Fradley v. Hyland
| Decision Date | 01 December 1888 |
| Citation | 37 F. 49 |
| Parties | FRADLEY v. HYLAND. |
| Court | U.S. District Court — Southern District of New York |
Syllabus by the Court
Where an agent, authorized by a principal to purchase supplies for the use of the principal, and instructed to purchase only for cash, purchases in his own name, upon credit, of a seller who supposes the agent to be buying for himself only, and the principal pays or settles with the agent for the supplies in good faith, supposing that the agent had purchased them for cash or upon his personal credit, he is not liable over again to the seller for the price of the supplies.
The rule that a seller who deals with the agent of an undisclosed principal can, upon discovering the principal, resort to the latter for payment, unless by his conduct he has led the principal in the meanwhile to pay or settle with the agent does not apply to a case in which the agent bought contrary to his instructions, and the seller gave credit to the agent supposing him to be the only principal, and the principal has in the meantime paid the agent.
Josiah A. Hyland, for appellant.
Peter S. Carter, for appellee.
The libel sets forth two causes of action for supplies purchased by one Gibson. The district court decreed in favor of the libelant upon the first cause of action, and dismissed the libel as to the other. The respondent in the court below is the appellant here, but the libelant, although he has not appealed from the part of the decree by which the libel as to the second cause of action was dismissed, cites the case of Irvine v. The Hesper, 122 U.S. 256, 7 S.Ct. 1177 and insists that he is entitled to urge that this court should decree in his favor as to that cause of action. The facts which appear in evidence are these: During the period in which the supplies were purchased, one Gibson, who was the owner, and was managing certain canal-boats of his own, was employed by the appellant, to manage certain canal-boats for the latter. Gibson was to obtain employment for the boats and return the net earnings monthly to appellant, after paying for all repairs and supplies, and deducting his own commissions. His instructions were not to obtain supplies upon credit, but, if not in funds from the earnings, to call upon the appellant. Monthly settlements of account took place between Gibson and the appellant, in which Gibson was allowed all items for supplies paid or contracted for by him against the earnings of the boats, and a considerable fund was always left in his hands by the appellant. Gibson ceased to act as appellant's agent September 1, 1886. The supplies were sold to him prior to that time. The libelant supposed that Gibson was the owner of all the boats he was managing, and dealt with him as such, selling him supplies for all indiscriminately, charging the price to him, and taking his notes from time to time, or those of one Isham, his clerk. The claim to recover the part of these supplies used on appellant's boats is the first cause of action set forth in the libel. One Kelly had also sold supplies to Gibson for the same boats, supposing that Gibson was the owner, and had received Gibson's notes, or notes of Gibson's clerk, for the amount. After these notes had matured, Gibson asked the libelant to pay them for him to Kelly, and the libelant did so, receiving new notes from Gibson for the amount. There was no assignment to libelant of Kelly's original demand against Gibson. The claim for the supplies thus sold by Kelly to Gibson is the second cause of action set forth in the libel. After Gibson ceased to act as agent for appellant, the libelant discovered that some of the supplies had been purchased for the appellant's boats, and, being unable to collect his demands of Gibson, made claim against the appellant therefor. Until then the appellant did not know of the transactions between Gibson and the libelant, or between Gibson and Kelly. The moneys left by appellant in Gibson's hands were at all times more than the amount of the libelant's demands, and Gibson was indebted to the appellant in more than that amount when he left the appellant's employ, and when this libel was filed.
As to the first cause of action no question is made by the appellant that it is not of admiralty cognizance, but he insists that he is not liable as a principal for the supplies sold to his agent by the libelant, under the circumstances of the case. The general rule is familiar that, when goods are bought by an agent, who does not at the time disclose that he is acting as agent, the seller, although he has relied solely upon the agent's credit, may, upon discovering the principal, resort to the latter for payment. But the rule which allows the seller to have recourse against an undisclosed principal is subject to the qualification stated by Lord MANSFIELD in Railton v. Hodgson, 4 Taunt. 576, and by TENTERDEN, C.J., and BAYLEY, J., in Thomson v. Davenport, 9 Barn. & C. 78. As stated by Mr. Justice BAYLEY, it is ' The principal must respond to and may avail himself of a contract made with another by an undisclosed agent. When he seeks to enforce a bargain or purchase made by his agent the rule of law is that, if the agent contracted as for himself, the principal can only claim subject to all equities of the seller against the agent. In the language of PARKER, B.: 'He must take the contract subject to all equities, in the same way as if the agent were the sole principal,' (Beckham v. Drake, 9 Mees. & W. 98,) and accordingly subject to any right of set-off on the part of the seller, (Borries v. Bank, 29 L.T.N.S. 689.) Thus the rights of the principal to enforce, and his liability upon, a contract of...
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