Summary
In East Girard, the court stated that the agent had apparent authority because, "in our opinion, Houlihan was perfectly justified in inferring that Idler's authority, as manager, included the ordinary power of dealing with the Association's collateral."
Summary of this case from Ortiz v. Duff-Norton Co., Inc.Opinion
April 21, 1953.
May 25, 1953.
Principal and agent — Apparent authority — Reliance on third person — Manager of savings and loan association — Restatement, Agency.
1. Where a principal puts one into, or knowingly permits him to occupy a position in which, according to the ordinary experience and habits of mankind, it is usual for the occupant to have authority of a particular kind, anyone having occasion to deal with one in that position is justified in inferring that the person in question possesses such authority, unless the contrary is then made known. [580]
2. Restatement, Agency, § 49, comment b, cited. [580]
3. Where an agreement is made between a third person and an agent acting within the scope of his apparent authority, the fact that the third person gives nothing but a promise and does not otherwise change his position in reliance upon the appearance of authority does not prevent the transaction from being a contract upon which both the principal and the third person are mutually subject to liability. [581]
4. Restatement, Agency, § 8, comment c, § 31, comment a, and § 159, comment e, cited. [581]
5. It was Held, in the circumstances, that a "manager" of a savings and loan association had apparent authority to enter into an oral agreement with a mortgagor to apply additional collateral, held by the association to secure three mortgages, in payment of arrearages on all the mortgages. [579-83]
Evidence — Surviving party — Agent.
6. One who is merely an agent for a person or corporation acting for his employer or principal is not a party whose death will render the other party to the transaction incompetent as a witness. [582-3]
Before STERN, C. J., STEARNE, JONES, BELL, CHIDSEY and MUSMANNO, JJ.
Appeals, Nos. 150 and 151, Jan. T., 1953, from orders of Courts of Common Pleas Nos. 5 and 6 of Philadelphia County, March T., 1951, Nos. 4078 and 4079, in case of East Girard Savings and Loan Association v. Vincent Houlihan. Orders affirmed.
Proceeding upon petition to open judgments entered by confession on bonds accompanying mortgages.
The facts are stated in the opinion by BOK, P. J., of the court below, as follows:
The judgments sought to be opened in this proceeding were entered on two of three mortgage bonds executed by defendant, in favor of plaintiff, on June 5, 1950.
On that date Houlihan negotiated three separate loans from the plaintiff Association. Each was secured by a mortgage upon a different property owned by Houlihan, namely, 236 E. Rittenhouse Street, 2434 West Sergeant Street, and 2438 West Sergeant Street Philadelphia. In addition to the mortgages, additional collateral security was deposited by Houlihan at that time in the form of an Eight Hundred Dollar certificate of stock of the plaintiff Association.
The present controversy grows out of the fact that in April, 1951, when Houlihan was in default on all three obligations, the Board of Directors of the plaintiff Association ordered that the Eight Hundred Dollars additional security be applied exclusively against the Rittenhouse Street account. This action brought the Rittenhouse Street property up to date but left the other two in arrears. It is the defendant's position that this action was in violation of an oral agreement between him and the Association whereby the collateral was to be applied in payment of the arrearages, existing at the time the agreement was entered into, in each of Houlihan's three accounts.
No evidence was offered on behalf of the Association to disprove that such an agreement was made, the defense being that, even if it had been made, it was not binding on the Association. The single question for decision, therefore, is the authority of one Herman C. Idler, who, according to the deposition of Houlihan, represented the Association in the transaction as "manager", to bind his principal to the terms of the oral agreement.
During the period in question, Idler was admittedly the manager of the plaintiff Association. His name appeared so in the letterhead of the Association. On at least two occasions letters were received by Houlihan in reference to his delinquent account bearing the signature, "Herman C. Idler, Manager". Both letters threatened foreclosure. In one it was suggested that Houlihan "call and see me (Idler) personally". It was in answer to this summons that Houlihan went to the Association office, met with Idler, and concluded the agreement.
It was admitted that Idler had no specific authority to enter into the disputed agreement, but it is clear from the foregoing circumstances that he had apparent authority to do so.
"If the principal puts one into, or knowingly permits him to occupy, a position in which, according to the ordinary experience and habits of mankind, it is usual for the occupant to have authority of a particular kind, anyone having occasion to deal with one in that position is justified in inferring that the person in question possesses such authority, unless the contrary is then made known." O'Donnell v. Union Paving Co., 121 Pa. Super. 68, 72 (1936), quoting from Restatement, Agency, Section 49, comment b. In our opinion, Houlihan was perfectly justified in inferring that Idler's authority, as manager, included the ordinary power of dealing with the Association's collateral. See Bush v. Atlas Automobile Finance Corp., 129 Pa. Super. 459, 465 (1937).
The case of Bryn Mawr College v. Gold B. L. Association, 120 Pa. Super. 246 (1935), seems conclusive on the point of Idler's apparent authority. There the Association's conveyancer was held authorized to accept a deed to a property in default in lieu of foreclosure. The Court said: "The authority of an agent of a corporation may be presumed from his position and the nature of the act." Idler's position as manager and his action in agreeing to spread the collateral over three properties instead of limiting it to the one for which it was issued reveal not only an apparent right to act but the kind of action to be expected of an executive in the ordinary course of business.
Plaintiff contends that the rule of apparent authority is not applicable in the present situation for the reason that Houlihan did nothing to change his position in reliance upon Idler's promise. The argument is made that the rationale of apparent authority is similar to estoppel. No case from this or any other jurisdiction is cited as a basis for this assertion. A contrary rule is found in Restatement, Agency.
"Where an agreement is made between a third person and an agent acting within the scope of his apparent authority, the fact that the third person gives nothing but a promise and does not otherwise change his position in reliance upon the appearance of authority does not prevent the transaction from being a contract upon which both the principal and the third person are mutually subject to liability." Section 8, comment c. (See also Section 31, comment a, and Section 159, comment e.)
Although the point was not raised, there appears to be consideration for the oral agreement. Houlihan agreed to pay the difference after applying the collateral to the three accounts. It came to only a dollar — a small consideration but still sturdy.
This is not a case of word against word. Houlihan's testimony was agreed upon in statement form, and it was also stipulated that his son would testify to the same purpose. In addition, a letter was offered, from Houlihan to Idler, which mentioned the oral agreement and protests the application of the collateral to the Rittenhouse Street property alone. Thus there are two witnesses and corroboration.
Plaintiff complains that Idler is now dead. No objection was made to any of the evidence given on deposition on any other ground. The objection is squarely answered by Danish Pride Milk Products Co. v. Marcus, 272 Pa. 340 (1922); and McCaulif v. Griffith, 110 Pa. Super. 522 (1933). In the latter case the Court said:
"The decisions under the Act of 1887 uniformly hold that one who is merely an agent for a person or corporation acting for his employer or principal is not a party whose death will render the other party to the transaction incompetent as a witness."
The rule to open the judgment is made absolute.
Plaintiff appealed.
Howard M. Kuehner, for appellant.
Gilbert Cassidy, Jr., for appellee.
In opening the judgment entered as of March Term, 1951, No. 4078, Judge ALESSANDRONI of Common Pleas Court No. 5 of Philadelphia County, adopted the opinion filed by President Judge BOK of Court of Common Pleas No. 6, Philadelphia County, as of March Term, 1951, No. 4079. Since the issues in both cases were identical even though different properties were involved, both orders affirming the judgments are affirmed on the opinion of President Judge BOK.