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Dec. 1830.]

BUSCH v. Wilcox.

666

did not rely upon both. It does not seem to us that because he would not have entered into the contract without Hall's guaranty, such fact was a waiver of his right to rely upon the prior representations made by Hall, whatever may have been the value of such verbal guaranty in a legal point of view.

The defendant, Wilcox, further insists that "the contract having been made and sent to Wilcox for his adoption, with• out any intimation of there being anything outside of the written contract to which he was committed by signing it, Wilcox at least was entitled to be apprised of these facts immediately upon his coming personally into his relations of principal with Busch."

In other words, if we understand the proposition correctly, it is asserted that when one enters into a contract with a selfconstituted agent who has no authority to act for another, and the person for whom the self-constituted agent assumes to act adopts the contract so made in his name and behalf, thereupon it becomes the duty of the person so treating with the self-constituted agent immediately to notify or inform the principal of the instrumentalities made use of by such selfconstituted agent to induce him to enter into the contract. In a case where such contracting party is free from fraud or collusion, and acts in good faith, we do not perceive that such duty is imposed upon him. He has no right to presume that the self-constituted agent has misrepresented facts to him, or that he intends to defraud him. On the contrary, we think it is the duty of the principal, or the person who becomes so by adopting the contract made in his name and for him, to make all needed inquiry and investigation into the facts, acts, and representations of the person who, without authority, has assumed to act for him before he adopts the contract as his own. For in adopting the contract he not only adopts it as written, but he thereby adopts as his acts all the instrumentalities of the self-constituted agent in obtaining the consent of the opposite party to enter into the contract. By adopting the acts of the selfconstituted agent, he seeks to appropriate to himself all the benefits to be derived from it as fully as if he had himself induced in the first instance, and with this he must assume all the liabilities which attach to it: Wilson v. Tumman, 6 Man. & G. 236; Morse v. Ryan, 26 Wis. 356; Kerr on Fraud and Mistake, 111; Bigelow on Fraud, 367; Broom's Legal Maxims, 708; Wharton on Agency, secs. 89, 90; Fitzsimmons v. Joslin, 21 Vť. 142; 52 Am. Dec. 46; Baker v. Union Mut. L. Ins. Co., 43 N. Y.

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283; Elwell v. Chamberlin, 31 N. Y. 611; Presby v. Parker, 56 N. H. 409; Garner v. Mangam, 93 N. Y. 642; Bennett v. Jud. son, 21 N. Y. 238; Carpenter v. Insurance Co., 1 Story, 57; Mundorff v. Wickersham, 63 Pa. St. 87; 3 Am. Rep. 531; Coleman v. Stark, 1 Or. 115. The point made by Mr. Wilcox need not be discussed further, inasmuch as it was not raised in the court below.

Counsel for defendant has placed in our hands a printed argument, in which he gives the reasons why a rehearing should be granted. Upon one point, he stands with the court upon common ground, which is accurately and tersely stated by him as follows: "In this case there can be no question but that the contract must now be treated as the contract of Mr. Wilcox. He adopted it. He made payments upon it, and he has brought suit upon it.”

This leaves the only real contention between counsel and the court, the question of the extent of the liability of a principal who becomes such by adopting the unauthorized act of a self-constituted agent. We quote from his argument as showing precisely the position of counsel. He says: “I want to emphasize the fact that at the time Mr. Busch was informed that Mr. Hall had no authority to speak in relation to the quantity or quality of the pine, the negotiations were still pending, and not concluded; and the fact that when Mr. Busch signed the writing he knew that the representations made by Hall were outside of any authority that he (Hall) might exercise, or might assume to exercise. And I want to emphasize the additional fact that Mr. Hall's personal guaranty was not given in addition to representations made within the scope of authority, but Mr. Hall's personal guaranty was given because his representations were without authority, and Mr. Busch knew it."

Grant that Busch knew that Hall had no authority from Wilcox to enter into any contract to lumber the land, and also that Wilcox had not theretofore authorized him to make any representations in relation to the quantity and quality of the timber, still, he did not know that Hall assumed to act as the agent of Wilcox in making the contract, – that he asBumed to act for him in executing the contract, - and the question recurs, When Wilcox adopted the contract and made it his own, did he not also adopt as a legal consequence the agency of Hall to its full extent, as to inducements held out by him, and in reliance upon which Busch entered into

the contract? We have already stated what we consider to be the law upon this proposition, and referred to some of the authorities by which we think it is supported.

Counsel for defendant also says: “It is stated in the opin. ion of the court that Hall, Wilcox, and Noyes and Bawyer were acting in concert, and not each one for his separate and individual interest, but as a whole. There is no testimony to that effect; but, on the contrary, the testimony is, that Mr. Wilcox did not act at all. There is no act of Mr. Wilcox in this case of any sort prior to the reception of the written bargain. That Hall and Sawyer acted in concert is true, but that Wilcox acted is untrue."

We did not attempt to state the testimony from which we deduced the statement referred to; but we think counsel must have overlooked the testimony which Mr. Wilcox gave, as follows: "There was a contract, I believe, that we should put in a part of this timber that coming winter."

The point, however, is not very important, as we are content to rest our opinion upon the obligations and liability of Mr. Wilcox, arising from his adopting the contract made by Hall as his agent, and the paramount duty of Wilcox to ascertain the extent of the authority assumed and the means employed by Hall in making the contract. The law, as we couceive it to be, is this: When a person deals with an authorized agent, he is bound to inquire and ascertain the extent and limit of bis authority to bind the principal, and the principal is bound by all acts of the agent within the scope of his authority; and when a principal adopts the contract of a self-constituted agent who has assumed to act for such principal without authority, he is bound to inquire and ascertain the extent the self-constituted agent assumed to act in his behalf, and the principal, when he becomes such by adopting his acts, is bound by all acts within the scope of the assumed authority; and in both cases the liability of the principal extends to the frauds or misrepresentations of the agent committed or made while acting within the scope of the real or assumed authority. We entertain no doubt upon the law that should govern the case.

Upon the facts as they are developed by the testimony, wo regard it as a close case, and viewed from Mr. Wilcox's stand. point, it is in some respects one of apparent hardship. But we cannot treat the facts differently from what the jury have bound them to be upon the whole testimony; and the court in his charge - which was not excepted to, nor was error assigned upon that portion of it - instructed the jury that as Mr. Wil. cox had commenced suit against Busch for damages for not performing the contract, they could not in this suit allow Wil. cox anything for failure to perform. His remedy against Busch is therefore left intact for any overpayment, or breach of contract on Busch's part.

We see no reasons for coming to a different conclusion than that first announced, and the rehearing is denied.

AGENCY LIABILITY OF PRINCIPAL — RATIFICATION.— Every one is bound to inform himself with whom he is dealing, and he deals with an agent at his peril, unless he informs himself of the extent of his authority: Bond v. Pontiac etc. R. R. Co., 62 Mich. 643; 4 Am. St. Rep. 883, and note. As to third persons, a principal is bound by the acts and representations of his agent made and done within the apparent scope of his authority; and his actual instructions do not govern, unless the person dealing with him had notice of or was put upon inquiry as to his real authority: Wachter v. Phænit Assur. Co., 132 Pa. St. 428; 19 Am. St. Rep. 600, and note; and this principle applies even to acts of an agent fraudulent in their nature, done in the scope of his authority: Du Souchet v. Dutcher, 113 Iod. 249. The principal's rati. fication of the unauthorized acts of one assuming to act for him as his agent must be in toto; he must take the responsibility as well as the benefit that may result from such acts: Shoninger v. Peabody, 57 Conn. 42; 14 Am. St. Rep. 88, and note; note to Atlee v. Bartholomew, 5 Am. St. Rep. 110-114; Johnston H. Co v. Miller, 72 Mich. 265; 16 Am. St. Rep. 536.

WILBUR V. STOEPEL.

(82 MICHIGAN, 344.) CORPORATIONS - CONTRACT BY Part OF STOCKHOLDERS. An agreement

beween two of the three stockholders and directors of a corporation, that a purchaser of stock shall be employed as business manager for a term of years, and for the repurchase of his stock at a stated price if he desires to retire at the end of the term, is inseverable, and void as against pube

lic policy, unless assented to by all the stockholders. PRACTICE - RIGHT TO EXCEPT TO INSTRUCTIONS. - Litigants cannot be de

prived of their right to except to instructions by the court, unless they

have expressly requested them. Requests by implication are unknown. CONTRACIS – KNOWLEDGE AND Assent. - In order to make a contract

valid which would be void without the consent of all the stockholders of a corporation, there must be evidence that they had knowledge that it was

to be made, and that they assented. PRACTICE INSTRUCTIONS. - Where there is evidence tending to support

both sides of an issue of fact, an instruction thereon should call atten.

tion to both classes of the evidence. CONTRACTS — PAROL EVIDENCE TO Show EXECUTION. Conversations and

nogotiations preliminary to a written agreement, although merged in it,

.

may still be admissible, not to explain its terms, but to throw light npon

the question of its execution, or other questions connected therewith. PRACTICE – EVIDENCE — BURDEN OF Proor. — When the execution of an

instrument sued on is denied by affidavit, the burden of proof is upou the plaintiff throughout the trial, to show the execution of the instru.

ment. This in Michigan, under circuit court rule 79. CONTRACTS. — DELIVERY, WHICH IS AN ESSENTIAL PART of the execution

of an instrument, cannot be inferred froin possession. CONTRACTS, EVIDENCE TO REBUT. — An unsigned memorandum of an agree

ment drawn previous to the contract sued on is not admissible as rebutting evidenco.

Charles K. Latham, F. A. Baker, and Edward W. Pendleton, for the appellants.

Parker and Burton, and Alfred Russell, for the respondent.

GRANT, J. This suit was brought upon the following written agreement:

“In consideration of the undertakings of De Witt E. Wil. bur, in connection of the Stoepel Lumber Company, and as part of the contract for the sale of ten thousand dollars of the capital stock of said company by us to him, we hereby agree that if at the end of two years he decides to withdraw from said company we will repurchase the stock he buys of us, or 80 much of it as he may then have, for cash, at eighty per cent of its par value; and if at any time during the first two years the said company dispenses with his services, we agree to buy back the stock, on the same terms as above stated; but in either case we stipulate to have three months' time in which to take and pay for the same.

WILLIAM C. STOEPEL. April 1, 1884.

JOSEPH E. WATSON."

The first declaration filed in the case set forth the above agreement in hæc verba, and alleged that the defendants were large stockholders in the Stoepel Lumber Company; that they were desirous of selling four hundred shares of its capital stock to plaintiff, and that he should become manager of the business; that he agreed to become a member of the corporation, and manager of its business, and that thereupon the above written contract was executed. The contract was not made with the company, but with two of its stockholders. One Herman R. Stoepel was also a large stockholder. This declaration did not allege any contract with him, verbal or written, nor any consent on his part to the agreement sued on, nor did his name appear in the declaration.

Issue was

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