Oelrichs v. Ford

21 Md. 489, 1864 Md. LEXIS 131

• Court: Court of Appeals of Maryland
• Decided: June 1, 1864
• Status: Published

Opinions

Bartol, J.,

delivered the opinion of this Court:

This action was brought by the appellee to recover damages, for an alleged violation by the appellants of their contract to purchase two thousand barrels of flour. The contract is in writing made by the appellants with one John W. Bell. The appellee claims the right to sue, on the ground that ho was principal, and that Bell, in making the contract, acted as his agent.

The right of a principal to maintain an action on a written contract made by his agent in his own name, without disclosing the name of the principal, although formerly sometimes questioned, is now well settled. See Ford vs. Williams, 21 How., 287. Hubbert vs. Borden, 6 Wharton, 79. In this case this question was very fully considered "by the Supreme Court of Pennsylvania, in an able opinion delivered by Judge Kennedy.

It is also well settled, that to prove the agency in such case, parol evidence is admissible; such proof does not vary or contradict the writing, but merely establishes a separate collateral fact, namely the relation existing between the party contracting for bim, and for whose benefit the contract is made; or in other words, the authority under which the agent acts, out of which grow the rights and obligations of the principal under the contract.

In this case the first exception was taken by the defendants below to the evidence offered, for the purpose of proving that in making the contraes sued on, Bell acted as the agent of the plaintiff. This evidence consisted of the correspondence between Bell and the plaintiff, and the entry on the day-book of Bell made by his clerk on theday of the sale.

The contract was made on the 31st of October 1855, for 1000 barrels Ohio super flour, and 1000 barrels Howard street flour, at f 9 per barrel, to be delivered at the option of the seller, from the 10th to the 20th of January following:

On the same day the following entry was made in Bell’s day-book by his clerk:

Sold O. & Lurman for B. Ford.

1000 Hd. St. ? in+ on t ’ m 1000 Ohio. \ 10 t0 20 Jan y» ^9-

On- the same day Bell wrote to the plaintiff the following letter:

Balto., Oct. 31, 1855.

Mr. Benj. Ford, D. Sir: — Your favor of yesterday covering acc. sales 352 bbls. flour. Our market not active as yesterday, moderate sales at $>9-.

I sold for you this morning and telegraphed you:

1000 Ohio, ) Sellers option at $9, 1000 How. st. J 10th to 20th Jan’y.

2000 How. st. at $9, all February.

I could not sell for all January, but came as near it as I could. These are good sales you may depend. Your average is now a good one; should prices advance further, sell more at á higher price. This plan can’t fail to come out right. Eesp’y Jn. W. Bell.

The following letter was also offered in evidence:

New York, Nov. 1, 1855.

John W. Bell, Esq., Dr. Sir: — Yours of 31st ulto. at hand, and I see you have sold 2000 bbls. flour for Jan’y to 20th, and 2000 bbls. flour for Feby. Things are very quiet here to-day, all waiting for steamer; considerable selling at 12-|- on 8.87, and some on 9, for the steamer now due.

It is very hard to say how flour will work, receipts are siol so largo for last two days — -more wheat coming than flour, being higher. It will be surprising if they keep flour at present prices, with the great abundance of every thing in the country; three weeks will determine. The demand coming so early looks as though they were deficient considerably. ■ Respectfully, yours, &e., Benj. Ford.

In addition to the above evidence the plaintiff proved, that he was a flour merchant in the City of New York, and that Bell was then extensively engaged in Baltimore as a flour merchant, and bought and sold flour both on his own account and on commission.

In the opinion of a majority of this Court the correspondence was competent and admissible evidence to prove that the contract was made by Bell for and on behalf of the plaintiff as his agent. There can be little doubt that the sale referred to in Bell’s letter of the 31st of October, is the same evidenced by the contract; although the defendants’ names are not mentioned, in the letter, the date, quantity, price and terms are the same. Nor can there be any doubt that the letter of the plaintiff is evidence not only of his ratification of the contract, but of Bell’s pre-existing authority and power to make it as his agent. ¡Supposing this correspondence to be in good faith, of which the jury was to judge, it would seem to be difficult to conceive oí stronger proof of agency. The objection that the defendants were no parties to that transaction, and ought not. to be bound, by it, has no force. Their rights and obligations under the contract, are in no manner changed or affected thereby„ The questions of agency, and the authority of the agent necessarily depend upon the agreement between, the agent and the principal, and may be evidenced by parol, or by writings entered into between them, and such proof it seems to'us is free from, all objection. It is true the agency may be proved by tbe agent himself, bo is a competent witness ex necessitate, or upon grounds of public policy; but it is not necessary to call him to the stand if the agency can bo proved aliunde.

This question arose in the case of Hubbert vs. Borden, 6 Wharton, before cited, and was expressly decided in conformity with the views above expressed. In that case the contract in writing sued on by Borden, was made with the defendant by Thomas and Martin in their own name, and the Court say, (page 96,) “That the correspondence between the plaintiffs and Thomas and Martin, was properly admitted, because it showed the authority, which the latter had from the former, to make the contract on their behalf, and likewise the terms and conditions upon which it was to be made with the defendant.”

The objection taken at the trial, and embraced in this exception, going to the whole evidence offered, it follows from the established rule of this Court that there was no error in overruling the objection, if a part of the evidence was admissible, although a portion of it may have been inadmissible. This rule would entitle the appellee to an affirmance on this exception, even if the entry from the day-book were held to be illegal testimony. With reference to that, however, a majority of the Court are of opinion that it was properly admitted in evidence as á part of the res gestee. 1 Greenleaf’s Ev., sec. 115. Of course the honesty and good faith of that entry, as well as of the correspondence, if they were denied, were proper questions for the jury.

Second exception. The questions presented by this exception were argued with great ingenuity and ability by the appellants' counsel, and are certainly not free from difficulty; but after the best consideration we have been able to give them, a majority of the Court are of opinion the ruling of the Superior Court was correct and ought to bo affirmed.

This exception was taken to the rejection of a mass of evidence offered by the defendants, a brief statement of which is necessary in order to show the questions involved in its decision. The plaintiff having proved that on the 19th of December 1855, Bell disappeared from his place of business and never returned to Baltimore, no one knowing what had become of him, and leaving his affairs in an insolvent condition, and that he went to California where he has since resided; then proved by 'George Wm. Brown, Esq., that he called as the plaintiff’s attorney, in company with John H. Ford, son of the plaintiff, on the 29th December 1855, upon Mr. Frick, the attorney of the defendants, having been referred by the defendants to Mr. Frick, and showed to him the contract in question of the 31st of October, and informed him that the same was made by Bell for him, the plaintiff, as principal, and that'he would comply with it. Mr. Frick replied, that the plaintiff had not put up any money under the contract; to which Mr. Brown replied, that he denied the right of the defendants to demand any, but that the plaintiff was prepared to do any thing required by the contract. Mr. Frick then said that the defendants did not know the plaintiff in the transaction, and considered the contract at an end.

The plaintiff then proved that, on the 16th of January 1856, in pursuance of the contract, he tendered to the defendants 1000 barrels of Ohio Super flour, and 1000 barrels of Howard street Super flour; but the defendants refused to receive it. The market price of flour on that day was $8 per barrel. The defendants then proved that on the 31st of December 1855, they purchased from Mr. Hincks 6000 barrels of the same kind of flour mentioned in the contract, deliverable in the ensuing January and February at $8.15 per barrel.

The defendants then proceeded to offer evidence, to the rejection of which this exception was taken, substantially as follows;

That the defendants wore shipping merchants largely engaged in purchasing flour for exportation to Europe to fill orders to them from abroad. That the existence of the Crimean war at that time had produced an extraordinary demand for American bread stuffs, which rendered it necessary to make contracts in many instances for flour to be delivered at a future day, and that the price of flour at that period was constantly fluctuating and varying with the arrival of every steamer. On account of the negotiations for .peace then pending and the uncertainty of the result, the, price would vary from two to three dollars a barrel in forty-eight hours. That the contract with Bell was made by the defendants in order to enable them to fill in part their orders from abroad. At that time Bell was a general flour merchant, selling on his own account as well as on commission, and in excellent standing and credit. That Bell absconded on the 19th of December 1855, leaving his affairs in an insolvent condition, and his property was immediately seized by his creditors, under attachments against him as an absconding debtor. That at the time of his absconding, Bell had many contracts outstanding, like that offered in evidence, for the future delivery of flour; and that the opinion of the best informed merchants in Baltimore at that time was, that flour would reach the price of $12 a barrel in-the January and February ensuing. That after the absconding -of Bell, the defendants demanded at his store of his chief clerk, security for the performance of the contract, and failing to receive it, they at once bought flour to replace that which he had agreed to furnish at $8.75 per barrel. That on the 29th of December 1855, the plaintiff, who was a flour merchant of New York; gave notice to the defendants, that he claimed to be principal in the contract, and offered to perform it. That plaintiff was at that time known to the defendants, and generally known to be a broken merchant without any credit or standing, and that they refused to give him credit, or take him for the contract, unless he would give security for its performance, which he refused to do. That the defendants in making the contract with Bell, treated him as principal, and never heard of the plaintiffs having or claiming any interest in the transaction, until his notice to them of the 29th of December. This evidence was offered for two purposes: first, in bar of of the action; and secondly, in mitigation of damages; and in the opinion of a majority of the Court it was not admissible for either purpose.

By the well established law of agency, the principal may maintain a suit upon a contract made for him by his agent, as well where he is not named or known to the other contracting party, as where the principal is disclosed by the contract. The effects of an agent’s contracting in his own name without disclosing the principal, are first, that he thereby makes himself personally answerable for the fulfillment of the contract; and secondly, that the principal cannot interpose and claim the benefit of the contract, without, giving to the other party, who has dealt with the agent as if he were the principal, the benefit of all set-offs and other equities existing against the agent. Story on Agency, sec. 420. “But subject to these rights and those of the agent,” says the learned author, in the section referred to, “the principal may generally sue upon such a contract, in the same manner, as if he had personally made it.”

This brings us to the inquiry, what were the rights of the defendants under their contract with. Bell — assuming as wo must do for the purposes oí’this exception, that they gave credit to him exclusively in making the contract ? The appellants’ counsel has argued, that when he proved insolvent and absconded, there was a virtual abandonment of the contract on his part; his performance of it being thereby rendered impossible, which authorized the vendees to treat it as rescinded. We have found no case going so far as to sustain this proposition, and we think the error of the learned counsel grows out of a misapprehension of the nature of the contract. The inability of a party to perform his contract by reason of insolvency, amounts to an abandonment or rescission of it, only when that inability exists at the time when the other party is entitled to cIct mand its performance. It is true that a vendor who has sold goods on time, giving credit to the vendee, may refuse to deliver them, if the vendee becomes insolvent before the possession has passed, and in some cases may stop them in transitu. This grows out of the lien of the vendor upon the goods, as a' security for the purchase money; but the contract is not thereby rescinded. Story on Sales, sec. 320. And no case can be found of a contract of sale for cash on delivery to be made at a future day, where it has been held that the vendor may refuse to deliver the goods on the day, if the cash be then tendered, on the ground that the vendee had become insolvent in the- mean time. Nor does such insolvency entitle the vendor to rescind the contract. The rights and obligations of the parties in such case are correlative. Under the contract before us, the defendants contracted with Bell, relying exclusively upon his ability to deliver the flour purchased at the time named. By the terms of the contract they had-no right to demand from him, nor from his principal, any other security for its performance, and until its breach by the vendor, which could not occur before the time fixed for its performance, (or what would amount to a breach, viz: the inability of the vendor to comply with it. at that time,) the vendees had no right to rescind it, or to treat it as abandoned by the other party. Such stipulations might have" been made as would have conferred such rights upon the vendee; but it contains no such provisions, and the parties must be held bound by their engagement according to its terms.

A great many authorities were cited by the appellants’ counsel, to support his views on this part of the case; they have been examined, and without referring to them here particularly, we think the principles above stated are sound and not inconsistent with the authorities cited: and we conclude that the evidence offered by the defendants, and contained in this exception, was properly rejected, as irrelevant and incompetent testimony for either of the purposes mentioned.

Third Exception. In this exception, the defendants, in addition to the evidence contained in the second exception, offered to prove a usage among flour dealers in Baltimore, governing contracts of this kind, winch is particularly set out in the defendants offer, (and stated ante pp. 491 and 492.) A majority of this Court are of opinion that there was no error in rejecting this evidence. Under the usage, the defendants claimed the right to rescind the contract upon the failure of the other party “to put up a margin” on demand , that is, to deposit a sum of money as a security for the performance of the contract. In treating upon this exception, the offer must he considered as if the proof was actually produced in the terms therein stated, and we think that even supposing the proof of such usage were admissible to affect the contract, the offer is insufficient, and falls short of establishing the defence. In the offer it was certainly necessary to state as a part of the usage, that in the event .of either party failing to put up the margin demanded in a reasonable time, the other party had the right at his option to cancel the contract. In the offer this is not stated, though in the appellants’ argument it was assumed that such was the usage. The Court cannot infer that such a result would follow. It is not a matter of legal conclusion, but ought to appear as matter of fact, as part of the usage.

If one party fail to do a- collateral act, which the other has a right to demand, it will not follow as a legal consequence that the contract is for that reason void, or may bo wholly rescinded. That would be the effect of a failure to comply with the contract itself, which in this case was to deliver 2000 barrels of flour at a future day. Now the usage offered to be shown is, “that in the mean time either party has a right to demand a margin to be put up, rea-’ sonably sufficient to secure tbe performance of ibe contract,” but is altogether silent as to the consequences of a failure to comply with such demand. Under such usage, the Court cannot say the defendants had a right to rescind the contract for that reason, when the usage, as set out in the offer, is silent on that subject.

But this question is more speculative than material in this case, because in our opinion the usage as described in tbe offer was wholly inadmissible to affect the construction of the contract. This opinion was expressed by the Supreme Court in a case between, the same parties, 28 Howard, 63, where an attempt was made to establish a similar usage; as set out in the offer we think it is vague, uncertain and unreasonable. And these objections are not removed by the offer to prove by the declarations of the parties, or their verbal understanding, that their dealings were made with reference to and subject to the usage. Such evidence could not control the written contract. The effect of admitting such testimony would be to set up as many usages as there may be contracts made, and to open the door for the admission of parol evidence of the particular customs of parties and their modes of doing business, to determine their legal rights and obligations, which ought to depend only on their agreements as they have made them in writing.

The fourth exception was taken- to the instruction given by the Court to the jury. But it is conceded by the appellants’ counsel to be free from objection, unless there was some error in the ruling of the Court upon the other bills of exception. It is in the language sanctioned by the Supreme Court, in the case before referred to, in 23 Howard.