Swindell v. Latham

• Citation: 58 S.E. 1010,145 N.C. 144
• Parties: SWINDELL v. LATHAM.
• Decision Date: 10 October 1907
• Court: United States State Supreme Court of North Carolina

58 S.E. 1010

145 N.C. 144

SWINDELL v. LATHAM.

Supreme Court of North Carolina

October 10, 1907

Appeal from Superior Court, Beaufort County; W. R. Allen, Judge.

Action by W. E. Swindell against J. E. Latham. From a judgment for plaintiff, defendant appeals. Reversed.

This action was brought to recover the sum of $3,906.25, which the plaintiff alleges is due to him from the defendant, by reason of the fact that the latter, who lived in Newbern, was conducting a mercantile business in Washington, Beaufort County, N. C., by and through his agent, A. B. Smith, and that Smith was authorized to purchase such goods, wares, and merchandise as were necessary to be used in the conduct of the said business, either for cash or on credit, and that, in the usual and necessary conduct of the affairs of his principal, A. B. Smith borrowed from the plaintiff the said sum, which was used in the said business, and of which the defendant derived the use and benefit. The defendant denied all of this and averred that his agent was authorized to buy only for cash which was to be furnished by him, or procured through the bank.

The court charged the jury as follows: "(1) The plaintiff brings this action to recover money which he alleges was borrowed by the defendant's agent, A. B. Smith, for use in the defendant's business, of buying and selling cotton and merchandise, in Washington, and that the agent, when he received the loan of the money, was acting within the scope of his authority, and that the defendant received the benefit of the money so borrowed in the prosecution of his business in Washington. (2) The defendant admits that he was doing business in Washington by his agent, A. B. Smith, but he denies that Smith, as his agent, had any authority to borrow money, but, on the contrary, he was instructed to buy only for cash and to draw checks on the bank for the purchases so made by him, both of cotton and merchandise, and that sufficient arrangements had been made with the bank to honor all checks so drawn, and he avers that he is not liable to the plaintiff for any money borrowed by Smith from him. (3) A principal is not bound by the act of his agent, unless the act is within the authority of the agent. This authority may be expressly given, but there is no evidence of such authority in this case. It may also be implied. If the principal acts in such manner, and permits his agent to so conduct his business as to lead one of ordinary prudence to believe he has authority to do a particular act, and a third party deals with the agent, relying upon this apparent authority, the principal is liable. (4) If an agent has no authority to borrow money in order to pay for goods, but is directed to buy for cash with money advanced by the principal, and the latter fails to furnish the cash, and the agent, for the purpose of promoting the business, borrows money and uses it to pay for goods for his principal, and the goods are used in said business for the benefit of the principal, then the principal is liable for the money so borrowed." (5) The court here stated the contentions of the parties and recited the testimony, showing its bearing upon the issues in the case. "(6) If you find by the greater weight of the evidence that the defendant held Smith out as his agent, and with his knowledge and consent permitted the business to be so conducted by Smith as to lead a man of ordinary prudence to believe that he had authority to borrow money, and the plaintiff, while acting upon this belief, loaned money to said agent, which was used in buying goods for the defendant, you will answer the first issue 'Yes.' If you find by the greater weight of the evidence that the defendant failed to furnish his agent with sufficient funds to pay for goods, that he knew goods were to be bought for cash, that his agent borrowed money from the plaintiff and used the same to pay for goods, and that these goods went into the business of the defendant and were disposed of for his benefit, you will answer the first issue 'Yes'; otherwise 'No.' (7) If you believe the evidence in this case, the plaintiff loaned to Smith $1,548.75 in October, 1903, $857.50 on February 16, 1904, and $1,500 on December 16, 1904. If you further believe the evidence, the first two of these transactions are usurious and the plaintiff would not be entitled to recover any interest thereon, and all payments made would be deducted from the principal sum. The third transaction is dependent upon the intention of the parties. If it was made for the purpose of securing a greater rate than 6 per cent., it was usurious; but, if otherwise, it was not. (8) If you answer the first issue 'Yes,' you will answer the second issue, if you believe the evidence, $1,356.25 on the first transaction, $778.75 on the second, $1,500 on the third, if you find it was usurious, or $1,500 and interest from December 16, 1904, if it was not usurious. (9) If you answer the first issue 'No,' do not consider the first and second loans any further, but you will still consider the third, and if you find from the evidence that Smith borrowed the $1,500 from the plaintiff on December 16, 1904, and used it to buy goods for the defendant, that these goods were received by the defendant and used by him with a knowledge of these facts, that the defendant is liable therefor, and if you so find, answer the second issue $1,500, if usurious, or $1,500 and interest, if not usurious. If you do not so find and you answer the first issue 'No,' then you will answer the second issue 'Nothing.' If you believe the evidence and answer the first issue 'Yes,' you will answer the second issue $300, less $92, leaving $207.12, with interest from January 7, 1905."

The following issues were submitted to the jury: "(1) Was A B. Smith, prior to December 13, 1904, authorized by the defendant to enter into the contracts with the plaintiff sued on in this case, and to charge defendant with the payment of the money received thereby? Ans. Yes. (2) Is the defendant indebted to the plaintiff, and, if so, in what amount? Ans. $3,635."

There was a verdict, under the evidence, and the charge of the court, for the plaintiff, as appears in the record, and judgment was entered thereon, from which the defendant, having duly excepted to the alleged errors of the court in the trial of the case, appealed to this court.

An agent, with authority to buy or sell, has, in the absence of any restriction to the contrary, the power to buy for cash or credit.

W. C. Rodman, for appellant.

Harry McMullan and Ward & Grimes, for appellee.

WALKER J.

It seems to us that the presiding judge went too far, under the facts and circumstances of this case, in the fourth instruction given the jury, which was as follows: "If an agent has no authority to borrow money in order to pay for goods, but...