Henry v. Lane

128 F. 243, 62 C.C.A. 625, 1904 U.S. App. LEXIS 3896

• Court: Court of Appeals for the Fifth Circuit
• Decided: February 16, 1904
• Docket: No. 1,284
• Status: Published

Opinion

PARDEE, Circuit Judge

(after stating the facts as above). An inspection of the transcript will tshow that, while the complainant below sets forth, and asks specific performance of, the agreement of May 5, 1901, as binding upon the appellant, Henry, yet the decree herein appealed from does not conform to the said agreement. The decree commences by holding that the alleged contract ought to be specifically enforced, but then proceeds by changes here and there to make a materially different contract from that alleged, and require the execution of an agreement and trade which no one contends the parties ever made. Some of the particulars in which the decree varies from the alleged contract are as follows:

(1) The contract provides that the notes for the deferred payments shall date “ten days after the abstract showing good title to „said land is furnished by seller to buyer.” The record shows that the abstract was forwarded to Lane on or about May 9, 1901. It was received by Lane, examined, and forwarded by him to Trueheart & Co. prior to May 15, 1901. By the terms of the contract, therefore, the notes should bear date not later than May 25, 1901. The decree, however, requires the notes to bear even date with the decree, which is April 17, 1903.

(2) The contract expressly reserved to the maker of the notes the right to pay the same at any time at his option, “the said notes to he paid in full at any time at the option of the maker thereof.” The decree provides simply that said notes shall be “due and payable respectively in one, two, and three years from their said dates,” and there is no clause giving the maker the right to pay them off at any time at his option.

(3) The contract provides that appellant shall convey to Lane “the league of land in Wharton county, Texas, originally granted to Napoleon B. Williams.” The decree provides that appellant shall convey to Lane the land described by field notes in the patent to the heirs of Napoleon B. Williams, but further provides that, in the event there shall be a shortage in said league, and the same contains less than 4,428 acres, then the appellant shall not be liable in any manlier therefor; and said Rane shall not be entitled to an abatement of .the unpaid purchase price on account of the shortage, and that this-provision'shall be inserted in the deed.

(4) The . decree' provides that.appellant shall convey “with cove-' nants of special warranty.” The contract provides,-“Title to- the land to be good, or to be made good within a reasonable time,” clearly requiring ál genéral warranty of the title.

(5) The ’decree, provides that, if there shall be a shortage in the land, appellee shall not be entitled to any abatement of price on account thereof. Under the contract of May 5th, in case of failure of title to any of the land conveyed, appellee would be entitled to a pro rata abatement of the purchase price.

(6) The contract of May 5th does not name a trustee for the deed of trust given by the appellee to secure the deferred payment of the purchase price, or allow him any commissions. Under such circumstances the. trustee should be named and his commissions fixed by agreement, but the decree names F. Charles Hume as trustee for the deed of trust, without reference to the wishes of either of the partiesj and allows him 5 per cent, commissions.

(7) The contract expressly provides that the'deed to the said land “shall reserve to the said E. J. Henry and to his heirs and assigns, forever, the right and title to all minerals, oil, and gas in said land,, and the right to enter upon said land and operate for location, de-velopr. ent, and use of said right.” But the decree wholly fails to make any provision whatever for reserving said mineral rights to appellant. It is true that on June 21, 1903, the judge of the Circuit Court undertook to make an order curing this omission, but that order was made after the adjournment of the term, the allowance of the appeal, the filing of the bond, and the issuance and service of the citation.

From this it would seem that the decree appealed from should be radically amended, if not entirely reversed.

But underlying the whole matter is the question whether the alleged contract and earnest agreement entered into on May 5, 1901, between the appellee Rane, and Trueheart & Co., as agents for the appellant, was and is a valid existing contract; and that depends upon whether or not the said earnest agreement was authorized by the special power of attorney granted the appellant on April 18, 1901, giving authority to Trueheart & Co. within 60 days' to contract for the sale of certain lands on certain terms therein specified.. It is well settled that when an agent acts under special authority conferred by a formal instrument his powers must be ascertained from the instrument itself. The rule is given by Judge Moore in Reese v. Medlock, 27 Tex. 120, 84 Am. Dec. 611, as follows:

“It is.a well-settled general principie tliat, when an agency is created and conferred by written instrument, the nature and extent of the authority given by it miist be ascertained from the instrument itself, and cannot be enlarged by parol evidence of the usage of other agents in like cases.”

In Skaggs v. Murchison, 63 Tex. 348, the rule is décláred:

“It is so well settled as to be elementary that powers of attorney and similar instruments have to be strictly construed,- and that under no circumstances-.will the principal be bound beyond the plain import of the instrument.”

See, also, Gouldy v. Metcalf, 75 Tex. 455, 12 S. W. 830, 16 Am. St. Rep. 912; Holladay v. Daily, 19 Wall. 610, 22 L. Ed. 187; Mechem on Agency, § 409.

The appellant, by his power of attorney, authorized Trueheart & Co. to contract for the sale of “my Napoleon B. Williams league of land in Wharton county, Texas.” There is no doubt that the appellant intended by this description of the land to be sold the Napoleon 'B. Williams league as reduced and restricted by the then recent sum vey procured through Trueheart & Co., whereby it clearly appears that the said league contained only 4,014 acres of land, instead of 4,317 acres, as called for by the field notes accompanying the original patent. There is 110 doubt, either, that Trueheart & Co. fully understood the power of attorney to refer to the league as restricted by the last survey. No other conclusion can be reached from the evidence. There is some evidence in the record tending to show that appellee, Lane, the claimed purchaser, knew all about the surveys; knew that Henry really owned but 4,014 acres; and also knew therein and from preliminary negotiations of appellant Henry’s intention to sell only the lands he owned. The alleged contract provides for sale by the appellant to appellee, Dane, of the league of land in Wharton county originally granted to Napoleon B. Williams, which would call for 4,317 acres following the original field notes, and makes appellant liable for any deficiency.

The power of attorney, as originally drafted, provided for appellant to give a deed by perfect title. „ Before executing the instrument, however, the word “perfect” was stricken out, so that the power of attorney provided for “mv deed conveying the land by title to be executed.” There is no doubt whatever that by this provision the appellant intended only to give a quitclaim deed with special warranty. He so notified the agents, Trueheart & Co., in a letter transmitting the power of attorney. There is evidence in the record tending to show that the appellee, T,ane, knew of this intention to restrict the title given: yet the contract as claimed provides that the title to the land shall be good, practically calling for a deed with full warranties. The record abounds with evidence on these propositions, and counsel in their briefs have threshed it out in the light of adjudged cases and on principle; but we do not find it necessary to rule definitely on either, because we think that there is an unquestioned variance between the power of attorney and the alleged contract which requires us to hold that the appellant Henry was not bound by the agreement of May 5, 1901. The alleged contract is void because of a material departure from the power of attorney in providing that the notes might be paid at any time, at the option of the maker, whereas the power of attorney stipulated that they should mature in one, two, and three years after date. The power of attorney left no discretion whatever to the agents respecting the terms of sale. It stipulated absolutely for $10,598.80 in cash, and for three notes -of .$10,000 each, maturing in one,.two, and three years after date, and bearing interest from date at the rate of 8 per cent, per annum, payable annually. It was not a general, but a special, power and agency that was conferred and created. Appellee knew the character of the agency and of the particular limitations' upon the power conferred. He would not even negotiate, until the agent should obtain and produce authority in writing as suggested and demanded by him. When the power of attorney was executed and sent to the agents, the latter satisfied appellee of its existence, and furnished him a copy of it. The power of attorney was the sole measure of the agents’ authority. It specified in detail the terms upon which appellant was-willing to sell, and, whether wise or unwise, beneficial or prejudicial, they were the terms which appellant chose to name; and Trueheart & Co. and appellee were powerless to change them. It was appellant’s land. As the owner he had the right to specify the terms upon which he would sell his own property. No matter how absurd or unreasonable his terms might be, it was, in the very nature of things, his right,-as owner of the property, to fix his own terms, and Lane had either to assent thereto or decline to buy.

As a matter of fact, the departure which Lane and Trueheart & Co. made in stipulating that the notes for the deferred payments might be paid at any time, at the option of the maker, was materially and substantially to the detriment of appellant. Eight per cent, is a high rate of interest in these days, even in Texas. Five per cent., no doubt, would have been considered a good rate in New Jersey. These notes afforded appellant a safe investment for a large sum of money for a considerable period. Notes, $10,000 for one year, $10,-000 for two years, and $10,000 for three years, at 8 per cent, interest, with first-class landed security, and payable in bank in New York, were and are worth above par. It is evident, therefore, that, even if the question depended upon the materiality of the variance, the departure made'by Trueheart & Co. and Lane from the power conferred and from the instructions given by appellant was material, and was substantially detrimental to the interests of appellant.

It has long been settled that the legal effect of an instrument payable on a date certain is different from that of an instrument payable on or before that date. Kikindal v. Mitchell, 2 McLean, 402, 14 Fed. Cas. 468, No. 7,763. In that case there was no express provision that the obligor should have the right to pay the note, at his option at any time before the date, but the court held that the words “on or before” gave the obligor that right, and that this was a right which, without these words, he did not have, and, further, that this made a material difference. In the instant case it is not left to be inferred from the use of the words “on or before,” but it is expressly stipulated in the alleged contract that “the said notes to be paid in full at any time, at the optiop of the maker thereof.” The power, of attorney, on the other hand, provides that the notes shall mature, respectively, one, two, and three years after date, and makes no provision for the payment of the notes before their maturity. It is clear, then, that the alleged contract gave the maker of the notes a right which was not authorized by the power of attorney.

In Everman v. Herndon, 71 Miss. 827, 15 South. 135, which was a bill in chancery for specific performance of an alleged contract to sell land, the Supreme Court of Mississippi said:

“Looking to the only authority given by Herndon to Cross Bros, to make sale of the land, it is found to be limited to that of accepting the $4,000 proposition. * * * This firm was specially authorized to do and perform one particular act, viz., to accept a definite proposition which had before then been submitted to Herndon. Nothing is bettor settled in the law than that one dealing with an agent expressly appointed to do a particular act must inform himself of the extent of authority conferred, and must see to it that the act done is within the authority. * * * They (Cross Bros.) were authorized to accept the ⅜4,000 proposition, which was to pay that sum half in cash and the balance in one and two years, with interest at 8 per cent, per annum from date. They entered into an agreement under which the whole purchase price was payable in cash, which may have been a better or worse contract than that they were authorized to make, determinable by circumstances, but which was certainly not the contract they were directed and empowered to make. In legal effect, here was an offer by Ilerndon to sell his land at a fixed price, hall' in cash and the remainder in one and two years, with interest at 8 per cent., and a counter proposition by Everman & Blanton to buy at the price named, payable in cash. There is not a legal identity between the contract which Cross Bros, were authorized to make and the one they attempted to make, and their principal, Ilerndon, was not bound.”

Batty v. Carswell, 2 Johns. 48, 1 Am. Leading Cas. 653; Schultz v. Griffin, 121 N. Y. 294, 24 N. E. 480, 18 Am. St. Rep. 825.

The complainants in that case offered either to pay for the land all in cash, or to pay one-half cash and the remainder at one and two years, with interest at 8 per cent, per annum. Counsel contended that, as the terms were not expressly stipulated in the contract, nor signed by Cross Bros., it should be construed, under all the circumstances, to mean that the payments were to be as specified by Hern-don, one-half cash, and the remainder in one and two years, with 8 per cent, interest. But the court said:

“This would be to make a contract by construction different from that actually entered into by the parties. Clearly, under the written agreement •signed by Cross Bros., the complainants would have been entitled to make instant payment of all the purchase price of the land. s * * Looking through the whole record, we find that the defendant, Herndon, agreed to sell his land for §5 per acre, one-half in cash and the balance in one and two years, with interest at 8 per cent. ⅜ * * Cross Bros, were authorized by Herndon to make sale on the terms of his offer. They iu fact made an agreement for him to sell on different terms from complainant’s offer, which act on their part was never ratified by Herndon. On these facts the law is with the defendant.”

In Monson v. Kill, 144 Ill. 248, 33 N. E. 43, Anton Kill gave Mon-son authority to sell an acre lot of ground in Evanston, Ill., for $12,-000 net. “Whatever you get over and above this amount is your commission. Terms, $6,000 cash, balance in one, two, and three years, with 6 per cent, interest.” Monson, in the name of Kill, entered into a contract with one Beveridge, by which Beveridge agreed to purchase for the sum of $12,000. The contract recited that the purchaser had paid $500 purchase money to be applied on the purchase when consummated, and agreed to pay within 90 days after the title had been examined and found good the further sum of $5,500, at the office of Monson, provided a good and sufficient warranty deed, etc., should be then ready for delivery. It further provided that the balance should be paid in three'equal installments of $2,000, due, respectively, on or before one, two, and three years after the date of the contract. The contract was placed of record, and Kill filed a. bill in equity to cancel the contract. A decree was rendered in accordance with the prayer of the bill, and on appeal the Supreme Court of Illinois affirmed the decree canceling the contract, 'as unauthorized on the, part of the agent, and- said:

“If it be conceded — which is unnecessary to determine — that Monson had authority to execute the contract with Beveridge, and to extend the time ten days for the examination of the abstract by the purchaser, there was still a clear departure from the power and authority given. The authority to sell for one-half cash in hand is in no sense complied with by a sale on ninety days’ time. The authority was special and limited, and the purchaser was required' to know that the authority must be strictly construed. Beveridge took from Monson a contract in writing, and, in the absence of proof to the contrary, will be presumed to have known of Monson’s authority to sell. There is nothing in the case tending to show that Beveridge was led to deal with Monson as a general agent. * ⅝ * Again, the authority to sell the land and to make the balance over and above the cash payment payable in one, two, and three years, did not authorize the making of the contract that such payments might be made on or before said time, at the option of the purchaser. This precise question arose in Siebold v. Davis et al., 67 Iowa, 560 [25 N. W. 778], * * * Appellee had the right to prescribe the terms upon which his land -should be sold, and, having done so in express terms, the stipulation must be substantially followed.”

Siebold v. Davis, 67 Iowa, 560, 25 N. W. 778, referred to by the court in .Monson v. Kill, was an action in chancery to enforce the specific pei'formance of a contract for the sale and conveyance of land. The specific performance was refused by the court below, and the judgment was affirmed by the Supreme Court of Iowa. The authority to sell in that case was conferred by letter from Pierce, the owner of the land, to Ostrom and Messinger, the agents who made the contract. The plaintiff offered $2,000 for the land — $500 cash and the balance in five equal payments. The agents communicated this offer to Pierce, and Pierce, in a letter, replied: “I will only make three hotes of $500 each for balance. They can have all the time they want, say three, four, and five years; ’ but I won’t make little bits of payments out of $1,500.” The agents then executed in favor of Siebold a receipt for $500 as the first payment on the land reciting that it was sold for $2,000, “to be paid as follows, to wit, $500 in hand paid, the receipt whereof is hereby acknowledged, and the balance of the two thousand dollars in three equal payments; the first deferred.payment on or before three years from date of deed; all deferred payments to draw interest at 8 per cent, per annum.” The Supreme Court held that, because the contract makes the-three deferred payments payable on or before three, four, and five years from date, where the seller only authorized them to be made payable three, four, and five years after date, there is such a variance between the authority conferred upon the agent and the contract made by him as to render the contract unenforceable. Upon this ground specific performance was denied.

In the case of Jackson v. Badger (Minn.) 26 N. W. 908, that court,, without stating the facts of the case, said:

“In respect to the time for tbe payment of tlie deferred portion of the purchase price, the .contract made by the agent, and upon which this action is brought, was substantially different from the terms of sale dictated by the defendant, and, so' far as appears, he was not bound thereby. Making the $3,000 payable on or before three years was not in accordance with the prescribed condition that it should be payable in three years.”

And see Miller v. Sawbridge (Minn.) 13 N. W. 671.

The alleged contract is not a separable contract. Plainly, it is one and indivisible, all the terms being interwoven and interdependent. H the agents exceeded their authority in signing the contract on behalf of appellant, then it plainly does not bind him; and, appellant having repudiated it as soon as the papers were presented to him, there is no basis in law or equity for sustaining any suit against him.

There remains to dispose of the question of waiver or ratification. Immediately upon the receipt by the appellant of the proposed conveyances for him to sign in order on his part to complete the sale of the laud in question, to wit, on June 15, 1901, the appellant forwarded to the agents, Trueheart & Co., a telegram as follows: “Papers received sent my son. Purchaser must accept quitclaim deed, and land as described in your survey.” This telegram was the same day communicated to the appellee, Pane. There is very little, if anything, in this telegram to express acceptance or approval. It indicates that delay was necessary to examine the papers, and declares disapproval with regard to the title to be given and the description of the land. It is reasonably well settled that the principal cannot be held to conclusively approve or ratify the acts of an agent when he is in ignorance of the nature of such acts. At the timg this above telegram was sent, the appellant was ignorant of the details and provisions of the agreement which had been made by Trueheart & Co., on his behalf, with reference to the sale of the land. While it cannot be said that its existence had been concealed from him, it is true that, although requesting the same, he had not been furnished with a copy. The general rule is that ratification will not be inferred from any act or declaration of the principal unless he acts with full knowledge of the material facts. See Owings v. Hull, 9 Pet. 607, 9 L. Ed. 246; Bennecke v. Insurance Co., 105 U. S. 360, 26 L. Ed. 990. Halsey v. Monterio (Va.) 24 S. E. 258. But, passing this, it is plain on the face of the telegram that, if it was intended as a ratification or waiver, it. was only upon two conditions, not embraced in the alleged agreement of May 5, iqoi : First, the purchaser must accept a quitclaim deed; and, second, that the description of the land was to be according to the then recent survey superintended by Trueheart & Co. As said above, the telegram of Henry was immediately communicated to appellee, Fane, and he refused to accept either one of the conditions, for on June 17th he wrote a letter to Trueheart & Co., as follows :

“Yours of' tlie 15th inst. together with message from Mr. Henry received I shall insist on a general warranty danse and that the deed embrace all the land described and embraced in the patent, or that the price to he paid be reduced accordingly. Unless this is done T shall sue for specific performance of my contract, and for damages for breach thereof by Mr. Henry.”

This letter was duly forwarded to the appellant, and ended all correspondence and negotiations, so far as the appellant was concerned. All other correspondence between Trueheart & Co. and appellee, Tane, Some of which was forwarded to appellant, Henry, but not answered by him, was after the 60-days limit of the power of attorney of April 18, 1901, had expired. Of course, after the power of attorney expired by limitation, the appellant was not in any wise bound by any declarations of his agents, Trueheart & Co., or by concessions made by the appellee. Many other matters are developed in the evidence, and interestingly discussed in the briefs, but we do not find it necessary to consider them.

For the reasons given, we are satisfied that the appellant was not bound by the agreement and earnest receipt made by Trueheart & Co. with the appellee, Lane, on the 5th of May, 1901, and that the ap-pellee has no right to the enforcement of that agreement.

The decree of the Circuit Court is reversed, with costs, and the cause is remanded, with instructions to make such disposition of moneys paid into court as equity may require, and thereupon dismiss the bill, with costs.