Brunswick Corp. v. Sittason

• Decision Date: 21 May 1964
• Docket Number: 8 Div. 114
• Citation: 277 Ala. 45,167 So.2d 126
• Parties: The BRUNSWICK CORPORATION et al. v. Robert Dare SITTASON, Jr., et al.
• Court: Alabama Supreme Court

Page 126

167 So.2d 126

277 Ala. 45

The BRUNSWICK CORPORATION et al. v. Robert Dare SITTASON, Jr., et al.

8 Div. 114.

Supreme Court of Alabama.

May 21, 1964.

Rehearing Denied Sept. 10, 1964.

Peach, Caddell & Shanks and Robt. H. Harris, Decatur, for appellants.

Calvin, Gilchrist & Murphree, Decatur, for appellees.

SIMPSON, Justice.

The dissenting opinion of Mr. Justice Harwood contains a full statement of the facts which should be referred to in connection with a study of this opinion.

The dissenting opinion concludes that the Brunswick Corporation had within the State of Alabama a 'soliciting agent'; that said agent took an order from one Dr. Sittason for bowling equipment; that such order provided that to be binding upon Brunswick Corporation it must be accepted by an officer of the company at his home office in Chicago, Illinois; and finally that the 'soliciting agent' nor any other agent had authority to make any representations outside of those contained in the order.

So viewed, Mr. Justice Harwood concluded that there was only a question of law involved and that the affirmative charge was due to be given for the Brunswick Corporation, relying on such authorities as Gould v. Cates Chair Company, 147 Ala. 629, 41 So. 675.

Courts throughout the nation have, upon different legal theories, placed exceptions upon the rule as announced in Gould v. Cates Chair Company, supra.

'Apparent Authority'. This doctrine holds that the servant's duties may be accompanied by significant appearances. In an appearance of (or ostensible) authority there may be a holding out by the employer; to that may be added a reliance on the authority so appearing; and finally a resulting injury. See Anno. East Coast Freight Lines, Inc., et al. v. Mayor and City Council of Baltimore, 190 Md. 256, 58 A.2d 290, 2 A.L.R.2d 386 (406).

'Estoppel--Implied Acceptance'. The Wisconsin Court in speaking to this theory said in Sell v. General Electric Supply Corporation, 227 Wis. 242, 278 N.W. 442:

"'Generally speaking an offeree has a right to make no reply to offers, and his silence and inaction cannot be construed as an assent to the offer,' citing Grice v. Noble, 59 Mich, 515, 26 N.W. 688; Royal Ins. Co. v. Beatty, 119 Pa. 6, 12 A. 607, 4 Am.St.Rep. 622; More v. New York Bowery F. Ins. Co., 130 N.Y. 537, 29 N.E. 757. See, also, 1 Page, Contracts, § 160.' Morris F. Fox & Co. v. Lisman, 208 Wis. 1, 13, 237 N.W. 267, 271, 240 N.W. 809, 242 N.W. 679.'

In Morris F. Fox & Co. v. Lisman, supra, speaking of the above rule, the Court said:

'This rule is of course subject to exceptions. If the relations between the parties have been such as to give to silence the significance of an assent to the offer, the offeree's silence may amount to an implied acceptance. Hobbs v. Massaoit Whip Co., 158 Mass. 194, 33 N.E. 495. Or, if the conduct of the offeree is such as to lead the offeror to believe that the offer has been accepted, there may be an acceptance by estoppel. 1 Page, Contracts, § 161.'

'Prior dealing and relations between parties'. In Ammons v. Wilson Co., 176 Miss. 645, 170 So. 227 the Mississippi Court held that a refusal to reject an order after the elapse of only 12 days, a price rise of 7 1/2 cents per pound on shortening, and prior dealing between the parties made up an issue for the jury as to whether or not there was an implied acceptance of the order.

'Delay in Disapproving Order'. The Tennessee Court in Cole-McIntyre-Norfleet Co. v. A. S. Holloway, 141 Tenn. 679, 214 S.W. 817, 7 A.L.R. 1683, held that a delay (March 26 to May 26) of a jobber for an unreasonable time to notify a customer of rejection of an order taken by the jobber's traveling salesman amounts to an acceptance of it.

The Supreme Court of Vermont in Hendrickson v. International Harvester Co. of America, 100 Vt. 161, 135 A. 702, held:

'True it is that it takes two to make a bargain, and that silence gives consent in these cases only when there is a duty to speak. Gould v. Cates Chair Co., 147 Ala. 629, 41 So. 675; Senner, etc., Co. v. Gera Mills, 185 App.Div. 562, 173 N.Y.S. 265; Prescott v. Jones, 69 N.H. 305, 41 A. 352; Bowley v. Fuller, 121 Me. 22, 115 A. 466, 467, 24 A.L.R. 964; 13 C.J. 276. And true it is that it is frequently said that one is ordinarily under no obligation to do or say anything concerning a proposition which he does not choose to accept; yet we think that, when one sends out an agent to solicit orders for his goods, authorizing such agent to take such orders subject to his (the principal's) approval, fair dealing and the exigencies of modern business require us to hold that he shall signify to the customer within a reasonable time from the receipt of the order his rejection of it, or suffer the consequences of having his silence operate as an approval.'

See also Sioux Falls Adjustment Co. v. Penn Soo Oil Co., 53 S.D. 77, 220 N.W. 146.

For an interesting observation of the various methods by which principals can be bound by the unauthorized actions of their agents, see 'Ratification by Silence', Warren A. Seavey, 103 University of Pennsylvania Law Review, pp. 30-43.

This Court as far back as 1880 realized that a principal is in certain cases under a duty to disaffirm the unauthorized acts of his agent and in Mobile and Montgomery Railway Co. v. Jay, 65 Ala. 113, stated:

'The first head-note in the case of Powell's Adm'r v. Henry, 27 Ala. 612, which holds, that, 'if an agent exceeds his authority, although the principal may ratify the act; yet, to avoid it, he is not obliged to give notice that he repudiates it', is too comprehensive in its statement of the law. It is true that mere knowledge, on the part of the principal, of an agent's unauthorized action, will not make silence, or noninterference, in all cases amount to ratification. But it would, in those cases where the party dealing with the agent is misled or prejudiced (Smith v. Sheeley, 12 Wall. 358, 20 L.Ed. 430); or where the usage of trade requires or fair dealing demands, a prompt reply from the principal.'

In Comer & Company v. Way and Edmundson, 107 Ala. 300, 19 So. 966, this Court, upon approving the doctrine set forth in Meyer v. Morgan, 51 Miss. 21, said:

"The course of business between the factor [principal] and the correspondents [agents], implies prompt responses to business letters. If the factor advises his correspondents of his acts with respect to his property, and he does not in a reasonable time disaffirm and so notify the agent, the latter may well presume that his conduct has been approved. So large a part of the commerce of the world is done through agents of one sort or another, that it is necessary that this principle should prevail. Hence it is incorporated into all the systems of jurisprudence. Story on Agency, § 258. The principal must disaffirm. Silence will be equivalent to approval. * * * The principal, within a reasonable time, must elect to approve or disapprove the unauthorized act of the agent of which he has been informed. He cannot remain silent and await the vicissitudes of a fluctuating market, and if the price rises, disaffirm and claim the difference; or if it declines, acquiesce in the sale."

Hartselle is a relatively small city and there is one fact that is not in dispute in this case, viz.: Brunswick Corporation decided that the city could financially support but one bowling establishment. To say that Grauer, Brunswick's agent, made this decision would certainly arm him with more power and authority than that of a mere order taker. Brunswick Corporation made this decision and their agent busily engaged himself in making this decision known to the two groups involved.

The general rule is that officers and directors of a corporation are chargeable with knowledge of the customs and usages of their corporations. Miles Realty Co. v. Dodson, Tex.Civ.App., 8 S.W.2d 516.

We are not so disturbed with the pronouncement of the law in the dissenting opinion as we are with its interpretation of the facts. A brief review of these is in order. Time plays an important role. It is apparent that two separate groups of persons desired to establish bowling emporiums in the relatively small city of Hartselle, Alabama and for convenience, these are referred to as the 'Sittason' and 'Nelson' groups. The 'Sittason' group, after preliminary inquiry in December, 1960, first contacted Mr. Kenneth Grauer (salesman for Brunswick) or February 10, 1961. After a night meeting at which the sales agent made his sales talk, gave information as to terms, price, installation, and amount of equipment necessary, this group told Mr. Grauer that they would contact him later, went into executive session and decided to proceed with their plans and to place an order with the Brunswick Corporation for the necessary equipment.

The next day (February 11, 1961), Dr. Sittason contacted Grauer and placed two orders for approximately $150,000.00 worth of bowling equipment and delivered to Mr. Grauer a thousand dollars down-payment on each of the two orders.

The evidence is in dispute as to the actions and statements of Grauer from the period February 10, 1961 to March 22, 1961 in the following matters:

1. Did Grauer or did he not state to the 'Sittason' group that if an order was placed with Brunswick that they would deal with no other persons in the Hartselle area for a period of one year?

2. Did Grauer or did he not state to the 'Sittason' group after taking the orders that 'you are now in the bowling business. Get your land and start building the building'?

3. Did Grauer or did he not state that the city of Hartselle could not support more than one bowling alley?

4. Did Grauer or did he not represent originally (February 10, 1961) that the first group to start erection of a building would be the group that Brunswick would do business with or was such representation made only after the 'Nelson' group made its first contact with Grauer on or about March 19, 1961?

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