Evans v. Ely, 3348.
| Decision Date | 28 May 1926 |
| Docket Number | No. 3348.,3348. |
| Citation | 13 F.2d 62 |
| Parties | EVANS v. ELY. |
| Court | U.S. Court of Appeals — Third Circuit |
Isaac A. Pennypacker and Henry, Pepper, Bodine & Stokes, all of Philadelphia, Pa., for plaintiff in error.
James Frank Shrader and Gill, Guckes & Shrader, all of Philadelphia, Pa., for defendant in error.
Before BUFFINGTON, WOOLLEY, and DAVIS, Circuit Judges.
This suit is in assumpsit on a breach of an implied warranty. The theory of the action is that the plaintiff orally agreed to sell all the stock of the Home Manufacturing Light & Power Company to the Wilmington & Philadelphia Traction Company, corporations of different states, under a contract made with the defendant, president of the latter corporation, on his representation that he had authority to make the contract; that in fact he made the contract in question without the authority of his corporate principal; that later his principal repudiated it; and that, having induced the plaintiff by this misrepresentation to enter into the contract to his disadvantage, the defendant became personally bound by an implied warranty of his authority and is liable to the plaintiff in damages as though he had made the contract on his own behalf. Williams v. DeSoto Oil Co., 213 F. 194, 129 C. C. A. 538 (C. C. A. 8th); Kent v. Addicks, 126 F. 112, 60 C. C. A. 660 (C. C. A. 3d); Wolff v. Wilson, 28 Pa. Super. Ct. 511; Stiteler v. Ditzenberger, 45 Pa. Super. Ct. 266; Kroeger v. Pitcairn, 101 Pa. 311, 47 Am. Rep. 718. On the cause of action thus stated in the abstract, the learned trial court held that the plaintiff, to prevail, must present evidence on which three fact findings may be made:
(1) The defendant, as agent, made a contract on behalf of the corporation as principal; (2) the defendant represented that he had authority to contract for the corporation; and (3) the principal repudiated the contract made on its behalf because the defendant lacked authority to make it.
Finding no evidence on which to make these necessary findings, the trial court entered a judgment of nonsuit. Whereupon the plaintiff sued out this writ of error.
Admittedly the three elements — a contract, representation by the agent of his authority to make the contract, followed by the principal's repudiation of the contract because of the agent's lack of authority — are necessary to sustain an action on the agent's implied warranty of authority. Although each of these elements was considered and discussed at the trial, and again in this court on review, we are of opinion that the elements of authorization and repudiation are secondary to the element of the existence of a contract and do not arise until the primary fact of making a contract has been established. If there was no contract, obviously the principal could not have repudiated it; and the defendant's representation of authority to enter into a contract that was not made would, of course, raise no liability on his part. We shall, therefore, lay aside all matters of authorization and repudiation until we have found a contract.
We state the matter in this way because throughout the negotiations, pleadings and trial there was a question whether a contract was actually made; and, if made, with whom was it made — whether with the Traction Company or with the defendant?
Shortly stated, what happened was this: The plaintiff owned or controlled all the stock of the Home Company. Having in view two possible purchasers, a Baltimore concern and the Wilmington concern, he entered into negotiations with Thomas W. Wilson, vice president of the Wilmington Company in Wilmington, who all the while was in touch by telephone with Van Horn Ely, president of that company, then in Philadelphia. Negotiations, beginning early one afternoon, were protracted into the night. The parties (of whom there were several present) came to an understanding as to the price to be paid for the shares, when and how payments should be made, what bonded liabilities of the Home Company should remain, what of its liquid assets should be retained by the vendors, what part of the purchase price — $1,000 — should presently be paid — all before it was determined who was the party negotiating for the purchase of the stock. Ely and Wilson represented a group of corporations of which the Wilmington Company was one. The plaintiff did not know and did not care who the purchaser might be. However, we assume on the plaintiff's averment in his statement of claim that the Wilmington Company was contemplated by all the parties as the proposed purchaser. Toward the end of the negotiations it became apparent that the sale could not be made to the Wilmington Company without first obtaining the approval of the Public Service Commission of Maryland, the domicile of the Home Company, and its approval could not be obtained without a delay to which the plaintiff would not consent. It was then proposed that Wilson be nominated purchaser. This, for a reason not important to state, was regarded as impracticable and Ely's name was suggested. Believing they had arrived at an understanding, Wilson set about writing the contract. As he was having difficulty in expressing some of its terms and as it was evident the drafting of the contract would take some time, the several parties adjourned an hour for dinner. On their return Wilson presented to the plaintiff a draft of the proposed contract naming the plaintiff and defendant as parties and containing all that had been agreed upon and (the plaintiff says) one thing more which was in these words:
"The party of the second part (Ely) shall have an opportunity of satisfying itself (sic) through counsel as to all these matters before making the final payment for the property, and if not found satisfactory to the party of the second part all payments heretofore made shall be returned to the party of the second part and this agreement shall become null and void."
The plaintiff at first demurred to this provision as being a matter not agreed upon. Wilson insisted that it was a part of the terms and, with little more discussion, the plaintiff signed the writing, with the...
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...must be established by evidence which is substantial; a mere scintilla is not enough. Evans v. Ely, 3 Cir., 13 F.2d 62, and cases cited at page 64. verdict cannot rest upon guess or conjecture. Trainer v. Fort, 310 Pa. 570, 165 A. 232. Plaintiff's testimony is not as explicit as it might be......
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