Thompson v. Mercantile

• Decision Date: 30 January 1906
• Citation: 60 W.Va. 42
• Court: West Virginia Supreme Court
• Parties: Thompson v. Laboringman's Mercantile & ManufacturingCompany.

60 W.Va. 42

Thompson

v.Laboringman's Mercantile & Manufacturing Company.

Supreme Court of Appeals of West Virginia.

Submitted January 23, 1906.

Decided January 30, 1906.

1. Principal and Agent Authority of Agent Notice.

On the trial of an issue as to whether an act done by an agent was within the scope of his actual, or, within the meaning of the law, apparent, authority, notice to the agent of facts, relating to, or growing out of, the act in question, is not notice to the principal. If the act is, beyond the agent's authority, the relation of principal and agent does not exist as to it, and the rules applicable to such relationship do not apply. (p. 46.)

2. Same Loan to Agent Evidence.

Proof of a loan made to an agent on behalf of his principal is not evidence of the reception of the money by the principal. if the agent had no authority to borrow money on behalf of his principal. Nor is the agent's admission or representation as to the purpose for which he borrowed the money evidence against his principal. (p. 48.)

3. Same Ratification.

Failure on the part of a principal to dissent from or repudiate an unauthorized act of his agent, within a reasonable time, dependent upon the nature of the transaction and the situation and surroundings of the parties concerned, is evidence of ratification of the unauthorized act. (p. 49.)

4. Same Knowledge of Principal.

Lack of knowledge on the part of a principal, of any of the material facts connected with an unauthorized act of his agent, done on his behalf, will prevent the silence of the principal, or his failure to repudiate the act, from amounting to a ratification thereof. (p. 51.)

5. Same Evidence of Authority.

Mere rumor or common belief, that an agent has power to do a particular act on behalf of his principal, is not, of itself, evidence of such authority. (p. 53.)

Error to Circuit Court, Tucker County.

Action by A. Thompson againt P. H. Murphy and others. Judgment for plaintiff, and defendant the Laboringman's Mercantile & Manufacturing Company, brings error.

Reversed and Judgment for Defendant.

C. O. Strieby, for plaintiff in error.

Cunningham & Stallings, for defendant in error.

Poffenbarger, Judge:

The Laboringman's Mercantile and Manufacturing Company seeks the reversal of a judgment against it in favor of A. Thompson, for the sum of $407.44, rendered by the circuit court of Tucker county, in an action of debt on a promissory note.

This action is similar in some respects to that of Third National Bank v. Laboringman's Mercantile and, Manufacturing Co., decided by this Court and reported in 49 S. E. 544. Some of the principles announced in that case are applicable and controlling here.

The note, bearing date January 24, 1901, is for the sum of $382.39, was payable thirty days after date at the office of the Blackwater Lumber Company in Davis, West Virginia, and was signed "Laboringmans Mer. & Mfg. Co. P. M. Murphy, Pres." The parol evidence introduced is, in substance, as follows: A Thompson says Murphy approached him on the day of the date of the note and requested a loan, representing that the defendant company had a note due at the bank which it was unable to meet by a few hundred dollars, and also that there was an account due from it to the Blackwater Lumber Company, a corporation of which the said Thompson was practically the owner, which the defendant desired to pay. Thereupon Thompson prepared a note, and, after obtaining the signature thereto, gave his check for two hundred dollars, the difference between the amount due the Blackwater Lumber Company and the face of the note. Being asked, on cross-examination, whether the amount thus deducted was due from the defendant company or from the Davis Poultry Company, with which also Murphy was connected, he said he did not know, but had relied upon the information given him by Murphy, who had said "Our company owed the Blackwater Lumber Company." Whether the check was deposited to the credit of the defendant company in bank and the amount thereof checked out in payment of its debts or otherwise applied by it does not appear. After the note became due, it was protested, and notice thereof sent to the defendant company. Sometime thereafter, Thompson presented the note to the manager of the company at its office, and, later, to John F. Getty, supposing him to be one of the directors of the defendant company, but Getty seems not to have been a director until April 20, 1901. These demands were made probably in March or April, 1901. George B. Thompson testifies that very soon afterwards he called upon W. E. Patterson, secretary and director of the company, concerning the note and was told by Patterson that he knew nothing regarding it but would consult Murphy about it and send him down to see about it. John F. Thompson testified that he had presented the note in August or September, 1901, to W. W. Golightly, manager of the company, and demanded payment thereof and was informed that the directors would have to take action upon it before it could be paid. Having been informed that the directors would meet in a day or two, he went back the next week and was told that they had decided that they had no right to act on matters of that kind, the meeting having been a special meeting, but that a regular meeting would be held soon, at which action upon it could be taken. After the regular meeting he went back and was informed that nothing had been done about the note. The book in which the directors recorded their proceedings shows two entries made on the 5th day of September, 1901, which are, respectively, as follows:

"On motion of Mr. Marks, seconded by Mr. Pressau, it was ordered that the demand of Mr. A. Thompson for the payment of the note of $382.39, contracted by P. M. Murphy be laid on the table.''

"On motion of Mr. Marks, seconded by Mr. Pressau, it was ordered that the demand of Mr. A. Thompson, for the payment of the note of $382.39, contracted by P. M. Murphy, without the knowledge and consent of the directors, be laid on the table."

As tending to show acts from which the public might infer the authority of Murphy to borrow money for his company and execute its obligations therefor, it was shown that he had borrowed of George B. Thompson, January 15, 1901, two hundred dollars, and, on February 2, 1901, five hundred dollars, for which, on the last named date, he had given the defendant company's check, post dating it. When due, it was presented for payment and protested. Later, it was re-presented, upon information from Murphy that it would be paid, and was accordingly paid, but whether the money was deposited for that purpose by the company itself, or by Murphy, does not appear. On the 21st day of February, 1901, Murphy gave to F. A. Cruickshank the note of the company for two hundred dollars for money loaned by him, which note was afterwards paid in currency by P. M. Murphy. The evidence further discloses that at about the time the check, given to George B. Thompson, was protested, Murphy, with the knowledge and authority of the directors, was at Piedmont, West Virginia, attempting to raise money for the company on its note for two thousand dollars.

The question of liability was withdrawn from the jury by a demurrer to the evidence, which the court overruled and rendered judgment for the amount due as ascertained by the verdict.

It is not pretended that Murphy had any inherent authority or power as president to borrow money and execute the company's note therefor. That such authority is not possessed by the president of a corporation, in the absence of an express delegation thereof, has been determined by this Court. Bank v. Kimberland, 16 W. Va. 579; Third National Bank v. Laboring mart s &c. Co. 49 S. E. 544. Nor is it pretended that he had any antecedent express authority from the board of directors to so bind the corporation.

The judgment rests upon two propositions, the first of which is that there is evidence which would justify a finding that the defendant, with full knowledge, allowed Murphy to so act and deal, in respect to its business, as to constitute a representation to the public of authority in him to borrow money on its account. The facts relied upon to sustain this proposition are of the same character as those set up in Third National Bank v. Laboring man's &c. Co., and, in that case, they were deemed and held wholly insufficient for that purpose. They were almost contemporaneous in date with the transaction with Thompson. It does not appear that he had any knowledge of but one such transaction, namely, the first one had with George B. Thompson. Nothing in the testimony indicates that the directors of the corporation had any knowledge of this transaction subsequently had with George B. Thompson or the one had with W. W. Golightly. In the absence of any knowledge of these facts on the part of the board of directors, there is no foundation for saying the corporation held Murphy out to the public as an agent authorized to borrow money for use in its business. A verdict of a jury, predicated upon such testimony, could not be sustained and, therefore, the evidence is clearly insufficient upon a demurrer thereto.

The other view is that of ratification of the unauthorized act of the president. There is no claim of an express ratification. The contention is that it is a ratification by acquiescence and retention of benefits. As noted in the statement of the evidence, it does not appear that the account which was set off against the note at the time of its execution was due from the defendant company. Mr. Thompson's evidence goes no further than to say it was so represented to him by Murphy and he acted upon that information. Whether the company received the benefit of the check given for the balance of the note does not in any way appear from the evidence. The alleged reception of benefits stands wholly upon the representations made to Mr. Thompson by Murphy. The check is not produced, so as...