Reed v. Linscott

• Decision Date: 06 November 1934
• Citation: 175 A. 240
• Parties: REED v. LINSCOTT.
• Court: New Hampshire Supreme Court

175 A. 240

REED

v. LINSCOTT.

Supreme Court of New Hampshire. Hillsborough.

Nov. 6, 1934.

Transferred from Superior Court, Hillsborough County; Burque, Judge.

Action by Ralph D. Reed against Rollinston W. Dinscott. On exception taken to a referee's finding. Case transferred without ruling.

Judgment for plaintiff.

Trover, for conversion of a second-hand automobile. The plaintiff delivered it with others to a dealer for sale by the latter as his agent. No title passed to the agent, and upon a sale he was to remit the payment less charges to the plaintiff. The defendant bought the car in question from the agent, and paid for it by crediting the price on a bill the agent owed him. He supposed the car belonged to the agent, but knew the agent sold cars for others as well as on his own account. Slight inquiry would have disclosed the plaintiff's ownership.

Exception was taken to a referee's finding of a conversion.

Transferred by Burque, J., without ruling.

Sullivan & Sullivan, of Manchester (Thomas E. Dolan, of Manchester, orally), for plaintiff.

McLane, Davis & Carleton, of Manchester (Dudley W. Orr, of Manchester, orally), for defendant.

ALLEN, Chief Justice.

The conversion of the car by the agent is not doubtful. He acted beyond his authority and wrongfully appropriated it to his own use. He had no right to transfer the title except upon a sale for the owner. A sale for himself being outside the agency, the defendant acquired no title or right of possession, and was equally liable for a conversion, unless he may avail himself of some principle of estoppel. The defense is made that the agent was held out by the owner with apparent authority to act as though the car was his own.

In Atto v. Saunders, 77 N. H. 527, 529, 93 A. 1037, 1039, the definition of apparent authority was adopted as that "which a reasonably prudent man, induced by the principal's acts and conduct, in the exercise of reasonable diligence and sound discretion, under similar circumstances with the party dealing with the agent, * * * would naturally suppose the agent to have." In Davison v. Parks, 79 N. H. 262, 263, 108 A. 288, 289, it is thus defined: "In short, by it is intended that the principal has either so conducted his business as to give third parties the right to believe that the act in question is one he has authorized his agent to do, or that it is one agents in that line of business are accustomed to do." Frequent resort to this test has since been made. See Sullivan v. John Hancock Mut. Life Ins. Company, 86 N. H. 184, 186,165 A. 277, and cases there cited.

It hardly needs statement that apparent authority is not the same as implied authority. The latter is a form of actual authority. Unexpressed in stated terms, it follows as a reasonable incident or construction of the terms. Apparent authority, not being authority in fact, rests on the general principle of estoppel by which one who has given a false appearance to a situation is barred from denying the falsity. "Estoppel exists, and can only exist, not when there is agency, but when there is none." 16 Harv. Law Rev. 186, 188. "Liability for acts not authorized in fact and not ratified may be found when the principal has not lived up to the standard of reasonable conduct towards third persons who deal with his agent." Edelstone v. Salmon Falls Mfg. Company, 84 N. H. 315, 319, 150 A. 545, 547.

Possession gives third persons no right to assume the possessor's ownership or power to sell as against the owner. Hyde v. Noble, 13 N. H. 494, 38 Am. Dec. 508; Williston, Sales, § 313; 24 R. C. L. 391. If the possessor, as the owner's agent, has authority to sell, the authority is to sell in the owner's behalf and not as the agent's personal affair. The authority to sell is not for the agent to treat the property as his own, and without circumstances of estoppel no appearance of authority beyond the actual authority is given when property is delivered to an agent for sale.

"Miller had an undoubted authority to sell the goods; but it was to sell them, not as his own, but as the goods of the plaintiff; and acting as agent of the plaintiff he had no right to exchange them for other goods, or for his own note. By the disposition he made of them he treated them as his own, and this dis position was not properly a sale, within the meaning of his authority to sell, but a delivery over, at a certain price, in payment of a demand against himself. Although in the nature of a sale, it is in fact a payment of his debt with goods instead of money. If it might also be considered as a purchase by himself, at the same time that will not avail, as an agent has no right to purchase of himself what he is entrusted to sell." Holton v. Smith, 7 N. H. 446, 451.

Apparent authority beyond actual authority is lacking when the owner does not hold the agent out as having more than the actual authority. The good faith of the person dealing with the agent is then a negative factor. There is no estoppel against the principal because he has not misled the third party, and the actual authority given the agent is all that may be charged to the principal. The purchase from the agent is no less a conversion than the sale by the agent. "* * * The defendant's possession was unlawful in its inception; and he acquired neither title nor the right of possession by receiving the property from one who had no authority to deliver it to him." Gould v. Blodgett, 61 N. H. 115, 121. In saying that the court in this case held the defendant not to be a purchaser in good faith, the defendant underrates its authority. The purchaser there was not one in good faith because he did not pay for what he bought except in giving credit on the agent's existing indebtedness to him. He did not know the terms of the agency, and, although under the present Sale of Goods Act he would now be held to...