Barrell v. Newby

127 F. 656, 62 C.C.A. 382, 1904 U.S. App. LEXIS 3816

• Court: Court of Appeals for the Seventh Circuit
• Decided: January 5, 1904
• Docket: No. 990
• Status: Published

Opinion

BAKER, Circuit Judge

(after stating the facts as above). Plaintiffs question the adequacy of the allegations of their knowledge of defendant’s principalship before they took steps against 'Todd; but we think the answer avers their knowledge with sufficient certainty.

What were plaintiffs’ rights when on May ioth, after having executed Todd’s order of May 7th and incurred the loss by reason thereof, they learned that defendant was principal?

If a merchant parts with his goods to one whom he knows to be an agent, fails to require a disclosure of the principal, and charges the account to the agent, ordinarily the question might be raised whether the merchant has not deliberately chosen the agent for his debtor, and thereby precluded himself from afterwards pursuing the principal. Patapsco Ins. Co. v. Smith, 6 Har. & J. (Md.) 166, 14 Am. Dec. 268; Ins. Co. of Pa. v. Smith, 3 Whart. 520. But the ninth averment of the answer, to the effect that, though plaintiffs knew Todd was acting as an agent for an undisclosed principal, the custom of the trade authorized them to look to him in the first instance, prevents defendant from claiming that the suggested question is available here, and leaves plaintiffs in a position as advantageous as that of a merchant who sells on credit in the belief that the purchaser is acting for himself.

Plaintiffs’ contention is that such a seller, on discovering the principal, is never required to elect whom he will consider his debtor; that he has concurrent rights of action against both; and that nothing short of a satisfaction by one, or at least a judgment- against one (according to English cases, which seem to be based on the English rulings that a judgment against one joint tort feasor is a satisfaction as to all), will exhaust his right to pursue the other. In support of this proposition, and of collateral arguments, plaintiffs adduce many cases.¹

O'ri the other hand, defendant insists that such a seller, on discovering the principal, may take a reasonable time to investigate and compare the standings of principal and agent, and thereupon must choose whom he will hold as his debtor and abandon his right to choose the other; and- that he cannot 'hold both. And defendant cites numerous authorities- as a basis for his argument.²

If Todd,, when placing the Order with plaintiffs, had informed them that-he was .simply, acting as Agent for defendant, plaintiffs could-have accepted the order as defendant’s, and Todd would have incurred no liability; or they could have refused to take defendant as their debtor, and have informed Todd that they would look to him, and, if Todd had made no objection, he would have been bound and defendant not; but, in dealing with the agent of a disclosed principal, they could not have held both without an agreement to that effect. It is true that plaintiffs could have declined to take the order except on the joint and several contract of Todd and defendant; but there is no pretense of such a contract, for the averment of the complaint is that they accepted and acted on defendant’s order; and the bare transaction of a merchant’s selling to the agent of a known principal does not establish a joint and several, or several liability of agent and principal, but evidences only one contract, one liability, one credit, one debtor, whose identity is determined by the seller’s election, which he must make at the time.

Respecting election, what difference in reason does it make whether the seller ascertains the identity of the principal before he delivers the goods and extends the credit, or after delivery but before he seeks to exact payment ? In the first case, we understand plaintiffs to agree that the seller must elect.' In the second, the seller manifestly has passed on the credit of but a single person. If, before payment, he finds out who the principal is, it is just that he should be able to hold the agent, for the agent offered his own credit and it was accepted. It is also just that the seller should be permitted to abandon the right that he had in the first instance to pursue the agent, and to hold the principal, for the contract of purchase was in reality the principal’s. When, after delivery, but before seeking to exact payment, the seller learns the identity of the principal, he has an opportunity for investigating and comparing the standings of agent and principal, just as he would have had if he had known the principal before delivery. We apprehend no rule of law that warrants the conclusion that the seller must elect in the one case and not in the other. We perceive no solid reason why the law, in behalf of the seller, who in both cases has really contemplated and contracted for a single credit only, should in the one case more than the other create a contract under which the agent and principal stand as joint and several, or several, obligors. The decision in Beymer v. Bonsall, 79 Pa. 298, and expressions in some other cases, to the effect that one who sells to the agent of an undisclosed principal may, on discovery of the principal, pursue either or both until he has obtained satisfaction (as though they were joint tort feasors), do not meet our approval.

Objection is made to the answer on the ground that the issue of election or no election is one that must be determined by the jury from the evidence and the instructions of the court. If it were permissible for a defendant to tender the issue by the naked averment that plaintiff elected to hold the contract as the agent’s, and if, under such an answer, the uncontradicted evidence established acts of the plaintiff from which but one conclusion could legally be deduced, then the court would have the right to direct the verdict; and, if the same acts be set forth in an answer and confessed, wC think the court may likewise draw the conclusion.³ ' . •

Do plaintiffs’ acts constitute an election ? In two instances plaintiffs procured conditional executions in advance on their solemn declaration to the courts that the broken contract was Todd’s — not Todd’s and the defendant’s, but Todd’s. In another instance plaintiffs acted as court and sheriff, and turned Todd’s money into their own till. Now they declare with equal solemnity that the same broken contract was defendant’s — not defendant’s and Todd’s, but defendant’s. We do not mean to assert that the mere bringing of an action against Todd would be inconsistent with their proceeding later against defendant. If the action were begun before they learned of defendant’s principalship, certainly they should be permitted to dismiss, and sue defendant. And if they proceeded against Todd by reason of mistake or fraud or the like, they might seek relief from their apt, give up the chase they had ■entered upon, and return to the cross-roads. But here, under no misapprehension of comparative standings, but with full knowledge of the whole truth of the situation, plaintiffs not merely seized Todd’s money on the basis that the contract was his, but they insist upon their right to retain it, and to say that the contract is Todd’s, throughout the time in which they assert that the contract is defendant’s. To our minds but one interpretation can be given to this conduct.

Plaintiffs urge that, inasmuch as the answer fails to aver that defendant settled with Todd before they sued defendant, it would be no hardship to require defendant to pay them. It seems to us that plaintiffs are confusing election with equitable estoppel. Election, whether of remedies or of defendants,⁴ has no regard to the situation of the defendant, but is founded on a public policy that forbids a plaintiff to trifle with the courts. Equitable estoppel, on the other hand, grows out of a consideration of the defendant’s state. They are distinct defenses, and he who pleads election need not show that it would be inequitable to permit the plaintiff to recover; it is enough if he shows that the plaintiff, having by law the right to take either of two courses, has taken and holds to the one that leads away from him.

The judgment is affirmed.

1 The following are most strongly relied on: Youghiogheny Iron Co. v. Smith, 66 Pa. 340; Conro v. Port Henry Iron Co., 12 Barb. 53; Beymer v. Bonsall, 79 Pa. 298; Maple v. Rld. Co., 40 Ohio St 313, 48 Am. Eep. 685; Cobb v. Knapp, 71 N. Y. 348, 27 Am. Rep. 51; Knapp v. Simon, 96 N. Y. 284; American Trading Co. v. Thomas Wilson’s Sons & Co. (Sup.) 74 N. Y. Supp. 718; McLean v. Sexton (Sup.) 60 N. Y. Supp. 871; Irving v. Watson, L. R., 5 Q. B. D. 414; Barker v. Garvey, 83 Ill. 184; Mattlage v. Poole, 15 Hun, 556; Baltimore, etc., Tel. Co. v. Interstate Tel. Co., 54 Fed. 50, 4 C. C. A. 184; First National Bank v. Wallis, 84 Hun, 376, 32 N. Y. Supp. 382.

2 Tuthill v. Wilson, 90 N. Y. 423; Ranger v. Thalmann (Sup.) 72 N. Y. Supp. 451; Cook on Corporations (4th Ed.) § 454; Paley on Agency, pp. 246; 247; Paterson v. Gandasequi, 15 East, 62; Addison v. Gandasequi, 4 Taunton, 573; Thomas v. Davenport, 9 B. & C. 78; Ford v. Williams, 21 How. 287, 16 L. Ed. 36; Insurance Co. of Pennsylvania v. Smith, 3 Whart. 520; Patapsco Insurance Co. v. Smith et al., 6 Har. & J. (Md.) 166, 14 Am. Dec. 268; French, v. Price, 24 Pick. 13; Raymond et al. v. Proprietors of Crown & Eagle Mills, 2 Metc. 319; Paige v. Stone et al., 10 Metc. 160, 43 Am. Dec. 420; Silver et al. v. Jordan et al., 136 Mass. 319; Meeker v. Claghorn, 44 N. Y. 349; Perth Amboy Man. Co. v. Condit et al., 21 N. J. Law, 659; Borcherling v. Katz, 37 N. J. Eq. 150; Elliott v. Bodine, 59 N. J. Law, 567, 36 Atl. 1038; Fowler, Extr., v. Bowery Sav. Bank, 113 N. Y. 450, 21 N. E. 172, 4 L. R. A. 145, 10 Am. St. Rep. 479; McLean v. Ficke et al. (Iowa) 62 N. W. 753; Mechem on Agency, §§ 695-698.

3 See Emery’s Sons v. Traders’ Bank (Ky.) 6 S. W. 582; Curtis v. Williamson, L. R. 10 Q. B. 57; Sessions v. Block, 40 Mo. App. 569; Kingsley v. Davis, 104 Mass. 178; Bauman v. Jaffray (Tex. Civ. App.) 26 S. W. 260; Booth v, Barron (Sup.) 51 N. Y. Supp. 891; Stuart v. Hayden, 72 Fed. 402, 18 C. C. A. 618; Silver v. Jordan, 136 Mass. 319.

4 Fowler v. Bowery Savings Bank, 113 N. Y. 450, 21 N. E. 172, 4 L. R. A. 145, 10 Am. St. Rep. 479; McLean v. Ficke (Iowa) 62 N. W. 753; Beach v. Ficke, Id.; Terry v. Munger (Sup.) 2 N, Y. Supp. 348.