Anderson, Clayton & Co. v. Swallows

505 P.2d 431, 84 N.M. 486
CourtNew Mexico Supreme Court
DecidedJanuary 19, 1973
DocketNo. 9483
StatusPublished
Cited by1 cases

This text of 505 P.2d 431 (Anderson, Clayton & Co. v. Swallows) is published on Counsel Stack Legal Research, covering New Mexico Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Anderson, Clayton & Co. v. Swallows, 505 P.2d 431, 84 N.M. 486 (N.M. 1973).

Opinion

OPINION

OMAN, Justice.

Plaintiff brought suit against defendants as partners to recover the unpaid balance on an open account in the amount of $5,612.03. Jurisdiction over the person of Justice was never obtained, and the case was tried on the issues raised by the complaint and the answer thereto by Swallows. The trial court found in favor of plaintiff in the amount above stated, and Swallows appealed. We affirm.

The account was opened with plaintiff’s Amarillo, Texas office in 1965 by Swallows and Justice, doing business in the name of Justice Feed Store. In April 1968, their account was delinquent and Justice telephoned plaintiff’s sales manager and requested that the feed on hand be picked up. Thereupon the sales manager, a sales representative and a plant manager went to Justice Feed Store and had conversations with Swallows and Justice. Swallows testified he told the three stated employees of plaintiff of a proposal to form a corporation and “that it was in the attorney’s office being processed.” This was denied by the sales manager. In any event, none of these three employees had any authority to extend credit and no responsibility concerning the collection or payment of accounts. This responsibility was entirely in plaintiff’s credit department.

The feed was not picked up by plaintiff, and business between plaintiff and Justice Feed Store under the open account continued as usual. No one ever advised plaintiff of the formation of the corporation until in June 1970, when a check dated May 28, 1970 was returned by the bank on which it was drawn for insufficient funds, and plaintiff’s credit manager then became aware of the fact that the check was written by Justice Feed Enterprises, Inc. Inquiry was made by the credit manager of the New Mexico State Corporation Commission, by which he was advised that a certificate of incorporation had issued to Justice Feed Enterprises, Inc. on May 15, 1968. Between October 2, 1969 and May 28, 1970 fourteen corporation checks had been forwarded to plaintiff and credited on the Justice Feed Store account. These and all other checks received at plaintiff’s Amarillo office, which numbered about 700 to 900 per month, were handled by secretaries, except for an endorsement on the reverse side of the checks.

Swallows first contends there was no substantial evidence to support the trial court’s findings that plaintiff was not notified and did not discover that Justice Feed Store was being operated by the corporation until June 1970, and that until then plaintiff continued to extend credit to defendants as partners in reliance upon their individual credit. His argument is that notice to plaintiff’s sales representative in April 1968 that a corporation was being formed was notice to plaintiff. There is no claim that the sales representative communicated this information to plaintiff’s credit department or to anyone else in plaintiff’s employ with authority to act on this information.

The sales representative continued in plaintiff’s employ until September 10, 1968, and, as above stated, the corporation came into existence as of May 15, 1968. However, the sales representative never testified that he was at any time advised a corporation had been formed or had taken over the operation of the business and assumed the obligations thereof. The sales representative who serviced this account from July 1969 to date of trial on November 8, 1971, was at no time told and was never made aware of the fact that Justice Feed Store was being operated by a corporation. As heretofore indicated, plaintiff continued the account and mailed all billings in the same name at all times, and no one, and particularly Swallows, gave notice to plaintiff, or to anyone in any way connected with plaintiff, that the corporation had been formed and was operating the business. The first corporate check issued, insofar as the record reveals, was dated October 2, 1969, and this and all other corporate checks received by plaintiff were credited to the partnership account.

It is undisputed that the sales representative had no authority to extend credit, no duty or responsibility in connection with the collection of accounts, and very little knowledge of the status of accounts. Swallows cites the annotation at 43 A.L.R. 745 (1926) and he particularly relies upon the following cases cited at page 746 of the annotation: Jenkins Bros. Shoe Co. v. Renfrow & Co., 151 N.C. 323, 66 S.E. 212 (1909); Ach v. Barnes, 107 Ky. 219, 53 S.W. 293 (1899); Westinghouse Electric & Mfg. Co. v. Hubert, 175 Mich. 568, 141 N.W. 600 (1913).

In the explanatory remarks concerning the scope of the annotation it is stated:

“ * * * the rule being derived from the duty of disclosure by the former [agent] to the latter [principal] of all the material facts coming to his knowledge with reference to the subject of his agency, and a presumption that he has discharged that duty.” [Emphasis added]. ■ - -

As already stated, the subject of the agency in the case before us did not embrace matters of customer credit or collections on customer accounts, and the sales representatives had no responsibility in this area.

In the Jenkins case, supra, the plaintiff’s salesman admitted he received notice of the dissolution of the partnership before May 15 [the goods in question were sold by plaintiff’s salesman on May 27], that it was within his [the salesman’s] duty to notify plaintiff when he received notice of dissolutions of partnerships who were dealing with it [plaintiff], and he [salesman] sometimes received money from customers when they offered it. The scope of the agency clearly embraced a duty on the salesman to report the dissolution of the partnership to the plaintiff. This was not a duty of the sales representative in the ■case before us.

In the Ach case, supra, the claim was that the notice of the dissolution of the partnership was given to plaintiffs’ salesman “before the account sued for was created.” On appeal from a judgment for defendant entered pursuant to a jury verdict, the extent or scope of the salesman’s authority was not discussed, but reference was made to testimony to the effect that the salesman was expressly informed of the prior dissolution of the partnership and that plaintiffs would have to look to the informant and not to the partnership for payment. The decision on appeal was predicated upon the following stated principle :

“And notice to the agent in reference to or in connection with any business in which the agent is engaged by authority of the principal, and where the information is so important a fact in the transaction as to make it the duty of the agent to communicate it to the principal, is, in contemplation of law, notice to the principal, * *

It is impossible from the recited facts to define with any precision the scope of the agent’s authority in that case. However, under the particular facts of the case, the appellate court obviously was of the opinion the information given the salesman was so important as to make it his duty to communicate it to his principal. Under the facts of the case before us, the trial court was unable and we, also, are unable to find any like duty on the plaintiff’s sales representative.

In the Westinghouse case, supra, insofar as the question now before us is concerned, the Supreme Court of Michigan stated:

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Hill & Company, Inc. v. O'MALLEY
817 P.2d 660 (Court of Appeals of Kansas, 1991)

Cite This Page — Counsel Stack

Bluebook (online)
505 P.2d 431, 84 N.M. 486, Counsel Stack Legal Research, https://law.counselstack.com/opinion/anderson-clayton-co-v-swallows-nm-1973.