Wright v. Iowa Power & Light Co.

• Decision Date: 21 September 1937
• Docket Number: 43911.
• Citation: 274 N.W. 892,223 Iowa 1192
• Parties: WRIGHT et al. v. IOWA POWER & LIGHT CO.
• Court: Iowa Supreme Court

274 N.W. 892

223 Iowa 1192

WRIGHT et al. v. IOWA POWER & LIGHT CO.

No. 43911.

Supreme Court of Iowa.

September 21, 1937

Appeal from District Court, Polk County; Jos. E. Meyer, Judge.

Action to recover $1,378, with interest from November 2, 1933, for the breach of a contract under which the defendant company through its agent, agreed to repurchase certain shares of preferred stock sold plaintiffs in the Iowa Power & Light Company. The case was submitted to a jury which returned a verdict for plaintiffs. The court overruled appellant's motions for a directed verdict and a new trial. From a judgment on the verdict, appellant appeals.

Affirmed.

Bradshaw, Fowler, Proctor & Fairgrave, of Des Moines, for appellants.

John Connolly, Jr., and Irvin Schlesinger, both of Des Moines, for appellees.

KINTZINGER, Justice.

The record shows that at various times between January 17, 1929 and September 23, 1930, the defendant, through its agent, C E. Bauman, sold plaintiffs 26 shares of its preferred 6 per cent. stock in the Iowa Power & Light Company at $100 per share. The record also shows without dispute that said Bauman was an agent of the defendant company, duly authorized to sell its stock. Every time he sold any of said stock to plaintiffs, he agreed with them that the investment was perfectly safe and that the company would repurchase the stock at any time they desired, and that they could get their money back within ten days or two weeks after it was requested, less $2 per share on all stock turned in within one year, $1 per share on all stock turned in within two years, and without any charge thereafter. The record shows that the stock in question belonged to the Iowa Power & Light Company, and that it was therefore selling its own stock.

The evidence shows without dispute that on November 2, 1933, the plaintiffs tendered a return of all the stock purchased by them to the appellant company at its office in Des Moines for repurchase in accordance with the agreement made by defendant's agent, Bauman. The appellant positively declined and refused to repurchase said stock upon the alleged ground that the agreement for its repurchase was made without any authority of the company and that its agents had no power or authority to make any such agreement.

At the close of the evidence, defendant made a motion for a directed verdict chiefly upon the ground that its agents had no authority to enter into such repurchase agreement. This motion was overruled and a verdict for the full amount sued for was returned by the jury. Defendant then filed a motion for a new trial upon the same ground, which was also overruled. Judgment was then entered on the verdict, and defendant appeals.

The record in this case shows, and appellant concedes, that the only proposition raised on this appeal is that the " record in this case did not justify the trial court in submitting to the jury the question of the authority, actual or apparent, of the appellant's agents to bind it to the contracts declared upon."

Appellees are husband and wife, aged 74 and 76 years, respectively, residing at Des Moines. Mr. Wright was engaged in repairing violins. The record shows that appellees, as a result of newspaper articles advertising the sale of the Iowa Power & Light Company's 6 per cent. preferred stock as a safe investment, made inquiries at the company's office in Des Moines regarding such preferred stock. They were advised that one of its men would be sent out to see them. The following day, one C. E. Bauman called at their home, stating that he was sent there by the company.

The record shows that both Mr. and Mrs. Wright asked Mr. Bauman if they could get their money back when they wanted it if they purchased the stock, and Mr. Bauman told them they could. At Mr. Wright's suggestion for further assurance about the repurchase of the stock, Mr. Bauman brought a letter to the Wrights from the Iowa Power & Light Company, signed by F. R. Spaulding, its Investment Representative. This letter was addressed to appellee and said:

" Mr. Bauman has asked us to write you in regard to the market we are maintaining for our stock.

We have maintained this market ever since the stock was issued and expect to do so indefinitely, making a charge of $2.00 per share for the resale of stock held less than a year. During the second year the stock is held the charge is $1.00 per share and after that there is no charge.

The wide distribution of our stock together with the values which does not fluctuate, makes it possible for us to do this. * * *

[Signed] F. R. Spaulding,

Investment Representative."

The letter was written on one of the company's official letterheads, showing names of its general officers, among which was printed that of F. R. Spaulding, as Investment Representative.

Appellees purchased 26 shares through appellant's agent, C. E. Bauman, who had been sent to the Wrights by appellant to effect the sale. The Wrights paid Mr. Bauman $2,600 in cash for the stock, and the money was turned over to the Iowa Power & Light Company by its agent.

The defendant offered no evidence whatever, but in its answer alleged that neither its investment representative, Spaulding, nor its agent, Bauman, had any authority to enter into the contract for the repurchase of said stock.

The record shows that the reasonable value of the stock at the time it was tendered for repurchase was only $47 per share. Plaintiffs, being in need of funds, were compelled to sell their stock at $47 per share, and now ask judgment for $53 per share, with interest, as damages for a breach of the contract.

Appellant contends that the evidence fails to show that either Spaulding, the investment representative, or its agent, Bauman, who sold the stock, had any actual or apparent authority to enter into an agreement for the repurchase of the stock in question.

The record shows without dispute that F. R. Spaulding was the investment representative and had general supervision of the sale of all stock of the appellant company. It also shows without dispute that C. E. Bauman was an agent for the company authorized to sell its stock, and that he did sell 26 shares of stock to appellees at par, and that all of the money received therefrom was turned over to and received by the defendant company.

The lower court submitted to the jury the question of Bauman's apparent authority to enter into the repurchase agreement made with appellees. So the question for determination here is whether or not the evidence was insufficient as a matter of law to take that question to the jury.

The instructions of the court placed the burden of proof upon plaintiffs to show that appellant's agents were acting within the scope of their apparent authority in making the repurchase agreement.

It is conceded that an agent may bind his principal by an act within the limits of the apparent scope of his authority; it is also conceded that apparent authority is not actual authority, but is such authority as the principal holds the agent out to the public as possessing.

The rule is stated in 2 Corpus Juris 564, as follows:

" Where the third person has ascertained the general character or scope of the agency, he is authorized to rely upon the agent having such powers as naturally and properly belong to such character, and, in the absence of circumstances putting him upon inquiry, is not bound to inquire for secret qualifications or limitations to the apparent powers of the agent."

" Where the nature and extent of an authority * * * are to be determined, * * * or to be implied from the facts and circumstances, the questions as to the nature and extent of the agent's authority and whether the particular act in controversy was within the scope of his authority are usually questions of fact for the jury, guided by proper instructions from the court, and in such cases it is error to take the question from them by nonsuit, instruction, or direction of verdict." 2 Corpus Juris 962, § 733.

A corporation must and does necessarily act through an agent or representative. This rule is so elementary that it needs no citation of authority in support thereof. However, see Johnson v. Land & Inv. Co., 168 Iowa 340, 150 N.W. 596.

It is a well-established rule that as between a principal and third parties the principal is bound by the acts of his agent within the limits of the apparent scope of his authority. Palmer & Sons v. Cheney, 35 Iowa 281; Wood v. Chicago, M. & St. P. R. Co., 68 Iowa 491, 27 N.W. 473, 56 Am.Rep. 861; Fishbaugh v. Spunaugle, 118 Iowa 337, 92 N.W. 58; Wisconsin Lumber Co. v. Greene, etc., Tel. Co., 127 Iowa 350, 101 N.W. 742, 69 L.R.A. 968, 109 Am.St.Rep. 387; Boylan v. Workman, 206 Iowa 469, 220 N.W. 49; Tidewater, etc., Railroad Co. v. Harney, 32 Cal.App. 253, 162 P. 664; 2 American Jurisprudence, Agency, pages 82, 89.

In Johnson v. Land & Inv. Co., 168 Iowa 340, loc. cit. 351, 150 N.W. 596, 600, the court said: " Inasmuch as Carrier was concededly the agent of the appellant for some purpose and to some extent, Loper had a right in good faith to rely, within reasonable limits, upon his apparent authority. The appellant, as a corporation, was necessarily represented by some agent in every transaction. Carrier was its only representative present in this transaction."

In Wood v. Chicago, M. & St. P. R. Co., 68 Iowa 491 loc. cit. 497, 27 N.W. 473, 476, 56 Am.Rep. 861, this court said: " It was also warranted in submitting the question whether he was held out by defendant as authorized to make such contract. He was the only representative of the company at that station. * * * By placing him in charge of its business at that station, and empowering him to contract, * * * it held him out as possessing the authority...