Kost v. Peterson
| Decision Date | 17 December 1971 |
| Docket Number | No. 42841,42841 |
| Citation | 193 N.W.2d 291,292 Minn. 46 |
| Parties | Arthur KOST, d.b.a. Kost Ambulance Service, Respondent, v. Gordon C. PETERSON, Appellant. |
| Court | Minnesota Supreme Court |
Syllabus by the Court
1. As a general rule, money paid to an agent for the benefit of a known principal, to be returned to the payor upon nonperformance of certain conditions, cannot, when the payor becomes entitled to its return, be recovered from the agent, since the question whether the payor is entitled to the money is one that does not concern the agent, but is between the payor and the principal.
2. Under circumstances where plaintiff delivered to an agent an application for a franchise in a car-leasing program of a disclosed principal, together with a check, with the understanding that the check would be 'certified and then forwarded' with the application to the office of the principal, there was no fraud or deceit by the agent in exchanging the check at the bank for a bank money order which he forwarded pursuant to his understanding with plaintiff.
Gordon C. Peterson, pro se.
Gislason, Alsop, Dosland & Hunter and James Malecki, New Ulm, for respondent.
Heard before MURPHY, PETERSON, KELLY, and HACHEY, JJ.
Appeal from an order of the district court denying defendant's motion for judgment notwithstanding the verdict or a new trial. The issue presented for review relates to the question of whether an agent, acting for a disclosed principal, has incurred personal liability to the third person because of alleged fraudulent acts.
It appears from the record that defendant, Gordon C. Peterson, an agent acting for Federal Auto Systems (hereinafter referred to as F.A.S.), a Chicago-based corporation, called upon plaintiff, Arthur Kost, who owned and operated a garage, ambulance service, and wrecker service in Mankato, Minnesota. Peterson presented to Kost a proposal under which Kost could obtain a franchise or brokerage rights to engage in the leasing of new automobiles under a plan or program sponsored by F.A.S. The complaint alleges that Kost was induced to pay Peterson the sum of $487.50 by his fraudulent representations (a) that plaintiff could purchase and sell new automobiles without a state license; (b) that purchases of new automobiles for resale could be made at less than dealer's cost; (c) that a field organizer for F.A.S. would call and explain the details of the plan and assist in instituting the plan; (d) that a training course would be provided; and (e) that plaintiff's draft in the amount of $487.50 covering an initial deposit fee would not be negotiated until his application had been processed and approved by the F.A.S. home office.
The undisputed facts indicate that plaintiff did apply for an appointment to represent the F.A.S. leasing program and that he accompanied his application with a check for $487.50. On receiving the application and check, defendant gave plaintiff a receipt which stated:
'Art Kost
218--So. 2nd St.
'APPLICANT
'RECEIPT IS HEREBY ACKNOWLEDGED OF YOUR CHECK IN THE AMOUNT OF FOUR HUNDRED EIGHTY-SEVEN DOLLARS AND FIFTY CENTS ($487.50), GIVEN TO OUR REPRESENTATIVE GORDON C. PETERSON. THIS CHECK WILL BE CERTIFIED AND THEN FORWARDED WITH YOUR BROKERAGE APPLICATION TO OUR OFFICE AT CHICAGO, ILLINOIS. YOU WILL BE NOTIFIED WITH UTMOST DISPATCH AS TO YOUR ACCEPTANCE OR REJECTION AS BROKER. IF ACCEPTED, CONTRACT WILL BE FORWARDED TO YOU. IF NOT, YOUR CHECK WILL BE RETURNED UNCASHED. SIGNATURE OF OUR REPRESENTATIVE IS AUTHORIZED BELOW.
'(Signed) Gordon C. Peterson
FEDERAL AUTO SYSTEMS AUTHORIZED SIGNATURE
1830 Hillsboro Ave. So.
The next morning defendant took the check to plaintiff's bank for certification. He was told by the bank that, as a matter of policy, they would not certify the check unless requested personally by the maker, but instead would give him a money order made out with the name of the same payee. Accordingly, defendant endorsed and cashed the check and, in exchange therefor, was given a money order payable to F.A.S. Leasing, Inc., with the name of plaintiff as remitter, the same as it appeared on the original. Defendant then forwarded plaintiff's application, together with the money order, to his principal at its Chicago address. It appears that the check was duly accepted and processed through regular banking channels. Shortly thereafter, plaintiff sought to stop payment on the check but found that it had already been cashed. Defendant had no further contact with plaintiff until served with process in this action. In his memorandum, the trial court observed: 'Defendant received none of the money and there is no question that F.A.S. received the proceeds.'
Although there were oblique attempts by plaintiff to establish evidence of fraud with relation to the substance of the contract, it is not disputed that the court correctly determined that there was insufficient evidence to raise an issue as to fraudulent participation by defendant. In cross-examination of defendant, plaintiff's attorney suggested:
'You were aware, were you not, that F.A.S. was being investigated by the Attorney General?'
An objection to this question was properly sustained by the trial court.
The trial court, in his memorandum, stated:
The essential issue came down to the question of whether or not defendant acted fraudulently in converting plaintiff's check into a bank money order for transmission to his principal, and that was the issue submitted to the jury. The jury returned a verdict for plaintiff in the amount of $487.50.
1. The principle of law to be applied to the facts in this case is expressed in numerous authorities. Where an agent, acting for a disclosed principal, enters into a contract with third persons for and on account of his principal and in his name, the contract is that of the principal and does not give rise to any contractual...
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