Stevens v. Whole Wheat Milling Co.

172 N.W. 244, 42 S.D. 20, 1919 S.D. LEXIS 64

• Court: South Dakota Supreme Court
• Decided: May 13, 1919
• Docket: File No. 4496
• Status: Published

Opinion

GATES, J.

Action on a promissory note given by defendant to a newspaper advertising contest concern-, and by it. indorsed to plaintiff as collateral security, The defense was a partial failure of consideration and that plaintiff was not a bona fide holder. Trial to the court. Findings, conclusions, and judgment for plaintiff. Defendant appeals.

[1] The written agreement entered into between appellant and the advertising concern contemporaneously with the giving of the promissory note contained this paragraph;

“Important. — Our agent is merely a soliciting salesman, and all orders are subject to our approval or disapproval. Purchaser must, therefore, see to it that all arrangements pertaining to this order are shown hereon either in printing or writing, as none others will be recognized. This order is given with a full understanding of all the conditions hereof, and after reading same.”

Notwithstanding the above provision, the secretar}'- of appellant gave oral testimony as to the contents of a claimed written agreement between appellant and the soliciting salesman providing for further things to be done by the advertising concern than those specified in the agreement. It is a claimed breach of this further agreement that is set up as a partial failure of consideration for the note. There is no evidence that any such further agreement came to the notice of the principal, the advertising concern; indeed, the evidence stands uncontradicted that the concern knew nothing thereof. Counsel for appellant invoke the doctrine of imputed notice as declared in section 1687, Civ. Code (section 1269, Rev. Code 1919):

“As against a principal, both principal and agent are deemed to have notice of whatever either has notice of, and ought, in good faith and the exercise of ordinary care and diligence, to communicate to the other.”

[2] That rule of law has no application to the present situation. The rule of -law that does apply is well stated in Corpus Juris as follows:

“Instructions modifying or limiting the authority of the agent, which are known to a person dealing with him, are as binding upon such person as they are upon the agent, and he can acquire no rights against the principal by dealing with the agent contrary thereto.” 2 C. J. 569. § 1676 C. C. (Rev. Code 1919, § 1258).

The further agreement entered into by the agent was simply void because of the want of authqrity in the agent to make a binding contract in the manner it was made, of which want of authority the appellant had notice.

The appellant knew that the agent was without authority to enter into any contract or agreement except by writing or printing on the agreement itself. If the further agreement had been so made, it necessarily would have come to the knowledge of the principal.

[3] It being clear that appellant’s defense would not have been available even if the action had been brought by the payee of the note, there is no occasion to go into the question of whether respondent is a bona fide holder of the note.

The judgment and order appealed from are affirmed.