General Motors Truck Co. v. Texas Supply Co.

64 F.2d 527, 1933 U.S. App. LEXIS 4140

• Court: Court of Appeals for the Fourth Circuit
• Decided: April 4, 1933
• Docket: No. 3375
• Status: Published

Opinion

SOPER, Circuit Judge.

j This suit was brought by the Texas Supply Company, a Maryland corporation, against General Motors Truck Company, a ' Michigan corporation, to recover the price of ten automobiles which the supply eompaj ny claims were purchased from it by the truck company under an oral contract en- : tered mt0 011 tbe latt6r s bebal£ a dlJy i authorized agent. There was a verdict and judgment for the supply company, and an appeal to this court by the truck company, which contends that there was no legally sufficient evidence to entitle the plaintiff to recover, and that the District Court should therefore have granted a motion for a directed verdict for the defendant. The only two questions urged on this appeal relate (1) to the authority of appellant’s agent to enter into the contract, and (21) the enforceability of the contract under the statute of frauds.

It was shown by the plaintiff’s evidence that the supply company is the transportation unit of a corporation engaged chiefly in road building, and handles the automobile, trucks used in the work. On or abouUprili. 26, 1930, following certain unsuccessful ne-> gotiations between the supply eompany and/ the Baltimore branch of the truck company1' in regard to the purchase of ten General Mo-/ tors trucks, the supply company purchased/ the trucks from the Brooks-Price Company) of Towson, Md., an independent concern * whieh dealt in General Motors trucks for its! own profit. A salesman from the Baltimore^ branch of the truck company did, however, assist the Brooks-Price Company in making the sale. Attached to the contract of sale, as part thereof, was a warranty of the truck company as manuf acturer whereby it/warranted each motortruck to be free from def ects in material and workmanship, but limited^s3M^iu®'to'th'e replacement'of any part returned to it vdthin'ninety Alays, -and found to be' defective, and declared" that it neither assumed nor authorized any other person to assume for it any other liability in connection with the sale of theTehiete:—

Shortly after the trucks were delivered, iliey were found to operate poorly and to ’&reak ¿own frequently, because of defective springs. For a considerable period of time, mechanics of both the truck company and the r>^ i -n ♦ n u . ^ , ■, Brooks-Price Company attempted to remedy ^ defect ^ SULSS. 0n ¿ ^ in a conference at the BaltimdiWbranch"of the truck company, at which the president of the supply company ^ yP and the, branch manager of the truck com- W-■ pany were present, the unsatiSiactoiy^dird" tion of the trucks was discussed, and it was agreed that they should be returned't oTEé General Motors 'branch in Baltimore, "and" shortly afterwards this was done) ’ butnoj j definite agreement of settlement between thelj) parties'was then made.’

On August 3,1930, Pat E. O’Connor, the Eastern regional manager of the General Md- ’..... tors Track Corporation, with headquarters at ^tester, K Y, wrote to the president' of tll6 supply eompany under the letterhead o£ the tmck eompanyj and am0ng other ^ngS . '

“The information was conveyed to me/ tha* you desire to return these teueks to Mr. ) Brooks and thus abrogate the contract which \ 7°u have made with him._ If you were deal- ! ^nS with the representatives of a mediocre j concern, whose sole object was to sell you j trucks and ^Tget about them, we could f understand this attitude, but in ease of the t Gelleral Motof Tfuek Company, a corpora^bose mte^ a“d standfS » unques- ; ^ed, we are certamly at a loss to follow i ^ of reasoning. * * There is «olutely no reason why this matter cannot i be adf sted *? satisfaction of all con- ; c®med’ “d ybat .1S necessary to bring this / about’ we feel sure ean be worked out”

O’Connor had been corresponding frequently with the branch manager as to this matter, and, on August 15,1930, came to Baltimore, and, together with the branch manager and Mr. Brooks, went to the office of the president of the supply company for a eonferenee to work out a settlement. An oral agremnent was made with O’Connor that the truck company'should purchase from the supply company the chassis of the trucks for the sum of $7,823.06, which represented the original, purchase price of the trucks 'at $14,-423.06, less $3,600, the value of the truck bodies and less' $3,000 for the use of the trucks which the supply eompany had enjoyed. The defendant in the District Court relied on the contention before the jury that the agreement to repurchase was made by the Brooks-Priee Company rather than the truck company, but it is not denied that there was substantial evidence on this point to support the verdict in the plaintiff’s favor.

The main contention of the defendant in this court is that there was not sufficient evidence of the authority of O’Connor to make the contract to warrant the submission of the issue to the jury. It was shown at the trial that he had no express authority, and that in fact it was the rule of the company, although unknown to the supply company, that only the General Motors’ vice president, in charge of the truck division, was empowered to make a contract to accept the return of trucks previously sold. Appellant relies upon the rule that an agent, 'including a managing agent, has implied or apparent authority to purchase only such things as are necessary to effect thejpuiposes of his agency, and cases are cited which Bold that the principal is not bound by unusual purchases or purchases clearly detrimental to Ms interest. Loveland v. Kitterman, 44 S. D. 174, 183 N. W. 128; Carter v. Burnham, 31 Ark. 212; Latham v. Pledger, 11 Tex. 439; Beebe v. Equitable Mutual L. & E. Ass’n, 76 Iowa, 129, 40 N. W. 122.

It is, however, a misconception of the nature of the transaction here involved to view it simply as a purchase within the moaning of the above rule. None of the parties who carried out the transaction had any idea that the contract was entered into because the truck company wanted the trucks in its business. What the parties were seeking to do was to effect a settlement with a dissatisfied customer. It is to be remembered that, although the supply company did not buy the trucks directly from the truck company, the sale inured to its benefit as manufacturer, and it was bound, under its warranty, to make good tho parts which had proved to he defective. There was no obligation to take back the trucks, but the business standing of the manufacturer and the reputation of the goods was at stake, and an agreement on the part of a representative of the manufacturer to make good the defects in a practical way was not calculated to cause tho customer to doubt the extent of the agent’s authority. That the agreement was made for the purpose of satisfying a .customer who had just cause for complaint clearly appears not only from the considerations above outlined and the acts of all persons involved, but also from the letter of Au-gust 15, 1930, from O’Connor to the supply company, from which we have quoted above.

We have then a case for the application of the rule that thejict of an agent within the apparent but not within tho real scope of his authority is binding upon the principal where a loss would otherwise result to one who has in good faith relied on such apparent authority; an act being within the apparent scope of an agent’s authority when a reasonably prudent person, having knowledge of the usages of the business, would be justified in supposing the agent is authorized to perform the act from the character of Ms known duties. Richmond Guano Co. v. E. I. Du Pont de Nemours & Co. (C. C. A.) 284 F. 803, 807. In the application of this rule, the courts have held that the circumstance that an agent has been given apparent authority to manage or represent the principal’s business in a particular locality or section of the country may be taken into consideration in determining whether it is reasonable for one dealing with the agent to assume that he has power to make settlements or to rescind or modify contracts. Randall v. J. A. Fay & Egan Co., 158 Mich. 630, 123 N. W. 574; Van Santvoord v. Smith, 79 Minn. 316, 320, 82 N. W. 642; Leroy v. Hagen, 44 N. D. 1, 175 N. W. 718, 720; Hartford Life & Ann. Ins. Co. v. Hayden’s Adm’r, 90 Ky. 39, 47, 13 S. W. 585; Sabra v. Dayton Rubber Mfg. Co. (C. C. A.) 38 F.(2d) 452, 454; Socony Burner Corp. v. McClare, 134 Misc. 58, 235 N. Y. S. 290; Sauble v. Gary South Coast Agency, 56 Cal. App. 606, 206 P. 141; Indianapolis Rolling Mill Co. v. St. Louis, etc., R. Co., 120 U. S. 256, 7 S. Ct. 542, 30 L. Ed. 639.

The appellant contends that the rule of apparent authority does not apply in the pending case because the-evidence shows that there is a custom in the automobile industry that a branch manager has no authority to rescind a sale and to take back vehicles alleged by the purchaser to be defective. The evidence, however, does not indicate that such an official as a regional manager of a manufacturing corporation is denied authority to make such settlements by an established custom of the industry; so that we have merely to consider whether there was sufficient evidence to go to the jury to establish an apparent authority upon which a reasonably prudent man would be entitled to rely. We think that, there was such evidence in this ease. O’Connor was not merely the manager of a local branch. He was held out as the manufacturer’s representative in a large part of the United States, clothed with the title of “Eastern Regional Manager,” and with the special duty of supervising sales in the territory assigned him. He was called in. by the local agents of the company to adjust a bona fide complaint arising under a contract of sale of goods which the company had guaranteed. It was for the jury to say, under',these circumstances, whether a person of ordinary care and prudence would have had reasonable grounds to believe that the regional manager, who had made the agreement of settlement set out in the evidence, was authorized so to act. There was no error in submitting this issue to the decision of the jury.

Appellant’s second point is that a verdict should have been directed in its favor because the contract was unenforceable under the Maryland Statute of Frauds, Annotated Code of Maryland, art. 83, § 25, (section 4 of the Uniform Sales Act), since the value of the goods was more than $50, and the contract was not in writing. The_ District Judge, in his charge to the jury, referred to vthe_grovisio_ns.of the statute, but ruled that the deliyery of-the fxueks by the supply-comtpanyrto the truck company made it unnecessary for the contract to be in writing. He invited exceptions at the end of the charge, but_neither side had any objection to make. Nevertheless, the argument is nd^ made by the appellant that the charge was in error in this respect because the delivery took place before the oral contract was made; and we are told that the objection is not too late because the defendant in the court below prayed for a directed verdict on the ground that no legally sufficient evidence had been offered to entitle the plaintiff to recover. It is said that this is valid practice in Maryland under the ruling in Hamilton v. Thirston, 93 Md. 213, 220, 48 A. 709, a ease of contract, in' which it was held that defendant’s prayer for a directed verdict should have been granted by the trial court because the evidence showed only an oral contract under circumstances where a contract in writing was required by the statute of frauds. The authorities are not uniform as to whether an objection to an oral contract is waived unless it is made when the evidence is offered (see 27 C. J. 373, 374); and it is not going too far to say that the usual practice in Maryland is to object when the oral contract is offered in evidence. In Hamilton v. Thirston, the point was not merely raised by a general demurrer to the evidence, but also by a specific exception to the granting of each of the plaintiff’s prayers which in substance charged the jury that, if they found an oral contract had been made, the plaintiff was entitled to recover. When the point is not plainly made in the trial court, it may not be considered on appeal even under the Maryland practice, as appears from the recent ease of J. A. Laporte Corporation v. Pennsylvania-Dixie Cement Corporation, 165 A. 195, 196, decided by the Court of Appeals of Maryland on March 21, 1933. That was an action upon a contract for the sale of goods, and the precise question here involved was discussed by Chief Judge Bond in the following terms:

“The buyer raises on appeal a question whether the contract, lacking as it does a writing of the essential element of the price actually agreed upon,-is unenforceable under the statute of frauds.. * * * This is a question which does not appear to have been raised below, and for that reason seems foreclosed as possible ground of reversal on appeal. Code, art. 5, § 10. There was testimony that a writing on the actual price was lacking, but in no place does it appear to have been suggested that this affected the enforceability of the contract. The defendant prayed generally that a verdict be rendered in its favor because there was no -evidence legally sufficient to entitle the plaintiff to recover, and a ruling on the question could, perhaps, have been made on that prayer, but it has long since been decided that a prayer sufficiently general in terms to afford ground for ruling on a defense raised does not meet the requirement that the defense must plainly appear to have been raised. Tyson v. Shueey, 5 Md. 540, 552. A reading of the record indicates rather clearly that it was not raised yn this instance.”

Likewise in the federal courts it is the ¡ prevailing rule that no question may be raisi ed on appeal under an exception to the denial i by the trial court of a motion for directed yerdict expressed in general terms, where the Court has peremptorily charged the jury on the particular-point, and no exception has been taken by appellant to the charge. Louisville & N. R. Co. v. Womack (C. C. A.) 173 F. 752; Choctaw, O. & G. R. Co. v. Jackson (C. C. A.) 192 F. 792, 798, 801; Erlanger Tremont Theatre Corp. v. Ellsmore (C. C. A.) 56 F.(2d) 809, 810.

Affirmed.