MOLINE MALLEABLE IRON CO. v. YORK IRON CO., 83 F. 66

JENKINS, Circuit Judge.

The right of a principal to sue and his liability to be sued upon a contract made by an agent in the name of and for the benefit and advantage of the principal are unquestioned; nor Is it doubted that an undisclosed principal may sue or be sued upon a contract made by his agent in the name of the latter (Story, Ag. § 160a; Mechein, Ag. § 769), except possibly (1) when the agent has contracted personally by deed; (2) when, in a contract of sale, the agent has a lien upon the subject-matter of the contract, or its proceeds, exceeding or equal to the value, in which case the right of the agent is paramount to that of the principal; (3) when an exclusive credit is given to and by the agent.

Ewell’s Evans, Ag. 525 (401). There has been some contention Whether, with resiieet to a written contract executed in the name of an agent, the party who received the contract knowing that the agent acted for a principal could hold the principal; the supreme court of New Hampshire holding, contrary to Story, that in such case the reception of such a contract constituted a conclusive election to look alone to the agent. Chandler v. Coe, 54 N. H. 561-573. It may be doubtful whether the doctrine of this case can be upheld. Calder v. Dobell, L. R. 6 C. P. 486-498; Insurance Co. v. Allen, 116 Mass. 398; Byington v.

Simpson, 134 Mass. 169; Nicoll v. Burke, 78 N. Y. 580. But quaire whether such election by a third party involves an abandonment by the principal of Ms rights against the third party under a contract made by his authority. Whart. Ag. § 403.

We need not concern ourselves, however, at this time, with that controversy; for as well the court of New Hampshire as the other courts recognizes the doctrine as to express verbal contracts that, “if the principal was known, it is to be presumed that he was the contracting party, unless it clearly appears that the agent contracted on his own account, and that, with a knowledge of the facts, the opposite party elected to look to the agent.” Chandler v. Coe, 54 N. H. 561, 575. The difficulty with the instruction the refusal to give which is first assigned for error is that there is no evidence to support it.

The plaintiff in error knew that Forsyth, Hyde & Co. were dealing in iron upon commission; that they were the agents of the York Iron Company; and that the iron purchased was of its mánufacture. Presumably, therefore, the iron was the property of that company. For several years prior to the transaction in question the plaintiff in error purchased that description of iron of these agents with such knowledge of their agency and of the ownership of the iron. Every invoice delivered spoke to those facts and to that ownership.

Ullman, the president of the plaintiff in error, who alone testifies to the question, does not pretend to deny his knowledge of the facts. He frankly states that he “had never bought any except through agency of Forsyth, Hyde & Co.” It is true, he states he never 'had any dealings with the York Iron Company.

That is true in the sense that he did not deal directly with that company, and that is the sense in which the statement is intended to be understood; for it is no less true that the plaintiff in error had for years dealt with the York Iron Company through its agents with knowledge of the agency and of the ownership of the iron. It is therefore the case of a dealing with an agent of a disclosed principal touching the property of the principal.

In such case the presumption is indulged that the principal is the contracting party; and the contention of the plaintiff' in error, if it can in any case be upheld, can only be applied when it clearly appears that the agent contracted on his own account, and that the plaintiff in error elected to look to the agent alone. There is not in this record a scintilla of evidence to sanction such conclusion. Nothing transpired at the time of the contract to justify such inference. It is not sustained by the fact that in previous dealings the purchase price of iron had been paid to the agents.

It was'their duty, within the terms of their agency, to make such collections, and the fact of such payment does not warrant an inference that it was contemplated either by the plaintiff in error or by the agent that the principal should be ignored in the transaction. The instruction requested was therefore properly refused.

It is said, however, that, if the principal sue upon the contract made by the agent, he must adopt the precise contract made, and cannot repudiate that contract and sue in assumpsit upon an implied contract for the value; or that, if the contract be unauthorized, the principal must repudiate the contract, and sue in trover for the value of the goods.

We are not called upon to pass upon the technical question of pleading which was strongly urged to our attention, for the reason that, upon the assumption of the correctness of the proposition, in our judgment the evidence wholly fails to disclose any contract with Forsyth, Hyde & Co. by which as a term of the contract the iron was to be paid for by offsetting the indebtedness of Forsyth, Hyde & Co. to the ’ plaintiff in error for the accommodation notes stated. The memorandum of sale and the invoices, so far as they speak to the contract, show that it was'a sale for cash. The evidence of Mr.

Ullman, the president of the plaintiff in error, shows no other or different contract. He distinctly states that the question of the payment of Forsyth, Hyde & Co.’s indebtedness to his corporation was not a term of the contract for the purchase of the iron.

The fact that the bookkeeper of Forsyth, Hyde & Co., in their account with the plaintiff in error, credited the latter with the amount of the notes executed for their accommodation, and subsequently, at the time of the sale nearly a year thereafter, charged the amount of the sale to the company, does not in any degree tend to prove that it was agreed at the time of the sale that the price of the iron should be paid for by their indebtedness to the plaintiff in error.

It is urged that the question should have been submitted to the jury, and that they would have a right to infer such a contract; but we think no such inference is warranted in the light of Mr. Ullman’s positive statement that the two subjects were not connected. It would have been the duty of the court, if the verdict had been rendered upon the testimony adduced in favor of the plaintiff in error, to have set aside the verdict for want of evidence to support it.

It may further be observed that no such contract is set up in the notice or statement of facts which the plaintiff in error gave as his defense under the general issue. The correspondence of the parties discloses no claim to any such contract, but merely the right to set off. We therefore need not inquire what would have been the rights of the principal if the contract of sale had been as is now claimed by the plaintiff in error.

The contract being then as appears in the memorandum of sale and in the invoice, and having been executed, the defendant in error had a right to sue upon it, and could, under the common counts, recover the contract price. Crane Elevator Co. v. Clark, — U. S. App. -, 26 C. C. A. 100, 80 Fed. 705-710.

If the court below erred in admitting evidence of the value of the iron at the time and place of delivery, the error was harmless, and the judgment is not reversible for that reason, the amount of the recovery being for the contract price of the iron, and not for its value, which was proven to be greater than the contract price.

We do not' think the situation is at all disturbed, or that the right of the principal to sue is impaired, by the transaction by which the iron was turned over nominally to the agents, and they were authorized to apply the proceeds in payment of obligations assumed for the accommodation of their principal. The agents did not thereby acquire the absolute title to the iron. It was pledged to them for a specific purpose.

This pledge enabled them to hold the goods against third parties, and against the York Iron Company, but only so far as was necessary for their protection and security; and the title thereby acquired was a qualified one. The title to the iron or its proceeds was not exclusive in the agents. The right of the principal to collect the proceeds of sale was not thereby impaired. Hill v. Railroad Co., 43 S. C. 461, 21 S. E. 337; Merrill v. Thomas, 7 Daly, 393; Francklyn v. Sprague, 10 Hun, 589; Balderston v. Rubber Co., 18 R. I. 338, 27 Atl. 507.

If, by such an arrangement, the subject-matter became (the property of the factors, and was of a perishable nature, and had been destroyed, the loss would fall upon the factors, and they would have no recourse upon their principal for payment of the obligations upon which they were bound. So, likewise, if it had been lost in transit, or had met destruction in any way. It is, we think, manifest, that they took the property under no such assumption of responsibility.

Indeed, it seems to have been understood at the time of the arrangement referred to that it was a mere transfer of the possession of the property to be disposed of under the terms of the agency and the proceeds applied to the discharge of the obligations. They did not even assume the risk of the collection of sales. If there should be loss in that regard, it was to fall upon the York Iron Company, and not upon them. The relation created was that of an agency, coupled with an interest. We cannot regard the arrangement as in any degree impairing the right of the principal to collect of the purchaser the proceeds.

Possibly, equity would intervene at the in.stance of the factors to prevent collection when the purpose for which the iron was pledged would be defeated by such collection. The agents had a special property in the iron, which was paramount to the right of the York Iron Company; but the latter company had a right of property in the'iron, and could demand the application of its proceeds to the payment of its obligations upon which the agents were bound.

Any appropriation of the iron or its proceeds by the agents to the payment of their debt to the plaintiff in error (with which the York Iron Company was not concerned) would have been in violation of the terms of the contract of pledge, and could not be sustained; and equally would it be wrong to permit a purchaser of the property of the principal to set off against Ms debt for the purchase a sum owing to Mm from the agent. It appears that before this suit the specific purpose for which the iron was pledged had been accomplished. The agents had paid $10,090 of the obligations.

The balance of them was paid by the York Iron Company. Forsyth, Hyde & Co. had received from the sales of the iron over $20,000, and at the time of their failure were largely indebted to their principal. The purpose of the pledge being consummate, the right to the proceeds revested in the principal. The judgment will be affirmed.