chase the stock under certain conditions, does not bind it to perform the agreement.

The facts are stated in the opinion Messrs. Livingston & Whitmore and Mrs. Stella E. Whitmore, for plaintiff in certiorari:

The appellate court's decision is contrary to the fundamental principles of the law of agency.

Roberts v. Rumley, 58 Iowa, 301, 12 N. W. 323; Wheeler v. Northwestern Sleigh Co. 39 Fed. 347; Finance Co. v. Old Pittsburgh Coal Co. 65 Minn. 442, 68 N. W. 70.

Whatever is done by a special agent in excess of his authority is void unless ratified by the principal, and that without affecting the validity of what the agent did within the scope of his authority.

Davenport Sav. Fund & Loan Asso. v. North American F. Ins. Co. 16 Iowa, 74.

Where a principal has authorized the doing of a certain act, he does not, by accepting the benefits of the act, assume responsibility for an additional unauthorized act of the performance of which he is ignorant.

Mechem, Agency, § 83; Wheeler v. Northwestern Sleigh Co. 39 Fed. 347; Roberts v. Rumley, supra; Smith v. Tracy, 36 N. Y. 79.

Where, when a principal first acquires knowledge of the facts, the conditions are such that he cannot in justice to himself repudiate the whole of the agent's acts, he may stand upon what he has authorized, and a third person must bear the loss resulting from his dealing with an agent without learning the extent of his authority.

2 C. J. Agency, § 133; Cooley v. Perrine, 41 N. J. L. 322, 32 Am. Rep. 210; Bryant v. Moore, 26 Me. 84, 45 Am. Dec. 96; Tulane University v. O'Connor, 192 Mass. 428, 78 N. E. 494.

Messrs. Leslie J. Owen and Stone & Dick, for defendant in certiorari.

An agreement by which a purchaser of stock may, at his option, at the end of a certain time, return the stock and receive back the price, or whereby the company agrees to repurchase it at an

of the court.

agreed price after a certain time, is in the nature of a conditional sale and is valid.

2 Fletcher, Cyc. Corp. § 604; Ophir Consol. Mines Co. v. Brynteson, 74 C. C. A. 625, 143 Fed. 829; Roush v. Illinois Oil Co. 180 Ill. App. 346; Schulte v. Boulevard Gardens Land Co. 164 Cal. 464, 44 L.R.A. (N.S.) 156, 129 Pac. 582, Ann. Cas. 1914B, 1013.

A contract by a corporation to repurchase shares of its own stock is not ultra vires.

First Nat. Bank v. Peoria Watch Co. 191 Ill. 128, 60 N. E. 859; Republic L. Ins. Co. v. Swigert, 135 Ill. 150, 12 L.R.A. 328, 25 N. E. 680; Clapp v. Peterson, 104 Ill. 26.

A contract for the repurchase of the stock was an entire and indivisible contract.

Schulte v. Boulevard Gardens Land Co. supra; Vent v. Duluth Coffee & Spice Co. 64 Minn. 307, 67 N. W. 70; 2 Fletcher, Cyc. Corp. § 612; Roush v. Illinois Oil Co. 180 Ill. App. 346.

The principal must ratify in toto, if at all. He cannot accept benefits and decline burdens.

Mechem, Agency, $$ 170-174; Cook v. Tullis, 18 Wall. 332, 21 L. ed. 933; Sternbach v. Leopold, 50 Ill. App. 496; Morris v. Tillson, 81 Ill. 607; Eberts v. Selover, 44 Mich. 519, 38 Am. Rep. 278, 7 N. W. 225; Brigham v. Palmer, 3 Allen, 450; Shoninger v. Peabody, 57 Conn. 42, 14 Am. St. Rep. 88, 17 Atl. 278; Hyatt v. Clark, 118 N. Y. 563, 23 N. E. 891.

Farmer, Ch. J., delivered the opinion of the court:

In September, 1912, R. M. Nicholson, the authorized agent to sell stock of the Standard Pecan Company, a corporation, sold Mrs. A. G. Murray 100 shares of stock of the corporation at $10 per share. wrote on the back of the stock certificate an agreement that the Standard Pecan Company would repur

He

chase the stock at the end of three years at $11 per share, and signed the corporation's name to it. Mrs. Murray died within three years of the date of the sale, and when the three years expired her heirs gave the Standard Pecan Company written notice of their election to resell the stock to the company in accordance with the agreement written by its agent on the stock certificate. The corporation refused to repurchase the stock, and the administrator of Mrs. Murray brought suit to recover under the agreement. The corporation based its refusal to repurchase the stock on the ground that its agent had no authority to make any agreement for its repurchase, and it repudiated said agreement. A trial was had in the circuit

court of McLean county, resulting in a judgment in favor of defendant, which was reversed by the appellate court and the case remanded for a new trial. The second trial resulted in a judgment in favor of plaintiff for $1,100, with 5 per cent interest, which judgment was affirmed by the appellate court, and upon petition of the Standard Pecan Company this court granted a writ of certiorari, and the case is brought here for further review.

The case was tried in the circuit court on a stipulation of facts. It was stipulated Nicholson was the authorized agent of the defendant corporation and had authority to sell its stock for cash at the rate of $10 per share, which was the par value. Certificates were signed and sealed with the corporate seal of the company by the president and secretary and delivered to Nicholson in blank, with authority to fill the blanks, in case of sale, with the name of the purchaser, the number of shares sold, and dates of sale. He had no authority to sell stock with an agreement providing for its repurchase. When he sold the stock to Mrs. Murray, without the knowledge or consent of the company and without reporting the same to it, he wrote on the back of the certificate:

"It is hereby agreed that the Standard Pecan Co. shall at the end of three years from date repurchase this stock at $11 (eleven) per share, upon thirty days' notice. The owner does not need to sell said company the stock unless she so desires. "Standard Pecan Co.,

"per R. M. Nicholson."

The certificate of stock, with that indorsement, was delivered to Mrs. Murray, whereupon she paid Nicholson $1,000, which he paid over to the Standard Pecan Company. It was stipulated the company did not know of the indorsement on the cer

tificate for a repurchase of the stock until three years from the date of its purchase had elapsed, when the company received a communication from the heirs of Mrs. Murray, demanding a repurchase of the stock in accordance with the writing on the back of the certificate. Upon receipt of the communication the company replied, refusing to repurchase the stock, and repudiated the agreement to repurchase, for the reason its agent had no authority to make any such agreement.

It is not claimed Nicholson had any authority to agree to repurchase the stock, but plaintiff contends the agreement to repurchase was part of the transaction in the sale of the stock, and the law will not permit defendant, after knowledge of the unauthorized agreement made by its agent, to retain the benefits of the sale and repudiate the agreement made by its agent to repurchase. All authorities agree that the general rule is a principal is not bound by the acts of his agent not within the agent-binding scope of his authori- effect of agent's ty. Where the principal ratifies his agent's unauthorized acts, he is, of course, bound. When one deals with a special agent, or an agent who has -duty of one only special authori- dealing with ty to act for his agent. principal, it devolves upon the person dealing with such agent to acquaint himself with the extent of

Principal and

acts.

for stock contains the provision that "no conditions, agreements, or representations," other than those printed in the instrument, shall bind the company, the agents of the company, who sell the corporate stock and procure the execution of the subscription contract, clearly act outside the limits of their ostensible authority when they make an oral promise, as an additional stipulation and obligation of the company, that the company will, upon request, accept a return of the stock and repay the consideration, with interest; and the fact that the agents acted fraudulently in such case would not fix responsibility upon the company. (This case was cited in Shimonek v. Nebraska Bldg. & Invest. Co. (1922) — Neb. —, 191 N. W. 668, an action where there had been a similar contract, but where, however, the agent's agreement had been ratified and partially carried out by the company.)

Where a letter of the purchaser addressed jointly to the principal and the agent ordered a cement elevator, and stated that the purchase was based "on your claim to sell the hoist for us within a reasonable time after we have notified you that we have finished using it, for about 66 per cent of the cost price," it was held that the power to make such an extraordinary contract was not presumably or impliedly within the general scope of a selling agent's authority, and that therefore it was incumbent on the purchaser to prove otherwise than by the acts and declarations of the agent that the agent had precedent authority to make it or that the principal ratified its act. The court stated: "The principle applicable to the case is this: "The burden of proving both the fact of agency, and its scope, lies on him who asserts them.'" T. L. Smith Co. v. Burd P. Evans & Co. (1914) 56 Pa. Super. Ct. 626.

On the other hand, as heretofore stated, in the great majority of cases the purchaser obtained relief. And in most of these cases he was the plaintiff in the action.

In Tidewater Southern R. Co. v. Harvey (1917) 32 Cal. App. 253, 162

Pac. 664, the defendant subscribed in writing for certain shares of stock of the plaintiff company, executing her note for the purchase price; the action was upon the note and resulted in favor of the defendant; the subscriptions were made out in triplicate; one marked "Original" was retained by the company, one marked "Duplicate" was given to the subscriber, and another marked "Triplicate" was retained by the agent; the "duplicate" subscription, retained by defendant, had written on the back the following: "July 25—11. Ten months from date, if holder of contract wishes, we agree to take said stock off purchaser's hands at the purchase price of $1 per share. Tidewater & Southern R. R. Co., by R. U. Morey, Sec. Dept;" this was not written upon the original subscription retained by the company; the defendant claimed that the sale was conditional and that by the fraud of plaintiff's agent the true consideration did not appear upon the "original" subscription. The court said, inter alia: "We are satisfied that appellant should not be permitted to deny the authority of the agent to enter into such conditional contract. The agents were authorized to sell stock; they had the blank subscription book. In the sale of the stock they represented, therefore, the corporation. The purchaser was not warned nor put upon inquiry as to any limitation to the authority of the agent in receiving subscriptions. The purchaser had the right to assume that the salesman was authorized by the corporation to do those legal acts which the nature of his employment seemed to warrant. The agent, in other words, was ostensibly clothed with unlimited authority, and upon familiar principles appellant should not be heard to disavow and repudiate the contract made by him.

The authority of the agent and the ratification of his acts by the principal may be shown, of course, by circumstances; and it is fair to assert that a review of the whole situation leads rationally to the conclusion that, in legal contemplation, the act of

Morey in the premises was the act of appellant. Moreover, if we regard the fraudulent feature of the transaction, we reach the same conclusion. It was the duty of the agent to make the proper indorsement on the ‘original' subscription. If he had done so, the corporation would have had through that channel actual knowledge of the entire contract. But by the fraud of the agent the said indorsement was not made, and as far as respondent is concerned, the case must be viewed then as though said indorsement had been made and acquiesced in by appellant; for the act of the agent under the circumstances is the act of the principal, and the latter must suffer the consequences of the agent's failure to do as he agreed."

(See also, for a case on similar facts, where, however, the authority of the agent seems to have been conceded, Tidewater Southern R. Co. v. Vance (1916) 31 Cal. App. 503, 160 Pac. 1097.)

Where stock was bought on a guaranty of resale signed individually on the reverse side of a receipt for the money, which receipt was written on the stationery of the defendant corporation, and signed by the same individual, "Agent at N. Y. City,"the guaranty being of resale at the same price if the purchaser's brother deemed the investment unwise, and a check for most of the purchase money was deposited by the corporation, it was held that the transfer of the stock by the corporation with apparent knowledge of the guaranty, and the retention by it of the check, were sufficient, if true, as the jury was warranted in believing, to constitute a ratification on the part of the defendant corporation of the guaranty. Malcomson v. Monaton Realty Investing Corp. (1913) 154 App. Div. 694, 139 N. Y. Supp. 405, affirmed in (1915) 214 N. Y. 677, 108 N. E. 1100.

In Sweeny v. United Underwriters Co. (1912) 29 S. D. 576, 137 N. W. 379, where there was evidence which would have warranted the jury in finding that stock of the defendant corporation was bought by the plain31 A.L.R.-39.

tiff upon the condition that it could be returned and the purchase price be refunded if the plaintiff was dissatisfied with the purchase, but the defendant contended that the agent making the sale had not authority to attach such a condition to any sale, the court said and held: "There was evidence tending to prove that the secretary and manager indorsed the contract as made by the sales agent, including the condition for rescinding; and it must be presumed that such secretary and manager had authority to enter into such a contract as the one in question, providing the defendant could have entered into same. If, as a matter of fact, such an officer as one who is known as secretary and manager had not authority to enter into a conditional stock sale, other than as such authority might be affected by statute, certainly the burden was upon defendant to establish such fact."

In Wisconsin Lumber Co. v. Greene & W. Teleph. Co. (1904) 127 Iowa, 350, 69 L.R.A. 968, 109 Am. St. Rep. 387, 101 N. W. 742, the plaintiff recovered in an action for the par value of certain shares of stock in the defendant company pursuant to a contract made in the name of the defendant corporation under its corporate seal, executed by the president and secretary, whereby the defendant agreed that in a certain contingency it would repurchase the plaintiff's stock and pay the par value therefor. As to the defense that the officers had not authority in fact to make the contract, the court said, inter alia: "It clearly appears from the implied color which the answers must give in order that the defense may be considered at all, that these officers did in fact make the contracts as alleged in the petition, under the seal of the corporation, and that the defendant corporation has had and enjoyed the benefits of such contracts. This being true, the corporation cannot accept and ratify the contracts in so far as they were beneficial to it, and repudiate them in so far as they imposed any liability on its part. It accepted plaintiff's money