Central Wholesale Co. v. Sefa

Decision Date24 December 1957
Docket NumberNo. 14,14
Citation87 N.W.2d 94,351 Mich. 17
PartiesCENTRAL WHOLESALE COMPANY, Plaintiff and Appellant, v. Floyd SEFA and Nasif Sefa, individually, and d/b/a Larry Hamady Pure Food Market and Sefa Brothers, Defendants and Appellees.
CourtMichigan Supreme Court

Joseph & Joseph, Flint, for plaintiff and appellant.

White & Newblatt, Flint, for defendants and appellees.

Before the Entire Bench.

CARR, Justice.

Plaintiff brought this action to recover the alleged contract price of groceries and produce sold and delivered by it to defendants, for which payment had not been made. Defendants filed their answer, and, interposing a counterclaim, alleged that under the arrangement actually made by them with plaintiff's agent they had made overpayments that they were entitled to recover. The parties to the cause on appeal have submitted a joint statement of facts covering matters involved in the controversy that are not in dispute.

In June, 1952, and for a number of years prior thereto, Floyd and Nasif Sefa, herein referred to as the defendants, were engaged in operating a retail grocery store at Goodrich, Genesee County. Plaintiff was carrying on a business, during said period, of selling groceries and produce at wholesale, the usual prices charged being cost plus five per cent, with certain discounts on produce. In former years defendants had made purchases from plaintiff, but prior to the date mentioned had discontinued doing so. They had, it appears, been buying their groceries from another wholesaler at a price of 'cost plus three per cent.' Being informed that their brother-in-law, Larry Hamady, who operated a grocery store in the city of Fenton, was purchasing from plaintiff at cost plus 2 1/2 per cent, they desired to make a like favorable arrangement through the salesman, George Trotter, who had been handling the Hamady account. Negotiations resulted in Trotter assuring them that they would be given by plaintiff the right to purchase groceries at cost plus 2 1/2 per cent, with favorable discounts on produce.

Defendants had not previously dealt with Trotter directly, although they had received groceries and produce sold by him to Hamady under the alleged agreement with the latter. In order to facilitate the carrying out of the arrangement made by them with Trotter, they requested plaintiff to include their store in the territory regularly covered by the salesman. Plaintiff's president, Sam Farah, to whom the request was made, at first expressed reluctance to grant it but finally did so. The following excerpt from the joint statement of facts is significant:

'It was desirable for Sefas to purchase on the basis they thought Larry Hamady was purchasing since there was an understanding between the two stores that they would advertise together and put out joint handbills. Before Trotter was actually assigned to call upon the Sefas, a meeting was held in the offices of Central Wholesale Company with Sam Farah, Larry Hamady, and Sefa, and it was discussed there that Sefas would have the 'same deal' the Larry Hamady was getting. However, the nature of the 'deal' that Larry Hamady was receiving was not discussed and no money was ever mentioned at this meeting.'

Following the arrangement above mentioned, business relations were established between plaintiff and defendants. It is conceded that for some months Trotter pursued a course of conduct not known to his principal or to defendants. Invoices of groceries and produce ordered and delivered were made out by plaintiff's office employees on the basis of cost plus five per cent for groceries and regularly allowed discounts on product. Trotter called on defendants from time to time, looked over the invoices received by them from plaintiff, and computed discounts thereon which ostensibly resulted in allowing the defendants the benefit of the bargain that they had made with him. Then, for the purpose of insuring that his principal would receive the full amounts indicated by said invoices, Trotter prepared fictitious invoices on blanks that he had presumably obtained from plaintiff's office, listing thereon goods and produce that never had actually been sold and delivered to defendants, and thus making up the amount of the discount that he had pretended to allow to Sefas. It was the claim of the latter on the trial in circuit court that they finally concluded that something was wrong with their business because they were losing money. Apparently they based their retail prices on what they thought they were paying plaintiff, rather than on the amounts that they actually paid, or were charged, pursuant to Trotter's manipulations. They complained to plaintiff, and a resulting investigation revealed the actual situation. Business relations were readjusted accordingly.

The instant case was brought by plaintiffs on the theory that it was entitled to recover for groceries and produce sold and delivered to defendants on the basis of the contract that it claimed existed, namely, cost plus five per cent for groceries and the regular prices for produce subject only to discounts allowed to purchasers generally under its method of operation. Obviously, plaintiff's theory of its cause of action ignored the fact that its representative did not make an agreement with defendants for such prices. It was agreed on the trial that the amount of plaintiff's claim was $3,158. Defendants insisted that plaintiff was bound by the agreement made with them by Trotter, that on the basis of the prices that they had agreed to pay for groceries and produce they had overpaid, or had been overcharged, in the sum of $5,316.51, and that they were entitled to judgment against the plaintiff on their counterclaim for the difference between said amount and the sum of $3,158.00, as claimed on behalf of plaintiff. Plaintiff's motion for a directed verdict in its favor, made at the conclusion of the proofs introduced by defendants in support of their counterclaim, and renewed at the conclusion of the testimony, was overruled, and the factual issues submitted to the jury. Verdict was returned in favor of defendants for the amount claimed by them. A motion for a new trial was denied, and plaintiff has appealed.

It may be noted that defendants, on leave granted by the circuit court, brought a cross action naming Trotter as defendant, on the theory that he was liable for damages in the event that plaintiff's position was sustained on the trial. However, the jury returned a verdict of no cause for action insofar as Trotter was concerned, and no appeal has been taken from the judgment in his favor. In consequence, questions that might otherwise arise with reference to the counter action against Trotter are not involved on this appeal.

The principal issue in the case has reference to the apparent authority of Trotter to bind plaintiff by the agreement that he made with defendants. The latter do not claim that testimony was offered on the trial tending to show specific authority granted to the salesman by plaintiff to make such an agreement as was entered into between him and the Sefas. The trial judge recognized the situation in this respect and submitted the question to the jury on the basis of a claimed holding out by plaintiff as to its agent's authority. The verdict returned was obviously based on acceptance of defendants' claim.

The proofs in the case fairly established that Trotter was empowered to interview retail grocers for the purpose of selling groceries and produce to them, to quote prices, to deliver statements periodically, to make collections, and to grant allowances for breakage and spoilage. The testimony of plaintiff's president on the trial further indicates that, with the approval of plaintiff, special discounts might be given. There is also testimony in the case that Trotter made statements to defendants indicating that Farah knew of the arrangement, and that they relied on such statements. As above noted, it was discussed at the meeting of Farah, Hamady and Sefa, before beginning operations under the arrangement between Trotter and defendants, that the latter would have 'the same deal' that Hamady was getting. It does not appear that Farah raised any question as to the nature of the 'deal' to which the remarks had reference. It is not disputed that defendants understood that they were to receive special consideration in the arrangements that Trotter might make with them, and the statement in question fairly indicated that such was the situation. It is also significant that prices were not discussed at the meeting.

Defendants' request that they be permitted to deal with Trotter was made in reliance on the promises and assurances of the latter with reference to the contractual arrangement contemplated. They jury obviously found that as a matter of fact, under all the circumstances surrounding the transaction, defendants were justified in assuming that Trotter was empowered to act on behalf of plaintiff in the sale of groceries and produce, including fixing prices and discounts involved...

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    • United States
    • Court of Appeal of Michigan — District of US
    • January 15, 2019
    ...conclusion because the inquiry properly is focused on Danzig's apparent, rather than actual, authority. See Central Wholesale Co. v. Sefa , 351 Mich. 17, 25, 87 N.W.2d 94 (1957).The trial court properly denied defendant's motion for summary disposition because there was a genuine issue of m......
  • Reed v. Yackell, Docket No. 126534. COA. No. 4.
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    ...in former subsections 161(1)(b) and 161(1)(d), respectively. Hoste, supra at 566 n. 2, 592 N.W.2d 360. 14. See Central Wholesale Co. v. Sefa, 351 Mich. 17, 25, 87 N.W.2d 94 (1957), quoting 2 CJS, Agency, § 96, pp. "Whenever the principal, by statements or conduct, places the agent in a posi......
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    ...to presume that the agent is authorized to do all things within the usual scope of the principal's business. Central Wholesale Co. v. SEFA, 351 Mich. 17, 27, 87 N.W.2d 94 (1957). However, a principal is not bound where his agent lacks authority and the person dealing with the agents knows o......
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    ...must have acted in such a way as to confer authority, whether actual or apparent, on the prospective agent. Central Wholesale Co. v. Sefa, 351 Mich. 17, 87 N.W.2d 94 (1957); Grossman v. Langer, 269 Mich. 506, 510, 257 N.W. 875 (1934); Michigan Nat'l Bank v. Kellam, 107 Mich.App. 669, 679, 3......
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