Froug, Smulian & Co. v. Outcault Advertising Co.

168 S.W. 1075, 114 Ark. 9, 1914 Ark. LEXIS 568

• Court: Supreme Court of Arkansas
• Decided: July 6, 1914
• Status: Published

Opinion

The question of tender was not raised below.

Smith, J.,

(after .stating the facts). (1-2) The principal, of course, is not bound by the unauthorized act of his .agent, who acts without .the .apparent scope of his authority. But he may ratify his agent’s unauthorized act, and, when he does so, he becomes as completely bound as if he had conferred upon his agent the authority to do the act in question. This is an elementary principle of the law of agency and requires no citation of authority to sustain it. Ordinarily, the principal is not held to have ratified the acts of his agent, if he is ignorant of his agent’s action, but such lack of knowledge can not always afford immunity from liability, and does not do so at all, if with knowledge that an unauthorized contract has been made in his name, but without information as to its details, he permits its performance and enjoys its benefits. In 31 Oye., p. 1257, it is said: “The lack of full knowledge (of all the facts), however, does not protect a principal who deliberately chooses to act' without such knowledge, as where, knowing that he is ignorant of some of the facts, he has such confidence in his agent that he is willing to assume the risk and to ratify the act without making inquiry for further information than he at the time possesses, or where he deliberately ratifies without full knowledge, under circumstances which are sufficient to put a reasonable man upon inquiry.” And again on the same page it was said: “Although a principal has an election either to repudiate or to ratify an unauthorized act of an agent, on his behalf, he can not ratify in part or repudiate in part, but must either repudiate or ratify the whole transaction. He can not ratify the part which is beneficial to himself and reject the remainder; with the benefits, he must take the burdens; Thus, a principal can not ratify a contract made for him by an agent without also ratifying and becoming bound by the terms and conditions, although unauthorized, upon which it was made. * * *

“Accordingly, a ratification with full knowledge of part uf a transaction in general operates as a ratification of the whole.”

Appellants knew a contract had been entered into in their name and was being performed by appellee. A letter was introduced in evidence addressed by appellee to appellants, thanking them for their patronage, and this letter was notice that some kind of an order or contract had been made in their behalf, and that the cuts were being delivered in accordance therewith.

Upon being advised their employee had executed a contract in their name, without authority, appellants had the right to repudiate it; but they could not ratify it in part and repudiate it in part. Daniels v. Brodie, 54 Ark. 220.

Good faith required appellants to ascertain the terms of this contract, if they did not intend to repudiate it. A copy of it appears to have been left with appellants, but became misplaced, and another copy was promptly furnished' upon a request therefor. Appellants say Gavin misinformed them as to the terms of the contract. Even if this be true, appellee was in no wise responsible for that fact. Gavin was never its agent and never undertook to act for it, but he became the instrumentality or agency by which appellant undertook to ascertain the extent to which he had contracted for them, and, under the circumstances, appellants must sustain the loss resulting from Gavin’s deception or error. Dierks Lumber Co. v. Coffman, 96 Ark. 505.

Finding no error in the judgment, the same is affirmed. Dec. 740, 10 Cal. 385, cited in their brief. Even, if this were a suit in equity and they made this contention, they could not successfully maintain it for the reason that it was within the issue involved in the chancery court instituted by the plaintiff against the defendant to have a lien declared on the land in question for the money loaned the defendant by the plaintiff. No appeal was taken from the judgment in that case, and, the plea of res adjudicata of the defendant would be a bar to the right of the plaintiff for subrogation.