Johnson v. Milwaukee & W. Inv. Co.

• Decision Date: 19 November 1895
• Citation: 64 N.W. 1100,46 Neb. 480
• Parties: JOHNSON ET AL. v. MILWAUKEE & W. INV. CO.
• Court: Nebraska Supreme Court

46 Neb. 480

64 N.W. 1100

JOHNSON ET AL.

v.MILWAUKEE & W. INV. CO.

Supreme Court of Nebraska.

Nov. 19, 1895.

Syllabus by the Court.

1. One dealing with the agent of a business corporation in a matter relating to its business operations, and not involving its corporate functions, is not charged with notice of its by-laws.

2. Therefore the apparent authority of such agent cannot be extended or restricted by such by-laws, in the absence of actual notice thereof.

3. Where a principal has by his voluntary act placed an agent in such a situation that a person of ordinary prudence, conversant with business usages and the nature of the particular business, is justified in presuming that such agent has authority to perform a particular act, and therefore deals with the agent, the principal is estopped, as against such third person, from denying the agent's authority. Whether or not an act is within the scope of an agent's apparent authority is to be determined under the foregoing rule as a question of fact from all the circumstances of the transaction and the business.

4. Evidence of such apparent authority is not restricted to proof of general custom, or to proof that the agent had previously performed similar acts to the knowledge of the principal. The nature of the business, usage not amounting to a general custom, and the fact, if it exists, that the principal is at a great distance, and the agent apparently entirely in charge of the business, may, in proper cases, be, among other things, elements for consideration.

Error to district court, Merrick county; Sullivan, Judge.

Action of replevin by the Milwaukee & Wyoming Investment Company against Addison B. Johnson and John R. Rush. Plaintiff had judgment, and defendants bring error. Reversed.John L. Webster, for plaintiffs in error.

J. W. Sparks and Geo. H. Noyes, for defendant in error.

IRVINE, C.

This was an action of replevin for 250 head of cattle by the defendant in error against the plaintiffs in error. On the first trial there was a verdict and judgment in favor of the defendants in the district court. This judgment was reversed by this court. Investment Co. v. Johnson, 35 Neb. 554, 53 N. W. 475. The case has been retried, resulting in a verdict and judgment for the plaintiff, and the defendants now prosecute error. The evidence is substantially the same as on the first trial, and, the facts having been stated somewhat in detail in the former opinion, we refer to that, and will not restate them, except that, in view of one argument now made, it should perhaps be stated that the business of the corporation, as set forth in its charter, is “buying, selling, raising, shipping, exchanging, and dealing in all kinds of cattle, horses and other live stock, in the territory of Wyoming,” etc., and that the duties of the manager, as provided by the by-laws, and as briefly referred to in the former opinion, are prescribed as follows: “The manager and assistant manager shall reside and keep their office in the territory of Wyoming, and shall have the charge and management, subject to the orders of the directors, of all the affairs and property of the company in said territory.” On the former hearing of the case it was decided solely on the effect of the evidence as to a custom in Wyoming whereby the manager of a cattle ranch, it was claimed, had power to sell cattle therefrom, and the court in the former opinion laid down certain rules for the determination of that question alone; that is, as to what was necessary in order to establish a custom vesting in the manager authority to so dispose of cattle. As now presented, an entirely different question arises. On the trial in the district court a special verdict was taken, whereby, under instructions conformable to the former opinion, the jury found that no such custom prevailed. The jury also found that, prior to the sale of the cattle in question, Adams had not, with the plaintiff's knowledge, performed any similar acts, and under a peremptory instruction there was a finding that Adams possessed no actual authority to make the sale. There were other findings, not material to the questions which we shall consider. The former opinion strongly implied a holding that no actual authority existed for the sale made by Adams, and we shall not here reconsider that question. The judgment in favor of the plaintiff was evidently entered on the theory that, in the absence of such actual authority, or apparent, conferred either by a custom of business or by the exercise of prior similar acts, the plaintiff could not be bound by Adams' acts. One instruction given by the court clearly shows that the judgment proceeded on this theory. This instruction was as follows: “An act is within the apparent authority of the agent when it is of like character as that of prior acts performed by him for the same principal, and which such principal, knowing the same, sanctioned or ratified. The act of an agent within his apparent, but not within his real, authority, will bind his principal only in case the person dealing with such agent knew of such prior acts, and dealt with the agent in reliance thereon; and in this case you are instructed that, unless you find from a preponderance of the evidence that Thomas R. Adams had, prior to the sale of these cattle, performed acts of a similar character, and that the plaintiff, after knowledge or notice thereof, sanctioned or ratified such prior similar acts, then you will not be justified in finding that Adams possessed the apparent authority to sell the cattle in question. The defendants cannot base any rights in this action upon the ground that they dealt with Thomas R. Adams as having the apparent authority to sell the cattle, unless it appears from the evidence that they, or one of them, knew of facts giving such apparent authority to Adams, and acted upon such appearances in the transaction of purchasing the cattle in question. The mere fact that the plaintiff had intrusted the care, management, and possession of these cattle to Thomas R. Adams gave him no authority to sell them. Although authority on the part of an...