Hooper v. Merchants' Bank & Trust Co.

• Decision Date: 04 November 1925
• Docket Number: 354.
• Parties: HOOPER v. MERCHANTS' BANK & TRUST CO.
• Court: North Carolina Supreme Court

130 S.E. 49

190 N.C. 423

HOOPER v. MERCHANTS' BANK & TRUST CO.

No. 354.

Supreme Court of North Carolina

November 4, 1925

Appeal from Superior Court, Forsyth County; Schenck, Judge.

Action by Swift Hooper against the Merchants' Bank & Trust Company. From a judgment affirming a judgment of the county court in favor of plaintiff, defendant appeals. Affirmed.

Verdict held to indicate finding of knowledge of want of authority of agent.

Plaintiff's evidence tended to show the following: That he owed the defendant a note in the sum of $2,500, with $22.50 accrued interest. That this note was a renewal representing a balance due the defendant out of a long series of transactions between plaintiff and defendant. That defendant had sued the plaintiff on this note, and defendant's agent told plaintiff that the note must be paid. That plaintiff sold some real property to his brother, C. M. Hooper, who assumed mortgages thereon, and, as plaintiff's agent, was applying, out of the balance, a sufficient amount to liquidate plaintiff's indebtedness. The note was dated September 2, 1920, and due one day after date, and was paid October 27, 1920. On this date plaintiff and his brother, C M. Hooper, went to the defendant's place of business and asked for the note. That the note was in the office of defendant's counsel who had instituted suit thereon, and the defendant sent for the note. That the plaintiff is a locomotive engineer, and it became time for him to go to his "run," and he left his brother there to complete the settlement. That, when the note was brought into the defendant's bank, discussion took place between the defendant's representative and plaintiff's brother as to who should pay the attorneys' fee incurred in bringing the suit, and plaintiff's brother finally said that, if defendant thought it was right for him to pay it, he would pay it. A check was drawn with the amount of note and interest, and $189.60 additional, making a total of $2,719.40, including $10 for costs of the suit pending. This $10 is not in controversy.

The defendant's evidence tended to show that there had been a long course of dealings between the plaintiff and defendant that he had put them to much trouble and annoyance in not meeting his payments when due, and had failed to give security promised; and that it was necessary to take steps to collect the note; and that this matter was discussed with plaintiff's agent, and the attorneys' fee, in the sum of $189.60, was left with it for defendant's counsel, to whose credit it was immediately placed; and that such payment was voluntarily made by plaintiff's agent, who either had the authority or the apparent authority to make such payment.

Plaintiff's evidence tended further to show that the defendant had actual notice that the plaintiff's agent, C. M. Hooper, did not have the express authority nor the apparent authority to make such payment, and that it was without consideration, and that he did not ratify the payment of the attorneys' fee.

The trial court submitted the usual issue of debt to the jury with instructions limiting the plaintiff's right to recover to the finding of the jury that the defendant must have had actual notice that plaintiff's agent did not have the authority to make the payment in excess of the interest and cost and principal of the note, with the appropriate instructions as to the burden of proof and their duty in the premises. The jury answered the issue as follows:

"In what amount, if any, is the defendant indebted to the plaintiff? Answer: $189.60, with interest from October 27, 1920."

Defendant appealed to the superior court of Forsyth county, assigning errors, and from a judgment affirming the judgment of the county court appealed to this court.

J. E. Alexander and L. M. Butler, both of Winston-Salem, for appellant.

Swink, Clement & Hutchins, of Winston-Salem, for appellee.

VARSER J.

The defendant's exceptions challenge instruction given to the jury in the county court as follows:

"The principal is held to be liable on contracts duly made by his agent with a third person (1) when the agent acts within the scope of his actual authority; (2) when the contract, although unwise, has been ratified; (3) when the agent acts within the scope of his apparent authority, unless the third person has notice that the agent is exceeding his authority, the term 'apparent authority' including the power to do whatever is usually done and necessary to be done, in order to carry into effect the particular power conferred upon the agent and to transact the business or to execute the commission which has been intrusted to him; and the principal cannot restrict his own liability for acts of his agent which are within the scope of his apparent authority by limitations thereon, of which the person dealing with his agent has no notice."

The foregoing is a correct statement of the law, clearly made, applicable to the facts in this case. The defendant has no basis for complaint at this instruction. When the verdict is interpreted in the light of this clear instruction, it appears that the jury has found that the defendant had actual knowledge that plaintiff's agent did not have the authority to make payment beyond the amount of the note, interest, and costs in the suit on the note. These items were legal and just debts due by the plaintiff to the defendant bank. When plaintiff's agent paid the expense incurred by defendant in employing counsel, without authority, as the jury has found, upon defendant's request, this was clearly a receipt of money to the use of the plaintiff. Bank v. McEwen, 160 N.C. 414, 76 S.E. 222, Ann. Cas. 1914C, 542; Briggs v. Insurance Co., 88 N.C. 141; Ferguson v. Mfg. Co., 118 N.C. 946, 24 S.E. 710; Hall v. Presnell, 157 N.C. 292, 72 S.E. 985, 39 L. R. A. (N. S.) 62, Ann. Cas. 1913B, 1293; R. R. v. Smitherman, 178 N.C. 599, 101 S.E. 208; Thompson v. Power Co., 154 N.C. 13, 69 S.E. 756; Bank v. Hay, 143 N.C. 326, 55 S.E. 811; Wynn v. Grant, 166 N.C. 39, 81 S.E. 949.

The facts in the instant record show a very little divergence between the contentions of the plaintiff and the defendant as to what happened with reference to the transaction out of which this suit arose. The defendant contends that it was a voluntary payment, with full knowledge of the facts, which cannot support this action to recover the money so paid. This is a correct principle as between the plaintiff and the defendant, when the facts support it. Lambeth v. Power Co., 152 N.C. 371, 67 S.E. 921; Beck v. Bank. 161 N.C. 201. 76 S.E. 722; Devereux v. Insurance Co., 98 N.C. 6, 3 S.E. 639; Matthews v. Smith, 67 N.C. 374; Commissioners v. Commissioners, 75 N.C. 240; Pool v. Allen, 29 N.C. 120; Adams v. Reeves, 68 N.C. 134, 12 Am. Rep. 627; Board v. Board, 75 N.C. 240; Commissioners v. Setzer, 70 N.C. 426; Brummitt v. McGuire, 107 N.C. 351, 12 S.E. 191. This transaction was had by plaintiff's agent and the defendant, and the jury finds that the defendant had actual notice that plaintiff's agent was without authority to make the payment in controversy. The law relating to voluntary payments by a party in person does not apply.

The defendant contends that plaintiff, after notice that his agent had made the payment, ratified the transaction, and is therefore estopped to contend for a recovery of the same, and moves in this court to dismiss plaintiff's action, for that the complaint does not set out sufficient facts to constitute a cause of action. Waiving plaintiff's contention that this motion is based upon the evidence and not upon the pleadings, we are of opinion that the doctrine of ratification does not apply. Plaintiff justly owed to the defendant bank $2,500 principal and $22.50 interest on his note held by the bank. A payment of this, after the bank had instituted suit, justly and properly entitled the bank to collect the actual court costs incurred in its suit on plaintiff's note, which was admittedly past due. There was ample consideration to support the payment of these items. That was the entire transaction authorized to be done by plaintiff's agent, according to the finding of the jury.

Immediately upon his finding out that the excess payment had been made, plaintiff goes to the defendant and demands a return of the excess payment, which is declined, and this suit is instituted to recover the same. The only part of the transaction that was open to this plaintiff to ratify, or not to ratify, was the payment of the excess above the items justly due the defendant. If he had attempted to disaffirm the payment of the amounts actually due, the defendant had the full right and ample power to refuse his demand. The items of the transaction are separable, although the entire payment was included in one check to the defendant. The facts do not support the plea of ratification. The doctrine of ratification is clearly set forth in 21 R. C. L. 933; Andrews v. Robertson, 111 Wis. 334, 87 N.W. 190, 54 L. R. A. 673, 87 Am. St. Rep. 870; Mechem on Agency, § 167; R. R. v. Atlantic Co., 147 N.C. 368, 61 S.E. 185, 23 L. R. A. (N. S.) 223, 125 Am. St. Rep. 550, 15 Ann. Cas. 363; Bank v. Justice, 157 N.C. 373, 72 S.E. 1016; Savings Bank v. Scroggin Drug Co., 152 N.C. 142, 67 S.E. 253, 50 L. R. A. (N. S.) 581, 136 Am. St. Rep. 821; Christian v. Yarborough, 124 N.C. 72, 32 S.E. 383; Rudasill v. Falls, 92 N.C. 226; Crawford v. Barkley, 18 Ala. 270; Hodnett v. Tatum, 9 Ga. 70; Bank v. Hanmer, 14 Mich. 208; Coleman v. Stark, 1 Or. 115; Norwood v. Lassiter, 132 N.C. 57, 43 S.E. 509; McCullers v. Cheatham, 163 N.C. 64, 79 S.E. 306.

Ratification is based upon the plain principle of honesty that a party cannot...