Charleston & W. C. Ry. Co. v. Robert G. Lassiter & Co.

• Decision Date: 21 November 1934
• Docket Number: 469.
• Parties: CHARLESTON & W. C. RY. CO. v. ROBERT G. LASSITER & CO. et al.
• Court: North Carolina Supreme Court

177 S.E. 9

207 N.C. 408

CHARLESTON & W. C. RY. CO. v. ROBERT G. LASSITER & CO. et al.

No. 469.

Supreme Court of North Carolina

November 21, 1934

Appeal from Superior Court, Wake County; Grady, Judge.

Civil action by the Charleston & Western Carolina Railway Company against Robert G. Lassiter & Company and the London & Lancashire Indemnity Company of America. From a judgment of nonsuit, plaintiff appeals.

Reversed.

Where one of two persons must suffer loss by fraud or misconduct of third person, he who first reposes confidence, or by his negligent conduct made it possible for loss to occur, must bear loss.

This is a civil action brought by plaintiff, Charleston and Western Carolina Railway Company, against the defendants, Robert G Lassiter & Co. and London & Lancashire Indemnity Company of America, to recover the sum of $4,407.07, together with interest thereon, from June 20, 1933, until paid, alleged to be due on account of tariff charges on and/or in connection with freight shipments delivered by plaintiff to the defendant Robert G. Lassiter & Co. The defendant Robert G Lassiter & Co. did not answer, and on November 6, 1933 judgment by default final was rendered against it. The defendant London & Lancashire Indemnity Company of America filed answer, and the cause was thereupon transferred to the civil issue docket for trial of the issues joined. The defendant London & Lancashire Indemnity Company denied liability to plaintiff, Charleston & Western Carolina Railway Company, under bond executed in its behalf by its agent and attorney in fact, Stacey W. Wade, alleging that the said Stacey W. Wade did not have the power and authority to execute the same.

The action was tried before his honor, Henry A. Grady, judge presiding, at second June term, 1934, of the superior court of Wake county; trial by jury having been waived. At the conclusion of all the evidence, the court allowed the motion of defendant London & Lancashire Indemnity Company for judgment of nonsuit, and, from judgment upon this ruling, the plaintiff excepted, assigned error, and appealed to the Supreme Court. The necessary facts will be set forth in the opinion. In the opinion, the London & Lancashire Indemnity Company of America will be called, for short, indemnity company.

Murray Allen, of Raleigh, for appellant.

J. M. Broughton, of Raleigh, for appellee indemnity company.

CLARKSON Justice.

At the conclusion of all the evidence, the defendant indemnity company made a motion in the court below for judgment as in case of nonsuit. C. S. § 567. The court below sustained this motion, and in this we think there was error.

The part of the bond in question, necessary to be set forth in this controversy, is as follows:

"Know all Men by These Presents, that we, Robert G. Lassiter & Company, of Oxford, North Carolina, as Principal and London and Lancashire Indemnity Company of America, of Hartford, Conn., as Surety, are held and firmly bound unto the Charleston and Western Carolina Railway Company, its successors and/or assigns, hereinafter called the Obligee, in the sum of Five Thousand ($5,000.00) Dollars, lawful money of the United States of America, for the payment of which, without setoff or counterclaim, we bind ourselves, our heirs, executors, administrators, successors and assigns, jointly and severally, firmly by these presents. Signed, sealed and dated this 13th day of October, A. D., 1931.

Whereas, the Obligee has consented to extend to the Principal, credit of not exceeding ninety-six hours for the payment of tariff charges on and/or in connection with freight shipments, the period of ninety-six hours being as hereinafter construed.

Now, therefore, the condition of this obligation is such that if the Principal shall, within such period of ninety-six hours, pay or cause to be paid to the Obligee all such charges, then this obligation to be void, otherwise to remain in full force and effect, subject, however, to the following express conditions," etc.

The express conditions are not material. The bond is signed as follows: "Robert G. Lassiter & Co., Principal (Corporate Seal) by Geo. R. Goodwin, Vice-President. Attest: H. Wolff, Asst. Secty. London & Lancashire Indemnity Co. of America, Surety. (Corporate seal of said company bearing words 'London & Lancashire Indemnity Company of America.') Stacey W. Wade & Son (Seal) by Stacey W. Wade, Attorney in Fact."

It is conceded that under the bond Robert G. Lassiter & Co. owe the plaintiff, Charleston & Western Carolina Railway Company, $4,407.07, with interest from June 20, 1933, until paid. The indemnity company contends that it nominated, constituted, and appointed "Stacey W. Wade and/or Louis M. Wade, of Raleigh, North Carolina, its true and lawful agent and attorney-in-fact, to make, execute, seal and deliver for and on its behalf, as surety, and as its act and deed"; that, under the attorney in fact bond, Stacey W. Wade & Son were given power and authority to execute certain kinds of bonds therein mentioned, but not the one in controversy. In its answer, the indemnity company said: "That the said bond is accordingly invalid and void so far as this defendant is concerned, and not in any respect binding on this defendant."

The agency and attorney in fact bond to Stacey W. Wade & Son is dated March 18, 1931. On May 4, 1931, Stacey W. Wade & Son received from the indemnity company, through its agent at Richmond, Va., a letter in part, as follows:

"Re: R. G. Lassiter & Company. Please be advised that we are willing to execute contract bonds for this concern up to $100,000.00 without reference to this office. On larger projects, we ask that you secure all possible information with reference to the project and phone or write us for authorization.

$100,000.00 blanket authorization on this concern without reference to the Company may seem to be very small to you, but in view of the fact that this concern represents an entirely new outfit so far as we are concerned, we trust that it will be satisfactory.

With reference to Freight Charge Bonds, we find it is the usual practice for the company which executes the contract bond, to execute the freight charge bonds necessary in the performance of the contract bonded by them under their contract bond. We would not care to execute any such bonds in connection with contracts bonded by some other company, though we will take care of the freight charge bonds executed on our own projects, of course."

The bond in controversy was thereafter issued on October 13, 1931. Stacey W. Wade testified, in part:

"I had no authority from the company to execute bonds other than the authority contained in the power of attorney by writing.

I was under the impression I had authority to execute the bond. That is why I executed it. I did not at the time of the execution of this bond give any information whatever to the Charleston & Western Carolina Railway Company as to any limitations on my authority which would prevent the execution of that bond by me in behalf of the London & Lancashire Indemnity Company. * * *

Q. Did you hold yourself out, Mr. Wade, as having authority to write bonds generally for the London & Lancashire Indemnity Company? A. Yes, sir."

We have examined the original bond in evidence, in the possession of the plaintiff and the subject of this controversy. (1) It is a printed form with blank to be filled in, which clearly indicates that it was furnished by defendant indemnity company to its agent and attorney in fact, Stacey W. Wade & Son. (2) The printed form has on it "A & B-1300-4-31-1 M." "Form 3351, Revised April 10, 1931." (3) "Indemnity Bond for Freight Credits." (4) At the bottom of the bond is a note printed, in part, as follows: "Bond must be forwarded to the Treasurer of the Railroad Company for file after being executed. Bond must be for the maximum amount of the credit." (5) The company's name indicated it was an "Indemnity Company." (6) The agent and attorney in fact, Stacey W. Wade & Son, had a seal of the company and the seal impression is on the bond, with this on it: "London & Lancashire Indemnity Company of America." The bond was given to plaintiff, and it relied on it, and no knowledge of the limited or restricted authority of the agent and attorney in fact of the indemnity company was brought to the attention of plaintiff.

In two aspects, we think, the judgment of nonsuit in the court below should be overruled.

First. The agent and attorney in fact, Stacey W. Wade & Son, were acting within the scope of their apparent authority and had the form from the indemnity company, which was filled out signed and sealed by Stacey W. Wade & Son, and which, according to the printed form, permitted them to do what they did do-execute an "Indemnity Bond for Freight Charges" to plaintiff. The plaintiff had no notice of the lack of...