Bissell v. Terry

Mr. Justice McAllister delivered the opinion of the Court:

The principal question in this case is, whether the instrument set out in the bill, which the complainant sought to have specifically enforced in equity, as the contract of Terrv, ever became obligatory upon him. That question, under the issues formed, involves two others: First—Whether Lord, the alleged agent, was duly authorized, within th,e meaning of the Statute of Frauds, to make that contract in the name of Terry. Second—Whether, if he was, a contract as alleged was completely made before the authority was revoked.

Counsel for appellant raised a question, in limine, that by the laws of Kentucky the authority of an agent to make such a contract is not required to be in writing. And they say that Terry, at the interview with Lord, at Louisville, in that State, on the 26th of October, 1872, gave the latter full and complete verbal authority to make a contract for the sale of the lands in question, and that therefore no question under the Statute of Frauds of the State of Illinois, can arise.

The first answer we make to that position is, that the fact is not established by a preponderance of evidence. Lord is the only witness who testifies to it, and who is interested, to the extent of his commissions, to make out the authority. But it is denied by Terry, who testifies that Lord ivas simply employed to ascertain and advise him as to the value of the.lots, and in this, Terry is strongly corroborated by the correspondence. The second answer to this point is perfectly conclusive. The lands in question are situate in this State. That being so, any conveyance, or contract for the sale of them, would be governed by the lex situs. This is familiar doctrine, and scarcely needs the .citation of authority for its support. Sherman v. Gassett, 4 Gilm. 521 , and cases there cited; Story’s Confl. of Laws, sec. 363 et seq., sec. 435.

The statute provides that “no action shall be brought to charge any person upon any contract for the sale of lands, tenements or hereditaments, or any interest in or concerning them, for a longer term than one year, unless such contract or some memorandum or note thereof shall be in writing and signed by the party to be charged therewith, or some other person thereunto by him lawfully authorized, in writing, signed by such party.”

The same question might arise under this last clause, as upon the first branch of the section, as to what would constitute a sufficient “signing” within the meaning of the act. Otherwise the clause is clear and unambiguous, and not open to construction. But a question does arise, when a paper is produced, which is claimed to constitute an authority to make a contract for the sale of lands, etc., on behalf of another, as to what rule of construction will be applied to such writing. Upon due consideration of the evils which led to its adoption, its object and purpose, we are inclined to hold that the rule of construction to which such writings should be subject, is the ordinary common law rule, which is, that all written powers, such as letters of attorney, or letters of instructions, must receive a strict interpretation ; the authority never being extended beyond that which is given in terms, or is absolutely necessary for carrying the authority so given into effect. Dunlap’s Paley on Ag. 192 ; Story on Ag. secs. 68, 69.

It is not claimed in this case, that there was any other authority from Terry to Lord, except what is contained in the letters of the former. These letters should be construed with reference to the surrounding circumstances. In the first place, Terry did not apply to Lord with reference to these lots; but the latter, being a land agent in Chicago, where the lots were, while on a visit to Louisville, called on Terry and made inquiries about the property and whether it was for sale. He then found that they were for sale, and that Terry had received a proposition of purchase from some other party; that Terry was in doubt as to their real value, and whether he ought to accept the offer which had been made. Lord, being in the business of real estate, volunteered his services to investigate, ascertain their real value and so inform Terry, and for this purpose wanted a description of them. This, Terry could not give, because he had not the requisite data at hand, but promised to send the numbers, etc., in a short time. We are satisfied, from, the testimony of these witnesses, and the subsequent letters, that nothing more was intended by Terry than merely to avail himself of his friend’s knowledge and facilities to ascertain the real market value of his lots. He had fixed in his own mind a minimum, but was evidently in doubt whether it was not too low. This interview was October 26, 1872. Accordingly we find that on the 28th, same month, Terry sent on to Lord the numbers and description of his lots, stating that he did not feel willing to take less than §550 per lot, one-third cash and balance in one and two years, with eight per cent interest, saying he would like to get more if he could, and calling upon Lord to let him hear from him at his earliest convenience. Not hearing from him, on November 9th, 1872, he addressed another letter to Lord, referring to his former letter, and saving, “I would like to hear from you, on receipt of this, as to their value. I am offered §500 per lot, one-third cash, balance one and two years, with eight per cent interest.”

Lord, having conceived the idea of making commissions for himself, not only kept silent as to the value of the lots, but received a proposition from Bissell to purchase them for §525 per lot, one-third cash, and balance in two years at eight per cent interest. Up to this time Lord had no supposition of authority in him to enter into a contract in the name of Terry. Nor had Bissell • for, at his request, Lord sent on this proposition to Terry for his approval or rejection. It was received by the latter and rejected. In Terry’s reply of date November 14, 1872, he says, “I must adhere to my original proposition, §550 each, for all, one-tliird cash, balance one and two years, with eight per cent interest. I am offered my price, with little variation in amount paid down.”

Now, it is from these letters, alone, that the authority in Lord to make the alleged contract set out in the bill is derived ; for, on the same day of the receipt of the letter last above mentioned, the instrument was drawn. Tested by the rule of strict interpretation above laid down, and considered in the light of surrounding circumstances, no such authority was intended to be conferred, nor did the letters purport to confer it. Terry had fixed upon his minimum, and was desirous of obtaining Lord’s opinion as to their real value. The latter skillfully abstained from giving an opinion, and kept putting propositions before Terry instead, thereby hoping to make his commissions of 2-J- per cent, as is shown by his letter of the 18th November, inclosing Bissell’s second proposition. And besides, these letters of Terry disclose the fact that he was negotiating in his own behalf as to the property, all the time. Whatever authority Lord had, was that of a special agent. Bissell was bound to know the extent of that authority, and the evidence shows that he, in fact, did know. But the controlling circumstance in this respect is, that neither Lord nor Bissell acted, in the preparation of the instrument set out, upon the assumption that Lord possessed the authority, as agent of Terry, to make that a complete and binding contract upon the latter, without his personal approval. It was not delivered, but, with their mutual understanding and assent, was to be forwarded to Terry for his approval, which was accordingly done by inclosing it in Lord’s letter to Terry, of the same date of the instrument, November 18, 1872. As consonant with this purpose, Bissell did not in fact pay to Lord the §100, the receipt of which is recited in the instrument called a contract, but gave Lord his check for that amount, under the arrangement that the latter was to hold it pending the submission of Bissell’s second proposition of purchase to Terry for his approval, and if the latter approved, the amount was to be credited on the purchase money; if not, the check was to be returned. And on the next day after giving it, November 19th, Bissell declared his purpose to withdraw his proposition, and demanded his check back of Lord. This check has never been paid.

Now, can it be maintained, upon any of the settled principles of contracts, that, under the circumstances of this case, the instrument set out became a complete and binding contract upon Terry, on the day when it was signed by Lord and sent to Terry for his approval ? We do not understand appellant’s counsel as so claiming. • If not, then when and how did it afterwards become so? Terry received the letter inclosing it to him for his approval, November 20, 1872. But on the day previous—the 19th—he had sold the property himself to another party, and by letter of that date advised Lord of the fact. So that, by reply to Lord, sent on the same day of the receipt of his letter inclosing the contract for approval, Terry returns the contract without his approval, stating, and of course as a reason, that he had, previously to the receipt of it, and on the 19th of November, sold the property to another party, and expressing his wish that Lord had brought this thing about sooner. He did not say in so many words that he did not approve of the proposition sent, because he had previously sold the property, but that is its meaning, and the only fair meaning to be put upon it. It would, therefore, be a forced and unnatural construction of that letter to say that it directly or impliedly ratified the act of Lord in signing the instrument. Then, it follows that, down to the time of the return of the instrument by Terry to Lord, without the approval of the former, it had received no validity as a contract. Could Lord give it any by any subsequent act on his part? Concede, for the sake of the argument, that, at the time of making it, he in fact had the authority in writing to make it, but had not chosen to exercise it without the personal approval of his principal, so that it was left incomplete, could he complete it after being notified that Terry had disposed of the subject matter of the agency ? We think not. The power was subject to revocation at the pleasure of the principal, and when he disposed of the subject matter of the agency, such act occasioned such a change of condition, such incapacity, as that Lord’s authority would be revoked by operation of law. Story on Ag. 481; Gilbert et al. v. Holmes, 64 Ill. 548 .

We are of opinion that the contract set out was never obligatory upon Terry, and for that reason the decree of the circuit court should be affirmed.

Decree affirmed.