Opinion
As Modified on Denial of Rehearing Jan. 23, 1930
Hearing Granted by Supreme Court Feb. 20, 1930
Appeals from Superior Court, Sonoma County; R.L. Thompson, Judge.
Action by D.G. Walker and H. Walker, respectively, against the Kimball Fruit Company, Inc. Judgments for plaintiffs, and defendant appeals. Reversed. COUNSEL
Heller, Ehrman, White & McAuliffe and Webster V. Clark, all of San Francisco, and Geary & Geary and C.J. Tauzer, all of Santa Rosa, for appellant.
Robert Duncan, of San Francisco, E.M. Norton, of Healdsburg, and Karl Brooks, of San Francisco (John L. McNab, of San Francisco, of counsel), for respondents.
OPINION
DEASY, Justice pro tem.
These two cases involved practically identical states of fact, and were tried together, although separate verdicts were entered. The appeals were consolidated for hearing and submitted together.
Respondents H. Walker and D.G. Walker are father and son, and in the year 1926 were the owners of adjoining orchards situated in Dry Creek valley in Sonoma county. In July, 1926, one Kemp Ross, as agent for appellant, entered into a contract with H. Walker, reading as follows:
"This Agreement made at Healdsburg, California, this 1st day of July, A.D.1926, between H. Walker hereinafter called the Grower, and Kimball Fruit Co., Inc., successor to Dennis, Kimball & Pope, fruit shippers, whose principal place of business is at New York, hereinafter called the shipper:
"Witnesseth: Guaranteed minimum of 90 cents on Fancy per X and 65 cents on C grade.
"That for and in consideration of the sum of One Dollar in hand paid by the shipper to the Grower and other valuable considerations, the receipt of which is hereby acknowledged, the Grower hereby places ½ his entire crops of Gravensteins apples grown on the following described property in Sonoma County, State of California, to wit: Located 5 mi. N.W. of H. Burg in Dry Creek Valley— estimated at 3000 x, packing charge not to exceed 55¢ x selling chg. 10% F.O.B. or 7% Delivered sale.
"For the season of 1926 of good merchantable quality suitable for marketing, in the hands of the shipper to market for his account. The Shipper shall receive for its services in marketing said crops, the usual commercial rates of loading and packing charges and commission established by it in that district, which Grower hereby agrees to pay. Said fruit or grapes are to be picked and delivered at Grower’s expense to the nearest packing house of said Shipper, and Shipper is to furnish the materials and do the packing and loading for which the Grower has hereinbefore agreed to pay. The Shipper agrees to use due diligence to market said crops to the best advantage to all parties.
"If the Grower is indebted to the Shipper at any time during the continuance of this agreement, the proceeds of said crops are hereby pledged to secure said indebtedness; and if said indebtedness is not fully paid before December 1st, 1926, then this agreement is renewed for the next year’s crop, and the proceeds are pledged for any indebtedness then existing.
"Kimball Fruit Co., Inc.
"By Kemp Ross, Shipper.
"H. Walker, Grower
"Address: Healdsburg, Cal. R. 2."
In the same month, as such agent, he also entered into a contract with D.G. Walker, reading as follows:
"This Agreement, made at Healdsburg, California, this 6th day of July, A.D.1926, between D.G. Walker, hereinafter called the Grower, and Kimball Fruit Co. Inc., successor to Dennis, Kimball & Pope, fruit shippers, whose principal place of business is at New York, hereinafter called the shipper.
"Witnesseth: Packing chg. 55¢ x; selling chg. 10% F.O.B. sales 7% Del. sales.
"That for and in consideration of the sum of One Dollar in hand paid by the Shipper to the Grower and other valuable considerations, the receipt of which is hereby acknowledged the Grower hereby places his entire crops of Gravenstein apples grown on the following described property in Sonoma County, State of California, to wit: Located 4 mi. N.W. Healdsburg in Dry Creek Valley— Estimated at 550 x Guaranteed minimum of 90 cents on Fancy & 65 cents C. Grade.
"For the season of 1926, of good merchantable quality suitable for marketing, in the hands of the Shipper to market for his account. The Shipper shall receive for its services in marketing said crops, the usual commercial rates of loading and packing charges and commission established by it in that district, which Grower hereby agrees to pay. Said fruit or grapes are to be picked and delivered at Grower’s expense to the nearest packing house of said Shipper, and Shipper is to furnish the materials and do the packing and loading for which the Grower has hereinbefore agreed to pay. The Shipper agrees to use due diligence to market said crops to the best advantage of all parties.
"If the Grower is indebted to the Shipper at any time during the continuance of this agreement, the proceeds of said crops are hereby pledged to secure said indebtedness; and if said indebtedness is not fully paid before December 1st, 1926, then this agreement is renewed for the next year’s crop, and the proceeds are pledged for any indebtedness existing.
"Kimball Fruit Co., Inc.
"By Kemp Ross, Shipper.
"D.G. Walker, Grower
"Address: Healdsburg, Cal. R. 2."
Appellant does not question the fact that Ross entered into contracts with respondents, but at the trial contended that the contracts were not as claimed by respondents, and that the duplicates forwarded by Ross to appellant’s agent in San Francisco, one Alexander Young, Jr., were different in form from those set out herein. The ones shown above were those delivered by Ross to the respondents. At the trial it appeared that on the duplicates mailed to Young by Ross erasures had been made, and that no guaranteed minimum price was specified for the apples.
Each of the respondents delivered apples to appellant during the season of 1926, and certain moneys were remitted to them, not amounting in either case to the guaranteed minimum price. Respondents thereupon demanded from appellant the difference claimed to be due to each of them, and upon the refusal of appellant to pay brought suits to recover such differences.
The actions were tried by a jury, which brought in a verdict for H. Walker in the sum of $2,085 and interest, and a verdict for D.G. Walker in the sum of $418 and interest. From the judgments rendered on these verdicts the defendant appealed.
The first contention of appellant is that no minimum price had ever been agreed upon, for the reason that the general agent of appellant, Mr. Young, never authorized the making of the guarantees because of the different wording in the contracts. The agent Ross testified that he mailed the duplicates to Young either from Healdsburg or Santa Rosa, and that, when he did so, the guarantees were written in exactly as they appeared in the contracts delivered to respondents. Young testified that, when he received the contracts in San Francisco, he read them, and that no provisions as to guarantees were contained in them. An interval of about a day elapsed between the mailing of them and their receipt by Young. The testimony of both witnesses may be true.
Where a contract, such as the ones involved here, is sent by mail, the postoffice cannot be said to be the agent of the person to whom it is addressed, and the delivery is not complete until the receipt of the contract and its acceptance. Navajo County Bank v. Dolson, 163 Cal. 485, 126 P. 153, 41 L.R.A.(N.S.) 787.
In view of this rule, it cannot well be said that there was any conflict in the evidence on the question as to whether the guarantees were in the contracts when received by Young, and hence any claim of respondents that the verdict of the jury is an implied finding on that subject, and therefore binding on this court on appeal, can have no merit.
The foregoing statement and conclusion are not decisive of the case, however, because the question of the authority of the agent Ross is not therein considered. The importance of the matter discussed will be adverted to more fully hereafter in connection with another point in the case. If Ross had authority, either actual or ostensible, to make the contracts containing the guarantees, Young’s action or inaction in the matter would become immaterial.
It is contended, however, by appellant that Ross had neither actual nor ostensible authority to enter into any contracts with respondents by which minimum prices were guaranteed. Many of the exceptions taken by appellant bear upon this contention, and do not require separate consideration. If Ross had authority, either actual or ostensible, as the agent of appellant to guarantee minimum prices to respondents, the judgments must be affirmed. If he had not such authority, they must be reversed, unless the contracts were subsequently ratified by appellant.
We will first consider the question of actual authority. In approaching this question it is apparent from the record that any actual authority could only have been conferred upon Ross by C.W. Kimball, the president of appellant, or by Alexander Young, its general agent in California. Appellant contends that there was no showing at the trial of any authority in C.W. Kimball, as president of appellant, to confer actual authority upon Ross. In support of this contention we are referred to the cases of Black v. Harrison Home Co., 155 Cal. 121, 99 P. 494, and Butler v. Solano Land Co., 46 Cal.App. 171, 188 P. 1019. We do not believe that these cases are controlling here, for the reason that in each of them was involved the question of alienating the lands of the corporation, the power to do which is ordinarily vested in the board of directors, and such, in effect, is the ruling in the cases cited. Rather, the rule applicable to purely business or commercial corporations is to be considered. That rule is that generally in a corporation organized for commercial purposes the president has power to bind the corporation by contracts made in pursuance of its ordinary business.
In Grummet v. Fresno Glazed Cement Pipe Co., 181 Cal. 509, the court said at page 513, 185 P. 388, 389:
"A corporation can act only through its agents, and the president of a corporation, as the agent and corporate representative, has the power, in the ordinary course of business and in furtherance of the corporate interests, to execute contracts and to bind the company in so doing. He is, by virtue of his office, recognized as the business head of the company, and any contract pertaining to the corporate affairs, within the general powers of such officer, executed by the president on behalf of his corporation, will, in the absence of proof to the contrary, be presumed to have been done by authority of the corporation."
And to the same general effect is the ruling in Stevens v. Selma Fruit Co., Inc., 18 Cal.App. 242, 123 P. 212.
The record shows that Alexander Young was appointed by defendant as its general agent for California. Ordinarily such an agent is clothed with all the authority necessary to enable him to carry on the business of his employer. The principal place of business of appellant was in New York, and it is a fair inference from the record that, so far as the business in California was concerned, he had the same plenary power that the president exercised.
Coming now to the evidence on the subject of the actual authority of Ross, we find that he testified that, when Mr. Kimball had looked at the crop of apples in the orchard of the respondent H. Walker, a conversation took place between Kimball and Ross out of the hearing of H. Walker, in the course of which Kimball said to Ross something about the fine quality of the apples that H. Walker was raising, and then said, "You get this crop regardless." Ross also testified that Young on one occasion told him to go out and get apples regardless, because he was afraid that they had ordered too much box shook.
The record shows that Ross was employed to solicit shipments of apples from growers in Sonoma county to the packing plant of appellant at Healdsburg. The contract forms he used were shipping contracts. It would seem to require the stretching of imagination almost to the breaking point to interpret the words "Get apples regardless" as conferring any express authority to make guarantees. That is not under any ordinary state of affairs a usual or necessary right possessed by a mere soliciting agent.
From the foregoing we conclude that Ross had no actual authority to enter into the contracts guaranteeing minimum prices.
Ostensible authority is such as a principal intentionally, or by want of ordinary care, causes or allows a third person to believe the agent to possess. Section 2317, Civ.Code.
A principal is bound by acts of his agent, under a merely ostensible authority, to those persons only who have in good faith, and, without want of ordinary care, incurred a liability, or parted with value, upon the faith thereof. Section 2334, Civ.Code.
In considering the question of ostensible authority, we must keep these Code provisions clearly in mind, and carefully examine the facts in the light of the rules stated therein. In the case of Cowell Lime & Cement Co. v. Santa Cruz Bank, 82 Cal.App. 519, at page 522, 255 P. 881, 882, in speaking of ostensible authority, this court said: "The determination of this character of authority is not a matter that lends itself to any hard and fast rule. It is almost wholly a question of fact."
What, then, are the facts in this case as disclosed by the record? Appellant, a New York corporation, had done a shipping and consignment business in various kinds of fruit in California for a short time prior to 1926. In that year Alexander Young, who maintained an office in San Francisco, became its general agent for California. Early in the year C.W. Kimball, president of appellant, came to California, and, being desirous of doing business in Sonoma county, where none had been done by appellant prior to that time, visited Sonoma county with Young, and there met a number of apple growers who had been requested by Young to assemble for that purpose. Neither of the respondents attended that meeting. Prior to that time, at the suggestion of Young, Ross had been employed as a solicitor, and at the meeting met C.W. Kimball for the first time. A day or so later Kimball, Young, and Ross called on respondent H. Walker, and Kimball looked over said respondent’s orchard. Kimball at that time stated that Ross was his representative there, and that Ross would call to see H. Walker later in regard to the fruit. Ross thereafter called on said respondent a number of times, and finally entered into the contract which is the basis of this action. Respondent D.G. Walker did not meet Young or Kimball at that time, and dealt altogether with Ross. The original meeting took place about two months prior to the making of the contracts. Meanwhile, appellant furnished to several banks in the vicinity a statement showing the financial standing of appellant and references to Eastern concerns. This was deemed advisable, because the company had never before done business in Sonoma county, and, in view of the nature of its business, wanted to satisfy the growers that they could with safety ship their fruit to it. One of the banks so supplied with information was the First National Bank of Healdsburg, and on the second page of the document sent there the following statement appeared:
"The Kimball Fruit Company does not merchandise nor buy anything for its own account, or use the company’s funds in buying and selling, but confines its operations exclusively to a commission basis."
The record shows that prior to the execution of his contract the respondent H. Walker called at the First National Bank of Healdsburg to inquire about appellant’s standing, and the document above referred to was shown him. He testified that he did not read the second page, but J.H. Miller, the cashier, testified that to the best of his recollection he read the entire document to said respondent. Respondent D.G. Walker made no inquiries of any kind, except from his father. It appears from the record that both respondents knew Ross for several years, and both stated that they had heard that in former years he had been in trouble because of unauthorized guarantees made by him on behalf of persons whom he had represented as a solicitor of business.
In the light of the facts so disclosed by the record, we feel that this case is controlled by the decision in the case of Peterkin v. Randolph Marketing Co., 48 Cal.App. 300, 191 P. 947, 948. The instant case is practically on all fours with the case above referred to, the main distinction being that there the contract was an oral one and here the contracts were in writing. That distinction is unimportant. In that case the court said: "Since plaintiff and his assignor dealt with Gow, knowing him to be acting as an agent of defendant, the burden was upon them to show that he in making the alleged agreement was acting within the scope of authority conferred upon him so to do. While counsel for respondent concedes that no express power was conferred upon Gow to either purchase or guarantee the price of the fruit delivered to defendant, he nevertheless insists that he was clothed with ostensible authority to make the agreement, and hence, since as claimed it recognized and adopted like contracts made by him with others, defendant is estopped from denying that Gow as its agent was authorized to make the alleged agreements. Conceding this to be the law, our attention is directed to no evidence whatever, either printed in the brief or contained in the typewritten transcript, which in the slightest degree tends to show that defendant had, through its agents or otherwise, purchased fruit at a stipulated price or guaranteed the price thereof, or shipped fruit other than on consignment for sale on commission."
The last-quoted paragraph is singularly appropriate here. There is no evidence here of any guarantees except those in the contracts sued on, and each respondent testified that he had never heard of any others.
Other cases exactly in point are Cannon v. Long, 135 Wash. 52, 236 P. 788; Fargason Co. v. Dudley, 173 Ark. 1148, 294 S.W. 6, and First National Bank v. Farson, 226 N.Y. 218, 123 N.E. 490, 492.
In the latter case the court said: "It is a general rule that the power of an agent to bind the principal in contracts of guaranty or suretyship can only be charged against the principal by necessary implication, where the duties to be performed cannot be discharged without the exercise of such a power, or where the power is a manifestly necessary and customary incident of the authority bestowed upon the agent, and where the power is practically indispensable to accomplish the object in view."
The duty of one dealing with an agent to satisfy himself as to the scope of the agent’s authority is similarly stated in the California cases of Mitrovich v. Fresno Fruit Packing Co., 123 Cal. 379, 55 P. 1064, and Allen v. San Francisco Wholesale Dairy Produce Exchange, 59 Cal.App. 93, 210 P. 41. The general tenor of the rulings in those cases is that one who seeks to charge a supposed principal with obligations resulting from the acts and conduct of an alleged ostensible agent must first show that he himself was cognizant of the facts which gave color to the alleged ostensible agency and caused him to believe that the person with whom he dealt was acting within the scope of his authority as agent.
As a result of what has been said, we must conclude that there was no holding out or representation by appellant of Ross as having any authority whatever to make the guarantees in question.
It clearly appears that respondents in dealing with Ross were not acting "in good faith, and without want of ordinary care." They both knew that he had in the past made unauthorized guarantees and had been in trouble on that account, and it would certainly be the act of an ordinarily careful and prudent business man to inquire of the general agent Young as to the extent of the authority of Ross before shipping any apples under the contracts.
Respondents have referred to the following cases: Leavens v. Pinkham & McKevitt, 164 Cal. 243, 128 P. 399; Cowell Lime & Cement Co. v. Farmers & Merchants Bank, 82 Cal.App. 519, 255 P. 881; Aigeltinger v. Burke, 176 Cal. 621, 169 P. 373; Resetar v. Leonardi, 61 Cal.App. 765, 216 P. 71; Hicks v. Wilson, 197 Cal. 269, 240 P. 289, and Producers’ Fruit Co. v. Goddard, 75 Cal.App. 737, 243 P. 686, which they claim support their position.
We have examined these authorities carefully, and fully agree with the conclusions therein expressed, but they are clearly distinguishable from the cases at bar. In each of them the agent by whose acts the principal was sought to be charged had been held out generally, and for a long period of time, and to the particular persons concerned, as possessing the authority he assumed to exercise, and in many instances unauthorized acts similar to the ones in issue in the cases mentioned had been ratified by the principal.
The record in this case discloses no such state of facts, and there is no evidence upon which any ostensible authority in Ross to make the guarantees can be predicated.
Respondents’ claim of ratification cannot be sustained. It is based upon the theory that, Young having received the contracts containing the guarantees, and having retained them without objection until after the apples had been delivered to appellant, any unauthorized acts of Ross were ratified. As we have stated, Young testified positively that, when he received the contracts, they contained no guarantees, and that he first learned that the ones he had in his possession differed from those received by respondents in the months of September, and that he repudiated the guarantees immediately. In addition to this, Miss Gielow, a clerk in Young’s office, testified positively that she sent a letter to each of the respondents shortly after their contracts were received by Young in which the following language appeared: "We are not going to make any promises or guarantees of prices, but we want you to realize that we have our heart and soul in the result of this work, and that our interests are entirely for your good." It is true that respondents each denied the receipt of such a letter, but the testimony is, in other respects, uncontradicted. Surely some emphatic repudiation would have been sent had Young known of the guarantees, instead of a form letter, which the record shows was similar to those sent to all growers whose contracts came to Young’s office.
For a similar reason respondents’ claim of estoppel is untenable.
It would needlessly prolong this opinion if the various exceptions were taken up and discussed. Some of them are entirely without merit, particularly those addressed to the instructions given by the court to the jury, and the others are all sufficiently covered by what has been said.
For the reasons stated, we conclude that the judgment in each of the cases must be reversed, and it is so ordered.
We concur: KNIGHT, Acting P.J.; CASHIN, J.