Banks v. Everest

The opinion of the court was delivered by Johnston, J.:

The plaintiffs in error attack the findings of fact and conclusions of law made by the court below, but raise no other questions. The findings of fact are so far supported by the evidence that they must be accepted here as a correct narration of the actual facts in the case. The real inquiry in the case is, whether the conduct of the plaintiffs in error rendered them responsible 'as principals for the acts of their agent done in excess of the express authority given him.

The rule of law governing this case, as stated by a noted text writer, is that—

“A principal - is responsible either when he has given to an agent sufficient authority, or when hejustifi.es a party dealing with his agent in believing that he has given to his agent this authority.” (1 Pars, on Con. 44.)

Judge Story, in speaking of the liability of a principal for the unauthorized acts of his agent, where- the apparent authority with which the agent is clothed is greater than was. intended by the principal, says :

“ In such cases good faith requires that the principal should be held bound by the acts of the agent within the scope of his general authority, for he has held him out to the public as competent to do the acts, and to bind him thereby. The maxim of natural justice here applies with its full force, that he who, without intentional fraud, has enabled any person to do an act which must be injurious to himself or another, shall himself suffer the injury, rather than the innocent party who has placed confidence in him.” (Story on Agency, § 127, and note.)

The same principle was recognized and applied by this *691 court in a case where au agreement was made by an agent and commercial traveler, and the principal contended that the agent exceeded his authority in making the agreement. It was said that—

“The defendants had no personal acquaintance, no negotiations, directly with the plaintiff. The entire trade was made between this agent and them. They had no knowledge of the extent or limitations of his authority. If the plaintiff accepted the contract of his agent, he must accept it as a whole, and cannot accept that which suits him and reject the balance. The principal is bound by the representations of his agent — bound by the contracts he makes within the apparent scope of his authority.” (Babcock v. Deford, 14 Kas. 408 .)

Here we find that Frederick was the acknowledged agent of the plaintiffs in error, and “was duly authorized to represent them.” He and others of their agents had frequently sold law books to the defendants in error, fixing the terms of sale, and in each case the books had been furnished and forwarded at the price agreed upon between the agent and the defendants in error. It turns out that the extent of the agent’s authority was to solicit orders for his principals, which orders were subject to their approval or rejection. But although there had 'been a long course of dealing between the parties, this limitation had never been disclosed to the defendants in error, nor had it in any way come to their notice. Instead of revealing this limitation through their agents, by circular or otherwise, the plaintiffs in error allowed their agents to go out to the public and act in the character of general agents. When the orders were sent in, they could easily have notified their customers that the orders had been approved or rejected, and thus brought to the attention of their customers the extent of their agent’s authority; but this was not done. It also appears in the testimony that the agent from whom the books were purchased, in this case, brought a book to the office of the defendants in error at another time, which he sold and delivered to them, Avithout communicating with or obtaining the approval of his principals. A bill for this book was forwarded by the plaintiffs in error, requesting payment from defendants in error, *692 which was the same procedure that was pursued in other cases where the books were furnished from the publishing house. Under these circumstances, we think the defendants in error had a right to believe that the agent was acting within and not exceeding the authority conferred on him when the sale in question was made. The defendants in error have dealt in good faith with the agent, upon the strength of his apparent authority, and ought not now to suffer. It is true, that in making the sale he violated the express authority given to him by the plaintiffs in error. But under the familiar principle that has been stated, where one of two innocent persons must suffer by the misconduct of an agent, it should be the one who, by his conduct, has enabled the agent to perpetrate the wrong.

The point urged that the principal cannot be held liable for the unauthorized act of his agent unless the persons dealing with the agent have sustained some loss, cannot apply, as the findings show that the defendants in error suffered a loss of $270, and it was for that loss the present action was brought.

The judgment of the district court will be affirmed.

All the Justices concurring.