Hadley Milling Company v. Kelley

• Decision Date: 22 February 1915
• Docket Number: 196
• Citation: 174 S.W. 227,117 Ark. 173
• Parties: HADLEY MILLING COMPANY v. KELLEY
• Court: Arkansas Supreme Court

174 S.W. 227

117 Ark. 173

HADLEY MILLING COMPANY v. KELLEY

No. 196

Supreme Court of Arkansas

February 22, 1915

Appeal from Lawrence Circuit Court, Eastern District; W. A Cunningham, Special Judge; reversed.

Judgment reversed and cause remanded.

Hawthorne & Hawthorne, for appellant.

Burke exceeded his authority in drawing the draft in the name of his principal, payable to himself. 18 L. R. A. 663; 199 Ill 151; 59 L. R. A. 657; 194 Ill. 157, 56 L. R. A. 564; 53 Ark 136; Id. 208; 105 Ark. 111; 92 Ark. 315; 70 Ark. 401; 62 Ark. 33; 52 Ark. 253; 124 N.W. 236; 76 N.W. 792; 77 N.E. 295; 31 Cyc. 1643.

J. N. Beakley, for appellee.

A traveling salesman of a wholesale house is a general agent, and his acts within the scope of his business, though in violation of instructions, will bind his principal, unless parties dealing with him have notice of limitations upon his authority. 48 Ark. 138. One who holds another out to the public as his agent is bound by his acts. 57 Ark. 203.

Burke did not exceed his apparent authority in this case. While declarations of an agent are not admissible to prove agency, yet, if the agency be otherwise prima facie proved, or admitted, as in this case, they become admissible in corroboration. This would admit the statement to appellee by Burke that he was required or permitted to take an acceptance as he did. 31 Cyc. 1656.

Persons dealing with an agent within the apparent scope of his real authority, will be protected. 52 Ark. 203; 49 Ark. 320.

OPINION

MCCULLOCH, C. J.

The plaintiff, Hadley Milling Company, is a foreign corporation, domiciled at Olathe, Kansas, and is engaged there in milling and selling flour. On November 23, 1912, the plaintiff, through its salesman, one J. E. Burke, sold a carload of flour to the defendant, J. P. Kelley, who was engaged in the mercantile business at Minturn, Lawrence County, Arkansas, and this is an action to recover the sum of $ 746, the price of the carload of flour. Defendant admits the purchase of the flour at the price named, but pleads payment of the amount by acceptance of a check drawn by Burke, in the name of the plaintiff, and satisfaction thereof by the execution of a note to the Bank of Hoxie, the holder of the check. The case was tried before a jury and the trial resulted in a verdict in favor of the defendant.

It appears from the evidence that Burke lived at Hoxie, Arkansas, and had been selling flour for the plaintiff in that portion of the State for several years. The terms of his contract with plaintiff, as stated by all of the officers of the plaintiff company in their testimony, was that he was to receive ten cents per barrel as commission on all of his sales, and that he was to sell for cash, or on thirty days time, or not exceeding sixty days time by express permission of the manager. Each of them testified that Burke had authority to make collections of accounts for the sale of flour, but that he had no authority to take notes, drafts, or acceptances. On November 23, 1912, Burke sold the carload of flour in question to the defendant and drew a draft on the defendant in the name of the company, payable to himself (Burke), and this draft was accepted by defendant by written indorsement made thereon. A few days later Burke sold the draft to the Bank of Hoxie at a small discount and the proceeds were credited by the bank on Burke's individual indebtedness. When the draft fell due, the defendant satisfied the bank and took up the draft and gave his note to the bank for the amount. Burke disappeared about the middle of February, 1913, without having reported to the plaintiff the collection of the account, and had not been heard of up to the time of the trial. The undisputed testimony of plaintiff's officers and manager is that they did not authorize Burke to take acceptances or to collect otherwise than in money; that they had never heard of his having done so in any instance, and that he had never paid the amount of this account or accounted to plaintiff in any way for it.

"One who deals with an agent is put upon notice of the limitations of his authority, and must ascertain what that authority is, and, if he fails to do so, he deals with the agent at his peril." United States Bedding Co. v. Andre, 105 Ark. 111, 150 S.W. 413. A person is, however, bound not only by the acts of his agent within the scope of actual authority conferred, but also those acts which are within the apparent scope of the agent's authority, even though they are beyond the actual scope of the authority. Queen of Arkansas Ins. Co. v. Malone, 111 Ark. 229, 163 S.W. 771. The authority of an agent to sell goods does not necessarily imply authority to collect the proceeds unless there are circumstances or appearances "which give color to the belief in the purchaser that the authority exists.'" Meyer v. Stone, 46 Ark. 210.

In the present case the goods were not delivered by Burke, and his authority to sell did not necessarily imply the authority to collect the proceeds, but the evidence is undisputed that the authority was in fact given to him to collect the accounts for sales. The real question presented is whether or not he had authority to accept defendant's time check in payment of the price of the flour, for if he had no such authority, or if it was not within the apparent scope of his authority, then the defendant's plea of payment is unfounded. The testimony is, as we have already shown, uncontradicted, that no express authority was given by the plaintiff to Burke to collect in anything except money, and it seems to be well settled by the authorities that the authority of an agent to collect does not include authority to collect in anything else except in current funds.

Mr Mechem, in his work on the law of Agency, says (Sec. 375): "An agent authorized merely to collect a demand or to receive payment of a debt, can not bind his principal by any arrangement short of actual collection and receipt of the money. He can not, therefore, take in payment the note of the debtor payable either to himself or to his principal." Precisely the same rule is laid down in I Clark & Skyles on Agency, p. 645, and 1 _Am. & Eng. Ency. of Law, p. 1027. See also, Blumberg v. Life Interests & R. S. Corporation (1897), 1 Ch. Div. 171, 66 Law J. Ch. 127; Pate v. Westacott, 1 L. R. Queen's Bench (1894) 272; Harlan v. Ely, 68 Cal. 522, 9 P. 947; Holt v. Schneider, 57 Neb. 523, 77 N.W. 1086; Drain v. Doggett, 41 Iowa 682; Baldwin v. Tucker, (Ky.)...