Arnold v. National Bank of Waupaca

105 N.W. 828, 126 Wis. 362, 1905 Wisc. LEXIS 263

• Court: Wisconsin Supreme Court
• Decided: December 12, 1905
• Status: Published

Opinion

Dodge, J.

Doubtless if the transaction between the defendant and the plaintiffs was a contract by the former to sell real estate to the'latter, a breach arising out of absence of title in the defendant as to which it was honestly mistaken at the time of making the contract would result in liability only for special damages, probably not including the value of the bargain which plaintiffs thereby lost. Arentsen v. Moreland, 122 Wis. 167, 99 N. W. 790. But the complaint is founded upon the theory of a contract of employment embodying a promise to pay an ascertainable amount for a specified service. It alleges the performance of that service and demands recovery of' the promised compensation. The evidence of both parties is. to the effect that in dealing with a known real-estate agent the significance of authority to find a purchaser at a certain net price to the seller is understood to be an agreement to pay as-commissions all sums in which the price which the buyer-found is able and willing to pay exceeds the net price nominated. The evidence is also undisputed, being mainly documentary, that the plaintiffs and defendant met and dealt upon? the basis of an authority or employment of the plaintiffs to find a customer, and that the so-called option meant no more-than a promise of exclusive agency during its period. This-construction of the transaction has the support of authorities-generally. Riemer v. Rice, 88 Wis. 16, 59 N. W. 450; Ellis v. Dunsworth, 49 Ill. App. 187. The immediate performance-of work by the plaintiffs in pursuance of such employment-being at once brought to the knowledge of the defendant was-undoubtedly an acceptance, and created mutuality to such contract. Hooker v. Hyde, 61 Wis. 204, 21 N. W. 52; Superior C. L. Co. v. Bickford, 93 Wis. 220, 67 N. W. 45; Peterson v. Chase, 115 Wis. 239, 91 N. W. 687; W. G. Taylor Co. v. Bannerman, 120 Wis. 189, 97 N. W. 918. The evidence is also undisputed that the plaintiffs did, within the four months period, find a customer ready, able, and willing-to pay $3,850 for the land, and communicated that fact to the defendant. The authorities are uniform to the proposition that such act on the part of a real-estate agent, employed to-find a customer at a net price to the seller, earns the agreed' commission whether sale is consummated or not, and although failure to make sale is due to the owner’s inability to make good title. Riemer v. Rice, supra; Donohue v. Padden, 93 Wis. 20, 66 N. W. 804; Phelps v. Prusch, 83 Cal. 626, 23 Pac. 1111; Fitzpatrick v. Gilson, 176 Mass. 477, 57 N. E. ; Monk v. Parker, 180 Mass. 216, 63 N. E. 793. For these reasons we are clear that, if tbe defendant bank acted in tbe various correspondence and transactions bad between plaintiff and its cashier, the right to recover the commissions in the amount awarded by the judgment was established without controversy.

The remaining question, much debated, is whether the bank did so act. Appellant’s discussion of the subject is somewhat confused by his persistency in viewing the transaction as a ■contract to sell real estate, whereas, as already declared, it must be considered as a mere contract of employment of an agent to find a customer. We find no conflict in the evidence that, among the duties and authority actually imposed upon the cashier of this bank, was that of taking customary and usual steps to find customers for such lands as these acquired by the bank in collection of its credits, speedy sale of which was demanded both by the interest and the legal duty of the ■corporation. Such aspect of his authority is testified to by •officers and directors, and not contradicted except by absence of express by-law or resolution imposing such duty upon him. No other officer, however, had either duty or authority io perform such acts which were proper, nay essential, to the •conduct of the corporation’s ordinary business. The cashier was the chief executive officer, with no active superior except the board of directors, who acted, as do many such boards, only to direct upon doubtful questions specifically submitted to them. In all ordinary business the cashier was as completely the corporation as can well be conceived. It is urged, however, that, even if he had authority to contract for assistance in selling lands of the bank, be certainly had none to so -contract- with reference to lands in which the corporation had no interest. Let this be conceded, in a certain sense, but we must also concede that, in the same sense, the corporation itself was without power to deal in reference to such lands. Whatever a corporation can do at all, rightfully or wrongfully, it can authorize an agent to do, for it can act only through some agency, whether that agency be a mere clerical employee or of any higher grade up to the board of directors, or even the stockholders’ meeting. It is essential to the community that those dealing with business corporations should be able to hold them to the same civil responsibility .for their acts as individuals would be held for similar ones. If, through negligence, fraud, or mistake, a corporation causes Injury to another, it must respond as must an individual. Since it can be negligent, fraudulent, or mistaken only through some agent, and since intentional authorization to an agent to make mistake or state falsehood is hardly conceivable, the safety of business intercourse can only be protected by holding that, when a certain business or transaction is delegated to an agent, he becomes the corporation in conducting that business, and if he makes mistakes, is negligent, or commits fraud in so conducting it, the mistake, negligence, or fraud is committed by the corporation. Eor such reasons the rule is even more important with the agent of a corporation than of an individual that what he does; within the scope of the business intrusted to him, his principal does, within the eye of the law, however unauthorized or even forbidden. This on the principle that he who places'it within the power of an agent to injure innocent third persons should be held to responsibility for abuse of that power rather' than the innocent stranger. The rule needs no citation in its support beyond our own decisions, but a few from other jurisdictions illustrate its application. Barteau v. West, 23 Wis. 416, 421; Wilson v. Noonan, 27 Wis. 598; Bass v. C. & N. W. R. Co. 36 Wis. 450, 462; Gano v. C. & N. W. R. Co. 60 Wis. 12, 15, 17 N. W. 15; McKinnon v. Vollmar, 75 Wis. 82, 43 N. W. 800; Gunther v. Ullrich, 82 Wis. 222, 52 N. W. 88; Burke v. M., L. S. & W. R. Co. 83 Wis. 410, 53 N. W. 692; Bergman v. Hendrickson, 106 Wis. 434, 82 N. W. 304; Matteson v. Rice, 116 Wis. 328, 92 N. W. 1109; Sharp v. New York, 40 Barb. 256; Adams v. Cole, 1 ; Farmers’ & M. Bank v. B. & D. Bank, 16 N. Y. 125; N. Y. & N. H. R. Co. v. Schuyler, 34 N. Y. 30, 68; Purcell v. Jaycox, 59 N. Y. 288; Warren v. Dennett, 39 N. Y. Supp. 830; Edwards v. Thomas, 66 Mo. 468; Schram v. Strouse (Tex. Civ. App.) 28 S. W. 262; Griswold v. Gebbie, 126 Pa. St. 353, 17 Atl. 673; Wheeler & W. Mfg. Co. v. Boyce, 36 Kan. 350, 13 Pac. 609; Evansville & T. H. R. Co. v. McKee, 99 Ind. 519; Planters’ R. M. Co. v. Merchants’ Nat. Bank, 78 Ga. 574, 3 S. E. 327; Western M. Co. v. Toole, 2 Ariz. 82, 11 Pac. 119.

It is entirely clear, as already stated, that, if an individual employs an agent to find a customer for certain lands, be becomes liable for tbe agreed compensation whether he owns them or not, although he may have acted on the mistaken supposition that he has title. He impliedly represents that he does OAvn them. When a business is conducted by a corporation, safety and justice require that it be held to the same responsibility as an individual for the detail acts involved. It must be possible for it to mislead by its mistakes or misrepresentations such as might occur were an individual conducting similar business for himself. Hence, when an agent is clothed with the power of the corporation to conduct a certain business, he is also clothed with the poAver on behalf of the principal to make mistakes or representations as might an individual in the ordinary course of such a business. Necessarily an agent to hire services to be performed upon any property must, in the course of such duty, designate the thing to be worked upon. Such designation is in the course and scope of his agency, and a false or erroneous designation must be. Agency to represent the truth necessarily involves power to misstate, for the making of some statement is within the scope of the delegated business, and responsibility for the right or wrong use of that power must rest upon the principal. Illustrative cases are cited above. Authority to cause arrests of trespassers or debtors has been held to include selection and designation of the persons. Hence mistake in arresting a non-trespasser, or one who has paid his debt, was held within the scope of the employment and to render principal liable to the injured party. Still more obviously would result liability to an attorney employed by the agent to institute the arrest proceedings. Many other illustrations from decided cases might be indicated, but are not necessary to induce us to the conclusion that the cashier, being authorized to employ a real-estate agent, was of course authorized to designate the lands to be offered for sale, and a mistake in such designation was within the course and scope of the business. Hence his acts in that respect bound the defendant.

Another general rule in the law of agency supports the same conclusion.

“Where the authority of the agent depends on some fact outside the terms of his power, and which, from its nature, rests particularly within his knowledge, the principal is bound by the representation of the agent, although false, as to the existence of such fact.”

The exercise of the authority itself is, unambiguously, such a representation. North River Bank v. Aymar, 3 Hill, 262; Griswold v. Haven, 25 N. Y. 595; N. Y. & N. H. R. Co. v. Schuyler, 34 N. Y. 30, 68; Conroe v. Case, 79 Wis. 338, 48 N. W. 480. The same idea as to acts of corporate officers is phrased by Oole, O. J.:

“If the contract can be valid under any circumstances, an innocent party in such a case has a right to presume their existence, and the corporation is estopped to deny them.” Gano v. C & N. W. R. Co. 60 Wis. 12, 15, 17 N. W. 15; S. C. 66 Wis. 1, 27 N. W. 628, 838.

The cashier having actual authority to employ plaintiffs to find customers for these lands if they belonged to the corporation, and having peculiar knowledge whether they did, and plaintiffs being ignorant, the cashier’s representation of that fact concluded the defendant as to its agent’s authority to make the contract.

Appellant urges that the question of plaintiffs’ good faith' in relying on defendant’s ownership of the lands should have been submitted to the jury. We are unable to find any evidence sufficient to raise an issue of fact against the direct evidence of one of the plaintiffs that he had no knowledge to the contrary and therefore relied on the defendant’s express statement that it did still own the lands described in the complaint.

We cannot avoid the conclusion that plaintiffs’ cause of action, as stated in the complaint, was established upon undisputed facts, and that the trial court rightly directed the verdict.

By the Oourt. — Judgment affirmed.