Interstate Electric Co. v. Frank Adam Electric Co

• Decision Date: 22 June 1931
• Docket Number: 27451
• Citation: 136 So. 283,173 La. 103
• Court: Louisiana Supreme Court
• Parties: INTERSTATE ELECTRIC CO. v. FRANK ADAM ELECTRIC CO

136 So. 283

173 La. 103

INTERSTATE ELECTRIC CO. v. FRANK ADAM ELECTRIC CO

No. 27451

Supreme Court of Louisiana

June 22, 1931

Rehearing Denied July 17, 1931

Appeal from Civil District Court, Parish of Orleans; William H Byrnes, Jr., Judge.

Action by the Interstate Electric Company against the Frank Adam Electric Company. From a judgment for plaintiff, defendant appeals.

Affirmed.

E. J Thilborger and J. J. Cullinane, both of New Orleans, for appellant.

Lemle, Moreno & Lemle, of New Orleans, for appellee.

ODOM J. ST. PAUL, J., dissents.

OPINION

ODOM, J.

Defendant prosecutes this appeal from a judgment for $ 2,189.55, rendered against it for damages resulting from its alleged violation of a contract of sale.

Plaintiff alleged and the record shows that it is engaged in the business of selling at wholesale electrical material in the city of New Orleans; that the defendant, Frank Adam Electric Company, domiciled in St. Louis, is engaged in the manufacture of electrical switchboards, junctions, boxes, and cabinets, and had an office in New Orleans under the management of W. J. Keller; that the Douglass Electric Construction Company, Limited, of New Orleans, had a contract to install in Hotel Dieu certain switchboards, boxes, and panels, which it agreed to purchase from plaintiff at the stipulated price of $ 6,464.55. It is alleged and contended by plaintiff that when it received the order from the Douglass Company for the material and fixtures, it immediately placed an order for the purchase of the same with the Frank Adam Company through its resident manager, W. J. Keller, who had authority to bind his principal, and that said Keller, for his principal, agreed to sell said supplies to plaintiff for the sum of $ 4,275, and that the defendant company, after accepting the order, refused to comply with its contract by shipping the material and supplies, making it impossible for plaintiff to carry out its contract with the Douglass Company; and that plaintiff was thereby damaged in the sum of $ 2,189.55, the difference between the price at which the supplies were sold to the Douglass Company and the price at which the defendant agreed to sell to plaintiff.

1. Defendant set up two defenses: First, that W. J. Keller was not clothed with power and authority to bind it in the premises; and, second, that no specifications accompanied the "purported order" for the supplies.

We find no merit in these defenses. Defendant is a manufacturer domiciled in St. Louis. At the time this transaction took place, and for many years prior thereto, it maintained an office in New Orleans in charge of a general manager.

It made no sales direct to consumers or contractors, but all sales were made through jobbers. Its general manager looked after its interest, and when he received an order for goods he directed the prospective purchaser or consumer to place the order with a jobber, which in this case was the plaintiff company. The testimony conclusively shows that for many years plaintiff had been purchasing goods from the defendant company through defendant's local, resident manager, who made all contracts and fixed the prices, and that never until this transaction arose did defendant intimate to plaintiff that its local manager did not have full authority to bind it. All orders for goods were placed with defendant's manager, who fixed the prices, made the contracts, sent them to headquarters, where they were accepted and filled without question.

Originally, defendant had a local or resident manager in New Orleans named Reed. While Reed was its manager, the defendant company specifically informed plaintiff that he was clothed with full power and authority to bind it in the fixing of prices and the making of contracts. W. J. Keller succeeded Reed as defendant's local manager in New Orleans about a year and a half previous to the date on which this contract was made, and when he did, defendant notified plaintiff that Keller had succeeded Reed as local manager, and thereafter plaintiff continued to deal with Keller as it had previously dealt with Reed. There was never the slightest intimation by defendant that Keller did not have the same authority that Reed had, and it is shown that the prices and contracts made by Keller for his principal were, without a single exception, carried out by defendant.

We find at page 85 of the record the following admission:

"It is admitted that if Mr. Fred Adam (who was at the head of defendant company) were placed on the stand he would testify that Mr. Keller is his district manager; that in the ordinary course of business orders placed with Mr. Keller by jobbers would be forwarded to the home factory and would be acknowledged by the home factory to the jobber, and that Mr. Keller is the only one in the city or the state who represents the Frank Adam Company." (Italics ours.)

Bearing in mind that defendant, in its answer, denied that Keller had "power and authority" to bind it and tendered his lack of such authority as its principal defense, it is quite significant that counsel did not have read into the record the admission that if Fred Adam were placed on the stand he would swear that Keller had no authority to bind the company, if that were true. The presumption is that the above admission sets out in substance all that could have been proved by Mr. Adam had he taken the stand. The admission is that Mr. Adam would swear that Keller was the defendant's general manager in this territory and that when orders were placed with him by jobbers they "would be forwarded to the home factory and would be acknowledged by the home factory." (Italics ours.)

That is precisely what took place in the instant case. Plaintiff placed the order with Keller on June 13, 1923, and notified the defendant to that effect. Just when the order was received is not clear. On June 29 defendant wrote plaintiff as follows:

"Replying to your postcard dated June 27, would state that we have not yet received the order referred to."

However, that the order was received is shown by a letter dated October 1, 1923, written by defendant's St. Louis attorney to plaintiff, in which it is stated:

"The Frank Adam Electric Company has handed me what purports to be your order, number 4181, dated New Orleans, June 13, 1923, and addressed to the Frank Adam Electric Co. at St. Louis."

Mr. Keller says he sent the order to defendant about August 27.

There is no testimony showing that defendant then repudiated the contract. The first intimation that plaintiff had of defendant's refusal to accept the order was conveyed in the letter of defendant's attorney, dated October 1.

Mr. Keller admits that when he received the order from plaintiff, he took it to his office and that five hours later he went back to plaintiff's office and informed Mr. Stern that he had phoned the home office and received the information that the order was accepted at the price he had fixed. He now admits, however, that he had done nothing of the kind.

Keller testified that he had no general authority to bind his company, that he sold on commission, and that all orders received by him were sent to the company and were not binding unless approved.

In support of its contention that it was not bound as a matter of law, counsel for defendant cite 2 C. J. 561, § 203, and other authorities to the effect that a principal "will not be bound by the act of the agent in excess of his actual authority." That is the general rule, but that rule is subject to well-known and well-recognized exceptions, as is evidenced by the very text cited and quoted by counsel.

It reads in part:

"The principal will not be bound by the act of the agent in excess of his actual authority, within the above rule, when the third person has knowledge of the extent of the agent's authority, or where the facts and circumstances of the case are such as to put him upon inquiry as to the authority and good faith of the agent." (Italics ours.)

The general rule invoked by defendant has no application to the instant case. The rule applicable here is stated in 2 C. J. 570, § 211, and is as follows:

"While as between the principal and the agent the scope of the latter's authority is that authority which is actually conferred upon him by his principal, which may be limited by secret instructions and restrictions, such instructions and restrictions do not affect third persons ignorant thereof; and as between the principal and third persons the mutual rights and liability are governed by the apparent scope of the agent's authority, which is that authority which the principal holds the agent out as possessing or which he permits the agent to represent that he possesses and which the principal is estopped to deny, and the principal will be bound by all acts of the agent performed in the usual and customary mode of doing the particular business, although he may have acted in violation of private instructions, unless there is something in the nature of the business or the circumstances of the case to indicate that the agent is acting under special instructions or limited powers. This rule applies whether the...