Ricketts v. Pennsylvania R. Co.

• Decision Date: 10 January 1946
• Docket Number: No. 122.,122.
• Parties: RICKETTS v. PENNSYLVANIA R. CO.
• Court: U.S. Court of Appeals — Second Circuit

153 F.2d 757 (1946)

RICKETTS v. PENNSYLVANIA R. CO.

No. 122.

Circuit Court of Appeals, Second Circuit.

January 10, 1946.

Ray Rood Allen and Burlingham, Veeder, Clark & Hupper, all of New York City (G. Hunter Merritt, of New York City, of counsel), for appellant.

Robert Leon Horn, of New York City (Harold Bloom, of New York City, of counsel), for appellee.

Before L. HAND, SWAN, and FRANK, Circuit Judges.

L. HAND, Circuit Judge.

The defendant appeals from a judgment awarding damages to the plaintiff — a waiter upon one of its dining cars — for injuries suffered while in its service on February 16, 1943. The action was brought under the Federal Employers' Liability Act, §§ 51-60, Title 45 U.S.C.A.; but the only question raised upon this appeal concerns the validity of two releases, dated August 23, 1943, by which the plaintiff released all claims against the defendant upon the payment of $600. The plaintiff had already executed a release for $150 in the same words on March 19, 1943, and one of the two releases of August 23, recited a payment of $750, the sum of the two payments; but, as that release plays no part in the result we shall ignore it and speak as though only the second release had been given in August. The plaintiff testified that he executed the first release after a talk with one, Brown, the defendant's claim agent, who told him that the payment of $150 was only for the tips and wages which he had lost; and that, relying upon this representation, he did not read the release, but signed it as Brown told him to do. Between that time and July he made some efforts to work but still felt incapacitated; and towards the end of that month, or early in August, he went again to Brown asking for more money. They could not agree, and he left, saying to Brown: "Well, I will have to get somebody to get all my tips and everything, my salary, because that is what I am getting." He then went to an attorney named Reich, who, after talking to Brown on the telephone, later brought to the plaintiff the release drawn on the defendant's form and told him: "I was just to sign a receipt for the amount of money that I got for the time I was off, my tips also included, to go back to work and they won't have anything against you * * * he had the word from the Pennsylvania that I will be taken care of." On his redirect he somewhat amplified this. Reich had told him: "the $600 is just for my earnings and my tips, because that would be better such and such. He said he did not want to sue. He said that would be better, and the company wants you to sign. That is big money. If you do, they won't have anything against you. Since you stay in the company, you have eligibility to be retired. You will have full retirement pay." Relying upon this, and again not reading the release, he signed it and the defendant paid him $600. The plaintiff's wife also testified that Reich had said that "the money was for his back pay and tips."

This version of the transaction the defendant denied. It called Reich, who said that Brown, when Reich consulted him, agreed to pay $600 for a complete release; and that all this Reich explained to the plaintiff when the release was executed. The judge charged the jury that, if the plaintiff executed the release "without fraud or misrepresentation, and understanding what he was doing," it bound him, but that if he "signed these papers as receipts for wages, if it was as his understanding that that was all he was signing, that he did not sign any general release, then, of course you take up the question of damages." Again: "Was it represented to the plaintiff by his lawyer that the papers he signed on August 23, 1943, were releases of all claims or only for lost wages?" The defendant made several requests to charge, but in none of them did it suggest that the jury should find whether the plaintiff retained Reich to settle all claims he had against the railroad, or whether — as the plaintiff testified — Reich's retainer was limited to collecting wages and tips.

The right of action here in suit was created by act of Congress, and it is abundantly settled that its interpretation is a matter of federal law and not governed by state decisions, even when it speaks in the words of the common-law. Chesapeake & Ohio R. Co. v. Kuhn, 284 U.S. 44, 52 S.Ct. 45, 76 L.Ed. 157. It would not inevitably follow that, after such a right had come into existence, the legal effect upon it of a transaction within a state — as here, of a release — was also to be treated as matter of federal law; conceivably, its fate might be left to the law of the state. However, as we read Garrett v. Moore-McCormack Co., 317 U.S. 239, 63 S.Ct. 246, 87 L.Ed. 239, this is not so. The right of action was there under the Jones Act, but the action had been brought in a state court, which had held that the burden of proof of establishing a release was governed by the law of Pennsylvania. This the Supreme Court denied, holding that the admiralty rule controlled; and it would seem to follow that the validity of the release at bar is to be decided by the common-law, to be gathered from the same sources which, before Erie Railroad Co. v. Tompkins, 304 U.S. 64, 58 S. Ct. 817, 82 L.Ed. 1188, 114 A.L.R. 1487, we used to employ in cases depending on diversity of citizenship.

Although the law was at one time otherwise, at least in this country (Friedlander v. Texas & Pacific R. Co., 130 U.S. 416, 9 S.Ct. 570, 32 L.Ed. 991), it is now settled both in the federal system (Gleason v. Seaboard Airline R. Co., 278 U.S. 349, 49 S.Ct. 161, 73 L.Ed. 415), and in England (Lloyd v. Grace, Smith & Co., 1912 A.C. 716), that an agent does not cease to be acting within the scope of his authority when he is engaged in a fraud upon a third person. That has probably always been the more generally accepted doctrine. Fifth Avenue Bank v. Forty-Second Street & G. St. Ferry R. Co., 137 N.Y. 231, 33 N. E. 378, 19 L.R.A. 331, 33 Am.St.Rep. 712; Ripon Knitting Works v. Railway Express Agency, 207 Wis. 452, 240 N.W. 840; Tollett v. Montgomery Real Estate & Insurance Co., 238 Ala. 617, 622, 193 So. 127; Restatement of Agency, § 262. We can see no distinction in principle between that situation and one in which the agent deceives, not the third person, but his principal. The reason in each case for holding the principal is that the third person has no means of knowing that the agent is acting beyond his authority, and it is a matter of entire indifference whether the agent adds deception of his principal to deception of the third person; for it is obviously true that for the agent consciously to exceed his powers is to deceive the third person. Hence we may assume in the case at bar that, if the plaintiff had retained Reich to settle any claim he might have against the defendant, the plaintiff would have been bound, if Reich had procured the execution of the release by deceiving him as to its contents.

On the other hand, if the plaintiff retained Reich merely to collect his wages and tips, as to which he had failed to come to a satisfactory agreement with Brown in July or early August, the release was invalid; for, whatever may be the law in England, it is well settled in this country that an attorney has no implied authority to compromise a claim. Holker v. Parker, 7 Cranch 436, 452, 453, 3 L.Ed. 396; United States v. Beebe, 180 U.S. 343, 351, 352, 21 S.Ct. 371, 45 L.Ed. 563; Glover v. Bradley, 4 Cir., 233 F. 721, Ann.Cas. 1917A, 921; McFarland v. Curtin, 4 Cir., 233 F. 728; Barber-Colman Co. v. Magnano Corp., 1 Cir., 299 F. 401; Jacob v. City of New York, 2 Cir., 119 F.2d 800 (reversed as to a different cause of action in Jacob v. City of New York, 315 U.S. 752, 62 S. Ct. 854, 86 L.Ed. 1166); Countryman v. Breen, 241 App.Div. 392, 394, 271 N.Y.S. 744, affirmed 268 N.Y. 643, 198 N.E. 536. The release would still be invalid even though the plaintiff signed it without reading it, for he would have been justified in relying upon what his lawyer told him of the contents. The theory upon which a document binds one who signs it, but who does not read it, is that either he accepts it whatever may be its contents, or that he has been careless in choosing his informant. Foster v. Mackinnon, L.R. 4 C.P. 704; Pimpinello v. Swift & Co., 253 N.Y. 159, 170 N.E. 530; Chapman v. Rose, 56 N.Y. 137, 15 Am.Rep. 401; Williston, § 95A. In the case at bar, whatever we may think about the correctness of the verdict on the facts, the jury could have interpreted the plaintiff's testimony to mean that he only told Reich to collect his wages and tips; which incidentally was consistent with his parting words to Brown. Indeed, it was not really possible to believe the words which he put in Reich's mouth, unless he had retained him for that limited purpose. At any rate, if the defendant had meant to raise the question whether Reich had been broadly commissioned, it should have done so by a proper request. This it did not do; and the result is that upon this, the turning point in the case — the extent of Reich's authority — the only question that remains upon this appeal is of the sufficiency of the evidence to support a verdict. It is true that the plaintiff did not offer to return the money received in March and in August, 1943; since however the defendant did not raise this point either in its answer, at the trial, or in this court, we have not considered it.

Judgment affirmed.

FRANK, Circuit Judge (concurring).

1. Plaintiff, as a result of a railroad accident which occurred while he was working as an employee of the Pennsylvania Railroad Company, suffered personal injuries which turned out to be so serious that the jury returned a verdict in his favor for $7,500, which the Railroad Company does not contest — except on one ground, i. e., that his claim was barred by a release he gave the company on payment to him of one-tenth that sum, or $750. That smaller sum represents merely the approximate amount...