Truscon Steel Co. v. Cooke

• Decision Date: 13 October 1938
• Docket Number: No. 1631.,1631.
• Citation: 98 F.2d 905
• Parties: TRUSCON STEEL CO. v. COOKE.
• Court: U.S. Court of Appeals — Tenth Circuit

98 F.2d 905 (1938)

TRUSCON STEEL CO. v. COOKE.

No. 1631.

Circuit Court of Appeals, Tenth Circuit.

September 7, 1938.

Rehearing Denied October 13, 1938.

Frank Wells, of Oklahoma City, Okl., and A. C. Ruihley, of Youngstown, Ohio (D. I. Johnston, of Oklahoma City, Okl., on the brief), for appellant.

Paul G. Darrough, of Oklahoma City, Okl. (Bland West, of Oklahoma City, Okl., on the brief), for appellee.

Before PHILLIPS, BRATTON, and WILLIAMS, Circuit Judges.

WILLIAMS, Circuit Judge.

On June 27, 1936, W. Cooke, as plaintiff, having commenced this suit in the district court of Oklahoma County, Oklahoma, against the Truscon Steel Company as defendant, to recover damages for an alleged breach of contract, it was thereafter duly removed by the Steel Company to the United States District Court for the Western District of Oklahoma.

The parties will hereafter be referred to respectively as "Cooke" and the "Steel Company."

The cause was tried to a jury, a verdict being returned for $7,343.75 against the Steel Company. Judgment having been entered for such amount, with interest at 6 per cent. per annum from August 1, 1933, this appeal followed.

At close of introduction of all the evidence the Steel Company moved for a directed verdict in its favor which was overruled. Exceptions were saved, not only thereto but also to other actions of the court, each of which are here assigned as error.

Cooke, a general building contractor, was awarded a contract by the United States Government to construct an auditorium and gymnasium at the Tahlequah Training School. Shortly prior to such award, Naylor, state agent for the Steel Company, having gotten in touch with Cooke, they reviewed the specifications covering the structural steel, trusses, and miscellaneous iron required in such construction. Thereafter Naylor submitted to Cooke two copies identified as Exhibit A, which were signed "Truscon Steel Company by L. D. Naylor," each of which is as follows:

"Quotation "Agency Oklahoma City, Oklahoma "Date November 23rd 1932 "Quotation to Wm. Cooke Address Elks Building, Shawnee, Oklahoma,

"We propose to furnish the following described materials required for Auditorium and Gymnasium, Sequoyah Training School, Tahlequah, Oklahoma, in accordance with the following terms and conditions, including those printed on the reverse side of this sheet, which upon acceptance by you of this proposal are agreed to and accepted by you:

(Then follows list of materials to be furnished for $4,950.00.)

* * * * * *

"Prompt acceptance of this quotation by you and the written approval of our Home Office shall constitute a binding contract."

Both copies of said Exhibit A were signed by Cooke, one retained by him and the other by Naylor.

On December 3, 1932, Cooke wrote to the Department of Interior giving a list of subcontractors on such job, listing the Steel Company as one, to be approved for the furnishing of steel, iron, and hardware to be used in construction of said buildings. The government approved the Steel Company as a subcontractor. Cooke being required by the government to begin work on November 28, 1932, he advised Naylor that he would need the reinforcing steel about four days after said date, who told him that he would get it locally, and secured same from the Sand Springs Steel Company, Tulsa, Oklahoma. Naylor also told Cooke to mail his plans to the head office at Youngstown, Ohio, so that shop drawings could be made and mailed to United States Department of the Interior at Washington, D. C., for approval.

On January 7, 1933, Naylor wrote a letter signed "Truscon Steel Company by L. D. Naylor, Branch Manager," to Cooke.¹

The contract (January 7th) in duplicate referred to therein by Naylor for Cooke's signature was a revision of the first quotation of November 23, 1932, and contained the following: "Prompt acceptance of this quotation by you and the written approval of our Home Office shall constitute a binding contract."

Neither the "quotation" of November 23, 1932, nor that of January 7, 1933, ever received "written approval of the Home Office."

On January 21, 1933, the Washington, D. C., office of the Steel Company having submitted drawings to the Department of the Interior, and same having been approved by said department, were sent to Cooke, stamped thereon as follows: "The issuance of this drawing for approval does not constitute acceptance of the contract by the Truscon Steel Company."

On January 28, 1933, Naylor, from Oklahoma City, Oklahoma, wrote the Metal Lath Department, c/o Cooke, Tahlequah, Oklahoma.²

On the same date (January 28, 1933), Naylor wrote Cooke that the home office requested that he secure his latest financial statement, in which he further stated:

"Also, if it is at all possible for you to do so, it would certainly help matters if you could send in a check for around $500.00 to apply on your old account, or else write Mr. McGuire when you will be able to send him at least a substantial payment."

Cooke had previously transacted business with the Steel Company through Naylor on another job which was completed in the early part of 1932, and was due Steel Company a balance on the account arising therefrom in the sum of $1,232.59. On February 5, 1933 (date as corrected), Cooke wrote the Steel Company at Youngstown, Ohio.³

On February 16, 1933, the credit man replied to Cooke.⁴

On February 21, 1933, Cooke wrote in reply to the credit man of the Steel Company.⁵

On February 22, 1933, the credit man again wrote Cooke.⁶

On March 3, 1933, Cooke remitted the balance due on the old account.

On March 16, 1933, the Credit Manager of the Steel Company from Youngstown, Ohio, wired Naylor to advise Cooke that the Steel Company did not accept the contract, and on March 20, 1933, so wired Cooke.⁷ On March 22, 1933, Naylor wrote Cooke that he was shocked and surprised to learn that the Steel Company had refused to accept the contract as he felt sure that it would after the old balance was paid; that after he learned of the refusal, he had immediately contacted Capitol Steel & Iron Company to see if it would take over the contract on the same terms and it had agreed to do so. At that time Cooke had about 20 days in which to finish the building without being penalized. He obtained the steel to finish the building from Capitol Steel & Iron Company, the steel joists being in 20 feet lengths instead of 60 feet as called for by the specifications, such joists having to be bolted and welded together, causing expense and delay. Cooke testified that the erection of such trusses ordinarily would have required 4 days but that it actually took them from April 28, 1933, to July 1, 1933, to erect them. On June 13, 1933, Waggoner, Superintendent of Construction for Cooke, wrote Capitol Steel & Iron Company that its Mr. Thiebaud arrived on June 9 and after bolting the trusses, a test was had making a satisfactory showing. Cooke added a postscript to the letter that Thiebaud's services had been satisfactory. Thereafter, the Bonding Company for Cooke, with his approval, compromised the bill with Capitol Steel & Iron Company for $800.00 less than the billed price for the steel furnished, Cooke stating that this $800 reduction was due to expense incurred by him for labor in welding and bolting the 20 feet trusses.

For the purpose of showing that Naylor had authority to make contracts for the Steel Company and that home office approval was not essential, John Byrd, president of the Mid-West Steel Company of Oklahoma City, testified that his company had transacted business, no amount being stated, with the Steel Company through Naylor on many occasions and that he did not recall any such approval by the Home Office. In refutation, Harry Smith, the present branch manager of the Steel Company for Oklahoma, testified that the Home Office had sent out approvals on all long form contracts involving more than $300, and that copies of letters of such approval were in the Steel Company's files on all orders from Mid-West involving more than $300.

Cooke's contention in court below was that Steel Company had become liable by the execution of the proposals of November 23, 1932, and January 7, 1933, and on account of its acts and conduct in recognition of and in entering upon performance of the contract.

The contention of the Steel Company is that no binding contract was ever entered into with Cooke.

The power of any agent to bind his principal rests upon authority conferred. Such authority as to third persons includes that incidental to or implied from the main power conferred, and that which custom and usage have added, and that which the principal has occasioned as by a previous course of dealing, causing persons dealing with the agent to reasonably believe the principal has conferred, the exercise of which by the agent, the principal is by his conduct estopped to deny, or which he has subsequently approved and ratified. The principal, however, will not be bound by an act of the agent in excess of the authority conferred where the third person has knowledge of such limitation. Gannaway v. Standard Acc. Ins. Co., 10 Cir., 85 F.2d 144; Howard v. Barnstable County Nat. Bank of Hyannis, 291 Mass. 131, 197 N.E. 40; and 2 C.J. pp. 560, 569.

Naylor as state representative of Steel Company, having authority to bind in all things except where a limitation was made of which such third persons were advised, such a limitation was imposed on Naylor's authority to enter into a binding contract with Cooke for the steel on the Tahlequah Gymnasium and Auditorium. "Quotation" of November 23, 1932, and that of January 7, 1933, contains the following limitation: "Prompt acceptance of this quotation by you and the written approval of our Home Office shall constitute a binding contract." Cooke signed each of these "quotations", containing such limitation, becoming in writing a party thereto, and was at all times thereafter aware of the requirement...