McIntosh-Huntington Co. v. Rice

• Decision Date: 11 September 1899
• Citation: 13 Colo.App. 393,58 P. 358
• Parties: McINTOSH-HUNTINGTON CO. v. RICE.
• Court: Colorado Court of Appeals

58 P. 358

13 Colo.App. 393

McINTOSH-HUNTINGTON CO. v. RICE.

Court of Appeals of Colorado

September 11, 1899

Appeal from district court, Arapahoe county.

Action on note by the McIntosh-Huntington Company, a corporation against John C. Rice. From a judgment for defendant plaintiff appeals. Reversed.

A statement of the origin of this controversy, and a copy of the documents executed by the parties in interest, will greatly facilitate the decision and make it easy of apprehension. In the early part of 1893, the appellee, Rice with one Westlake and Sidney H. Percy entered into negotiations looking to the establishment of a bicycle business in Denver for the handling of the Sunol bicycles, manufactured by the McIntosh-Huntington Company, of Cleveland, Ohio. Shortly after the negotiations began, the panic of 1893 struck the country, and the contemplated arrangements were abandoned, at least so far as concerned the formation of the co-partnership and the carrying out of the original enterprise. Percy was in Colorado as the agent of the McIntosh-Huntington Company to establish the agency for the sale of machines. Notwithstanding the abandonment of the co-partnership arrangement, for some reason which is not made apparent by the testimony, the company seemed to conceive it possible to establish a store. At all events, without the completion of the co-partnership or the establishment of the agency, the corporation shipped to Denver 75 bicycles, and sent the bill of lading to Rice. Rice did not take the machines, pay the freight, or assume control of them. The reason for the shipment of these machines to Rice, in the absence of an antecedent contract, is not apparent. Rice did not receive them, present his bill of lading, or take them from the railroad company. Shortly thereafter Percy either returned to Denver, or, not having left, went to Rice, and endeavored to induce him to accept an agency for the machines, or to purchase them under some arrangements which should be made between them. A large amount of evidence was given by Rice covering the transaction with Percy, conversations had, Percy's declarations respecting his authority and his agency, and the position which Rice took with reference to the handling of the machines. We need not state those conversations, nor Rice's testimony; for, though they were admitted, the testimony was wholly inadmissible, and cannot be considered in the determination of the case. As we look at it, the rights of the parties are measured by the written contracts which appear in the record, and the extent and limits of Percy's agency are disclosed by the circumstances and history of the case found in the evidence, other than what was given by Rice, which cover these antecedent negotiations. After the bicycles were shipped, and while they were in Denver, and during the progress of these negotiations, on the 25th of August, Rice wrote a letter to the McIntosh-Huntington Company, wherein he stated to them the existing conditions. It would appear therefrom that the company had written a letter to Rice respecting the contemplated agency, and he stated that the change in financial conditions had been serious, and that it was quite impossible for him to realize on his holdings and carry out the arrangements he had made regarding the business. He further stated that, though matters were dull, there was a decided improvement, and he anticipated that in a short time affairs would be so settled as to enable him to see his way clear to do considerable business, and he proceeds: "The wheels are safely stored and insured, and I should like to retain them here, unless you have a market for them there at present. I am quite positive, however, of my ability to dispose of them within a reasonable time, and certainly a very considerable period in advance of the date that your ordinary market is open. In the meantime, I will, of course, pay all charges necessary to see that proper care is taken of them, and you can rest assured that at any time, should you desire to have them returned, I will guaranty that they are in as good condition as they were when they were shipped from your factory. Awaiting your reply, I am," etc. Thereafter Percy and Rice negotiated about the disposition of these 75 machines. As already indicated, we shall dismiss Percy's declarations, because we regard the contract into which he and Rice entered as determinative of the rights of the parties and conclusive as to Rice's responsibility. All the negotiations between Rice and Percy were merged into this agreement, which can alone be looked to to settle their rights.

After the letter which has been referred to and quoted from, the following contract was entered into: "This memorandum is made and reduced to writing this second day of September, A.D.1893, by and between John C. Rice, hereinafter called the first party, and Sidney H. Percy, hereinafter called the second party, for the purpose of bearing witness to the following understanding; that is to say, based upon a consideration of the mutual undertakings hereinafter made between the parties, and the payment of one dollar by the second party to the first party, it is agreed, covenanted, and understood as follows: Whereas, the first party has purchased from the McIntosh-Huntington Company, of Cleveland, Ohio, seventy-five (75) bicycles, through the agency of the second party, who is the authorized representative of said McIntosh-Huntington Company, at and for the price and sum of four thousand nine hundred and twenty-five (4,925) dollars, evidenced by two promissory notes, given in settlement of the aforesaid purchase price; and whereas, the second party has purchased from the first party the same bicycles, at and for the same price, to wit, four thousand nine hundred and twenty-five (4,925) dollars, evidenced by a promissory note in adjustment of said purchase price: And now it is understood and agreed between the parties that the second party will proceed to sell said bicycles, and from the proceeds derived from any such sales to first discharge the said note given by the first party to the McIntosh-Huntington Company, the payments to be credited contemporaneously on the note given by the second party to the first party, and the remainder of any such proceeds, after deducting all absolutely necessary expenses, to be divided equally between the parties hereto, it being expressly understood that all of the net profits arising from the sale of any or all of said bicycles shall be applied equally and divided equally between the parties to this agreement. It is further agreed and understood that, should said second party be unable to dispose of said bicycles, so as to discharge the note made from the second party to the first party, then, to the extent of any such failure to pay off and discharge said note, the first party shall be relieved in like proportion from his liability to the McIntosh-Huntington Company on the two promissory notes given by him to the said company; it being the true meaning and purpose of this clause of the agreement that the liability of the first party to the McIntosh-Huntington Company shall be measured by the amount received by him from the second party, as derived from the proceeds of the sale of said bicycles, and no more. In testimony whereof the parties hereto have caused this paper to be drawn up and executed in duplicate the day and year first above written. Witness their hands and seals. John C. Rice. [ Seal.] Sidney H. Percy. [ Seal.]"

After making it, Rice executed two notes to the McIntosh Company for the purchase price of the machines. When one of them fell due he made a renewal note, and it, with the other, are the two instruments sued on. These notes substantially are,--one of them dated the 2d of September, 1893, for value received, whereby Rice promises to pay the McIntosh-Huntington Company $3,285, six months after date, with interest at 6 per cent.; and the other was a promise bearing date on the 30th day of December, and for value the defendant thereby promises to pay the McIntosh-Huntington Company $1,662.80, sixty days after date. These two notes were delivered to Percy, who sent them to the McIntosh-Huntington Company as the price of the machines. After the delivery of this commercial paper, Rice turned the bills of lading over to Percy, and, according to his testimony, Percy took possession of the machines. What he did with them, how he disposed of them, and what other arrangements were made between Percy and Rice about them, remain undisclosed. Percy was not a witness. Inferentially, it would appear Percy sold the machines, appropriated the proceeds to his own use, and failed to account for the price either to Rice or to the McIntosh-Huntington Company. The price not being remitted, and the notes remaining unpaid, the company brought suit on the notes, and Rice defended on the ground of want of consideration, and set up his transaction with Percy, and sought to escape liability on the theory that Percy was the agent of the McIntosh-Huntington Company in the transaction, and that that corporation was bound by Percy's acts, by the agreement which he had made on their behalf though in his own name, and that his agency was of the sort to give him power to make an agreement which would bind the corporation. To establish this agency, the defendant introduced sundry letters from the company which conceded his agency for some purposes, and a letter which was supposed to contain a specific authority, and which would make his authority ample to execute the contract, and thereby relieve Rice from any responsibility. Undoubtedly, Percy was the agent of the corporation to sell machines, and under some circumstances, perhaps, to establish an agency.

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