Hurley v. Watson

• Decision Date: 02 March 1888
• Citation: 68 Mich. 531,36 N.W. 726
• Court: Michigan Supreme Court
• Parties: HURLEY ET AL. v. WATSON.

36 N.W. 726

68 Mich. 531

HURLEY ET AL. v. WATSON.

Supreme Court of Michigan

March 2, 1888

Appeal from circuit court, Wayne county.

CHAMPLIN J.

Plaintiffs were copartners, doing business as coal dealers under the firm name of J. & T. Hurley, in the city of Detroit. They had in their employ for several years one J. P. Clark. The defendant is a druggist, and had rented a house to Clark. In the summer of 1879 Clark requested defendant to purchase coal from him. He consented to do so, and from that time dealt with Clark. The coal was delivered by plaintiffs' teams, and the firm name was painted upon the boxes of the coal wagons. Defendant also gave receipts to those delivering the coal, which acknowledged the receipt of the coal from J. & T. Hurley. Clark's name nowhere appeared upon the receipts or bill-heads of the firm. Clark also traded with defendant at his drugstore upon credit, and at Clark's request the rent and account due to defendant where credited upon the account due from defendant for coal so far as such credit went, and the balance be paid to Clark in cash. These dealings ran through a course of more than seven years, during which time several settlements were had and balances adjusted. Defendant knew the business in which plaintiffs were engaged, and knew that Clark was employed in their office, but did not know exactly in what capacity, or the nature or extent of his authority. He supposed him to be a general manager, from what he had observed of his transacting business. One day Clark left the office of his employers and never returned. On looking over the books of the firm they found what appeared to be a balance due from defendant for coal, amounting to $110. Mr. John Hurley presented this bill to defendant for payment. Defendant denied owing that amount, and claimed he only owed for two tons of coal then recently purchased. In the course of the conversation between Mr. Hurley and defendant, Hurley was informed that the indebtedness of Clark to defendant for rent and drugs had for more than six years been applied as payment on the coal he had purchased through Clark. This was the first intimation or information the members of the firm had received of such fact. They thereupon commenced this suit to recover over $500 for coal delivered to defendant by Clark from their coal-yards. The extent of Clark's authority is not definitely settled by the testimony. It appears that he was for many years chief clerk in the office of the firm, and had general control of the books; made most of the original entries in the day-books; assisted sometimes in posting accounts into the ledger; received moneys in payment of bills at the office; made out bills; collected bills at the office; took orders for coal, and settled with customers. He had no express authority to turn or apply his individual debts upon debts due the firm, and defendant from first to last never made any inquiry of Clark or of any member of the firm, although he met them frequently, as to the nature or extent of Clark's authority, or as to whether he was authorized to apply the rent and account due from him to defendant upon the indebtedness of the defendant to the plaintiffs for coal. It also appears that the men in the employ of the firm were paid as often as once each month in full for wages, including Mr. Clark; and these payments were kept upon the timebooks, and were not posted into the ledger. It also appears that Clark kept an individual account upon the firm ledger, in which the items credited to defendant on account of rent and drugs were charged to him. In this account there is one item of $100 posted to his credit for wages. The plaintiffs claim that they never discovered this account upon their books; that they had entire confidence in Clark's honesty and integrity, and never had examined their books, and did not know what they contained; that their time and attention were required and given to the handling of the coal at the docks and yards, and overseeing the laborers employed, and in looking after their teams; that they had from 75 to 80 men in their employ, and were doing over a quarter of a million business a year, and had no time to examine the books, and no inclination to, as they supposed their book-keepers were honest. These are the main facts in the case, which were submitted to the jury under the charge of the court, and they returned a verdict upon the disputed items for defendant. The errors assigned are upon the refusals of the court to charge as requested, and upon the charge as given, and are as follows: " First. The court erred in refusing to direct a verdict for the plaintiffs, as requested by plaintiffs' attorney, at the close of the testimony. Second. The court erred in refusing to charge the jury, as requested by plaintiffs' attorney, 'that it was the duty of Mr. Watson, when Mr. Clark offered to turn the account of Hurley Brothers on Clark's private account, to inquire of the Hurleys whether Clark had authority to do so, and that he had no right to assume that the Hurleys knew or approved of Clark's paying his private debts with their bill; and that it was the business of Mr. Watson to inquire into his agency; and that the act of his in not doing so does not form any justification in the matter.' Third. The court erred in refusing to charge the jury as requested by plaintiffs' attorney, 'that any person dealing with a clerk, and paying a bill to a clerk, from any store, (even though the bill be made upon the letter-head of the firm, and the party paying it knows that the clerk is employed by the firm,) is not authorized to pay that clerk unless the clerk has been authorized to collect it, and he is only authorized to pay it in the manner in which the clerk is authorized to collect it.' Fourth. The court erred in charging the jury: 'It is for you to say, from the evidence, whether the Hurleys caused Watson to believe that Clark's dealings with Watson were sanctioned by them. If you should find that Watson did so believe, and in good faith dealt with Clark, then the Hurleys are estopped from denying the validity of Clark's action in the matter, if you believe they knew of it.' Fifth. The court erred in charging the jury: 'It is for the jury to consider in this case whether the conduct of the Hurleys themselves did not cause Watson to be placed in the position in which they find him, when they asserted their claim against him; and if you believe that the Hurleys, by exercise of reasonably prudent supervision or oversight over their business and their subordinates, would have seasonably known or discovered Clark's dealings with Watson, as they appear to have been transacted, and that through their lack of such supervision or oversight they failed to know or discover the same, the Hurleys should be treated as having known and approved of Clark's dealings with Watson from the time when, by the exercise of such supervision, they would have known or discovered it.' Sixth. The court erred in charging the jury: 'Clark's position with the Hurleys, and dealings and settlements between Clark and Watson, occurring as they did, the lapse of time ensuing without complaint or objection by the Hurleys, and the settlements between Clark and Watson having been recorded, if you find they were recorded, as they appeared from time to time, according to the books of the Hurleys, to which they could have full and complete access, and which were in ordinary use in their business, raise the presumption that the Hurleys knew and sanctioned such dealings and settlements. It is not conclusive, but it raises the presumption.' Seventh. The court erred in charging the jury: 'The burden is upon the Hurleys to establish the invalidity of the dealing. The presumption that the Hurleys knew of and approved of the transaction between Clark and Watson is not rebutted by the assertion of the Hurleys that they knew nothing of them, if the jury are satisfied from the evidence that the Hurleys did not exercise reasonably prudent supervision or oversight over their business, and thereby failed to know or discover the course their own affairs were taking."'

The law is well settled that a person who deals with an agent is bound to inquire into...