Harriss, Magill Co. v. Rodgers Co.

• Decision Date: 01 October 1925
• Citation: 143 Va. 815
• Court: Virginia Supreme Court
• Parties: HARRISS, MAGILL & COMPANY, INCORPORATED, v. JOHN H. RODGERS & COMPANY.

Page 815

143 Va. 815

HARRISS, MAGILL & COMPANY, INCORPORATED, v. JOHN H. RODGERS & COMPANY.

Supreme Court of Virginia, Richmond.

October 1, 1925.

1. CONTRACTS — Shipping Agents — Contract by Shipping Agent to Pay Difference in Insurance — Defense that Verbal Contract with Shipping Agent Varied Contract with Ship Owner — Burden of Proof — Case at Bar. — In an action by shippers against a shipping agent the plaintiffs alleged that the defendant had verbally agreed to pay the difference between the insurance on the goods shipped in the vessel first selected and the insurance on the goods as shipped in the vessel finally substituted by the shipping agent. The defendant denied the verbal contract and further asserted that if such contract existed it would vary the terms of the written contract between the shippers and the ship owners.

Held: That the plaintiff had the burden of showing that the verbal contract with the defendant had been made, and the defendant had the burden to show that plaintiff could not rely on such contract for the reason that there was a written contract which could not be varied by parol proof of the agreement alleged by plaintiff.

2. CONTRACTS — Shipping Agents — Contract by Shipping Agent to Pay Difference in Insurance — Case at Bar. — In an action by shippers against the shipping agent for the difference between the insurance on the goods shipped, if shipped on the vessel first named by the shipping agent, and the insurance on the goods as shipped on a vessel substituted by the shipping agent, plaintiff contended that the shipping agent had promised to pay this difference. A witness for the plaintiff testified positively that such an agreement had been made and there was other testimony on the part of the plaintiffs to the same effect.

Held: That the evidence was sufficient to justify the court in submitting to the jury the question of whether the contract had been made by the defendant.

3. AGENCY — Liability of Agent — Collateral Parol Contract by Agent with Third Party when Negotiating a Written Contract for His Prncipal. — If an agent, while negotiating for a written contract to be made by him for his principal with a third party, undertakes on his own responsibility to make a contract himself with the third party, the agent may bind himself personally by an oral agreement, although the contract resulting from the negotiations which he makes for his principal is in writing. The agent may so bind himself, whether the principal is disclosed or not.

4. AGENCY — Undisclosed Principal — Liability of Agent. — When one enters into a contract, orally or in writing, in his own name when he is, in fact, acting as agent for another, without disclosing his principal, the other party may, as a general rule, hold either the agent, or his principal, when discovered, personally liable on that contract.

5. AGENCY — Collateral Parol Undertaking by Agent — Shipping Agent's Agreement to Pay Difference in Insurance — Case at Bar. — Where a shipping agent, as an inducement to shippers to enter into and continue the execution of a written contract with its principal, made itself liabe to shippers on a parol contract to pay the difference in insurance rates between the ship first named by the shipping agent and the ship finaly selected by it, the contract is separate, independent of and distinct from the written contract made by the agent for its principal, and a suit thereon against the agent can be maintained.

6. PAROL EVIDENCE — Agency — Independent Contract of Agent — Case at Bar. — Evidence of a parol agreement tending to establish a personal contract by a shipping agent to pay the difference between insurance rates on the ship first named by it and those on the ship finally substituted by it for carrying the goods of plaintiffs is admissible in evidence in an action by plaintiffs against the shipping agent, because the contract between the plaintiffs and the shipping agent was distinct from and collateral to the main contract, made with the principal of defendant, the owner of the vessel, to carry the goods, that principal not being bound by the contract. Such a collateral contract is not within the parol evidence rule because it does not vary or contradict the terms of the written agreement made between the parties to it, although one of the parties is acting through an agent.

7. PAROL EVIDENCE — To Whom the Rule Applies — Parties and Privies — Third Parties. — The parol evidence rule applies only between the immediate parties and their privies. It does not apply to a controversy between third parties or between a third party and one of the parties to the written instrument.

8. CONTRACTS — Shipping Agents — Parol Contract by Agents to pay Differences in Insurance Rates Between the Vessel First Named and the One Finally Substituted — Case at Bar. — Shippers approached defendant, not as agent of any particular vessel, but for the purpose of soliciting defendant's services in its regular business in making inquiries in shipping circles and procuring cargo room for intending shippers. The oral promise, sued upon in the instant case, to pay the difference in insurance rates between the vessel first selected by defendant for plaintiffs and the vessel finally substituted by them, grew out of a search for a suitable ship. This promise did not relate to the carriage of the goods. Defendant contended that when it came to entering into an agreement, binding the steamer to take the cargo and shippers to ship by the steamer, the contracts in writing did not evidence an agreement between defendant and plaintiff, but that it executed that contract only as agents for the steamer.

Held: That as the verbal contract sued on between the shipping agent and the shippers was entirely independent to the freight contract, the court did not err in permitting parol evidence of the agreement as to the difference in the insurance.

Error to a judgment of the Circuit Court of the city of Norfolk, in a proceeding by attachment. Judgment for plaintiff. Defendant assigns error.

The opinion states the case.

Hughes, Vandevanter & Eggleston and Otis Beall Kent, for the plaintiff in error.

Baird, White & Lanning, for the defendant in error.

CRUMP, P., delivered the opinion of the court.

The proceeding in the lower court was instituted by the filing of the petition for an attachment by John H. Rodgers & Company against Harriss, Magill & Company, Inc., a non resident corporation, as principal defendant. The principal defendant appeared and answered the petition and the issue so made was tried before a jury. The trial resulted in a verdict for the plaintiffs for $5,155.48, on which judgment was rendered. The defendant, Harris, Magill & Company, Inc., the plaintiff in error, then procured a writ of error from the Supreme Court of Appeals. In order for a clear understanding of the errors assigned by the plaintiff in error, it is very essential in this case to ascertain and bear in mind the exact character of the case for the plaintiffs and the nature of the defense.

The parties will be referred to according to the positions they occupied as plaintiffs and defendant before the lower court, Harriss, Magill & Company, Inc., being the defendant.

In the petition filed by the plaintiffs, composing a partnership under the style of John H. Rodgers and Company, they allege that the defendant, whose principal place of business was in New York, maintained an office and an agencyin the city of Norfolk; that the defendant undertook, by an agreement with the plaintiffs, to provide for the plaintiffs freight room on a ship acceptable to them for certain cotton to be shipped from Norfolk to Bremen; that if a ship was more than fifteen years old the insurers required a higher rate on the cargo than on a ship that had been in service for a shorter number of years; that the defendant, when approached by the plaintiffs for the purpose of having it procure the necessary ocean carriage, named for the performance of that service a steamship known as the Kian Maru, stating that she was about five years old; and that such ship was acceptable to the plaintiffs; that the defendant afterwards substituted for the Kian Maru the steamship Frances L. Skinner, stating that she was as good and satisfactory a vessel as the Kian Maru; that the plaintiffs accepted said steamship upon said statement, but afterwards learned that she was more than fifteen years old, and therefore the rate of insurance upon the cotton to be loaded on her would be in excess of the usual rate; that "this fact was communicated to the principal defendant and it agreed to pay the petitioners the difference between the cost of insuring their cargo on said vessel and what that cost would have been if said vessel had been less than fifteen years old." The petition further alleged that there was a custom to the effect that the shipping agents should pay such difference, and that the plaintiffs relied upon the custom, the representations and the contract. Upon the trial there was not sufficient evidence to establish such a custom and no instructions were given the jury as to that allegation. The case made by the plaintiffs upon the allegations in the petition rested upon their affirmation of the contract between the defendant company and themselves that the defendant company, upon the discovery of the higher rate of insurance because of the greater age of the steamship Frances L. Skinner, agreed and contracted to pay the difference in the insurance rates.

In the answer to the petition the defendant denied that there was any liability upon it by reason of the agreement or representation set out in the petition; that written agreements for the shipping of the cotton on the steamship Frances L. Skinner were entered into by the defendant as agent of the owners, Skinner and Eddy, of San Francisco, and the plaintiffs; that these contracts, together with the bills of lading, covered all...