,” for it amounted in effect to an agreement to re-purchase after a length of time in which the thing sold must of necessity become much deteriorated by use, if not wholly worthless. The purchasers took and paid for the goods, and the seller had the right to suppose the transaction at an end. Any agreement by which they could return them and get their money back was in effect an agreement for a re-sale, and in no proper sense part of the terms of sale of the first transaction. It was a contract which Mr. Baker might, as he in fact did, make for his own account, but it was not one the authority to make which for another could be implied from the relation of a salesman; and, as the contract is expressed by Baker to be for himself — “ I will purchase them back,” he says —and as there was no evidence of any authority, or usage, from which that authority in him could be inferred, it is plain that the contract was improperly admitted in evidence, and the court erred in answer to the points and in the general charge. The ground of the suit was the contract alleged to have been made. Authority to make it was to be proven by the acts and admissions of the defendant company; but, before those acts and admissions could be shown to have any bearing upon the cáse, the groundwork of the case must first be laid. It was therefore entirely proper for the court below to admit the letter in evidence, to be followed up, as it was followed up, by evidence tending to show its ratification by the defendants: Campbell v. Sherman, 49 Mich. 5 34. The question of agency is a question of fact, and as such it is for the jury to pass upon. It is not less a question for the jury to say whether the acts of one known and admitted to be an agent for some purposes have or have not been ratified by his principal. It is not a question of authority implied by law, such as the authority possessed by a salesman to make sales for cash or on credit, or his authority to warrant goods (Schuchardt v. Allen, 1 Wall. 359), both of which are matters, not of fact, but of law. There is but little distinction between this case and warranting that a new and untried patented article shall prove to be all that it is pretended that it is. And as, in the one case, the purchaser is not bound to pay if the warranty fails, so, in the other, he should not be compelled to pay if the patented article also falls short of its pretensions. “An agent entrusted with an article of personal property to sell, with no restriction of his authority, may give to any one to whom he offers it for sale a reasonable opportunity to ascertain if the article is such as he wants to buy; and whether he makes the contract for sale in advance, to take effect as a sale if the article proved to be such as the buyer wants, or makes the sale after the buyer has ascertained that fact, he is acting equally within his authority to sell. In this case, the agent made, in advance of giving defendant an opportunity to ascertain if the machine was such as he wished to buy, a contract to be a sale, if, on trial, it worked to defendant’s satisfaction, and to be no sale if it did not. He did not in that exceed his authority : ” Deering v. Thorn, 29 Minn. 120; affirmed in Oster v. Mickley, 35 Minn. 245.