Coursey v. Firestone Tire & Rubber Co. (33 F.2d 49, 1929)

JOHNSON, District Judge.

The first question to be determined in tMs ease is whether W. B. Alexander, manager of the Omaha branch of the business of the Eirto stone Tire «fe Rubber Company, a corporation, had authority as the agent of said company to make the agreement sued upon. The trial court held that he did not have that authority and instructed the jury to return a verdict for the company. The Firestone Tire one outside of Akron, Ohio, had authority to alter or modify its terms. This provision recited:

“It is further understood and agreed that the terms of this agreement cannot be altered, waived or modified, except by a written endorsement thereon executed on behalf of the company at Akron, Ohio, and' that any separate verbal or written agreements which may be made between the dealer and the company's salesmen or other employes are not binding upon the company.”

In the face of these provisions ‘of the June agreement and the manner of its negotiation and execution by the company there is no just ground for the contention that the company had clothed Alexander with apparent authority or had held him out as possessing authority to make the September agreement alleged in the complaint. And certainly in the face of these provisions of the June agreement no such authority could1 be implied from his position as manager of the Omaha branch. It seems clear to us on this reeord that Alexander as manager of the Omaha branch had no apparent authority to bind the company to take back and pay for goods which he had sold to plaintiffs in the course of his employment or to take over and pay plaintiffs the face value of their outstanding accounts, etc. The fact that goods were taken back and plaintiffs given credit for their value in the adjustment and settlement of plaintiffs' account with the company or that goods were taken back and their value credited to plaintiffs and applied on subsequent purchases of other goods in no way militates against this conclusion.

The court in Richmond Guano Co. v. E. I. Du Pont de Nemours & Co. (C. C. A.) 284 F. 803, states the rule applicable here as follows : “The act of an agent within the apparent, but not within the real scope of his authority, is binding on the principal where loss would otherwise result to one who has in good faith relied on such apparent authority. And an act is within the apparent scope of an agent’s authority when a reasonably prudent person having knowledge of the usages of the business, is justified in supposing that he is authorized to perform it from the character of the known duties.”,

In Schuster v. North American Hotel Co., 106 Neb. 672, 184 N. W. 136, it is said: “A person dealing with one known to be an agent is held to the exercise of reasonable prudence, and, if an agent makes an agreement, representation or promise so unusual and unreasonable as to arouse the suspicion of a man of ordinary or average business prudence, he is put upon notice and must ascertain if actual authority has been conferred.”

In Hill v. James, 148 Minn. 261, 181 N. W. 577, the court said: “If the agent, even though a general one, tenders a contract so unusual as to arouse the inquiry of a man of average business prudence, the person to whom the contract is tendered is put upon notice, and must ascertain if actual authority to enter into- it has been conferred.”

In Friedman & Sons v. Kelly, 126 Mo. App. 279, 102 S. W. 1066, the court said: “As a correlative of the principle which affixes the limitation of the rule with respeet to the apparent authority of an agent, as above indicated, there is another and companion principle which enforces a reasonable degree of diligence upon those who deal with the agent in relying upon his apparent rather than this express authority to bind the principal; and that is the person dealing with the agent, although ever so innocent, will not be permitted to ignore all the precepts of common sense pointing contrariwise and rely exclusively upon the representations or promises of the agent, however unreasonable, for the law with respect to every relation of life not involving intentional fraud or malice, as we understand it, sets up an ordinarily prudent man as the standard by which the conduct and affairs of other men should be governed, and in consonance with this standard a person dealing with an agent is required to act with ordinary prudence and reasonably diligence.”

As bearing upon the rule, see, also, the following eases: Richardson & Son v. Studebaker Corp. of America, 29 Ga. App. 249, 114 S. E. 648; Owens Bottle-Mach. Co. v. Kanawha Banking & Trust Co. (C. C. A.) 259 F. 838; Salmon v. Austro-American Stave & Lumber Co. (C. C. A.) 187 F. 564; Chicago, R. I. & P. R. Co. v. Chickasha National Bank (C. C. A.) 174 F. 923.

It seems to be faintly suggestiye in plaintiffs’ brief that the company ratified the alleged September agreement, but the record does not contain any evidence of ratification by an authorized 'agent of the company. The agents and employees of the company who according to the testimony of plaintiffs’ witnesses promised plaintiffs that the company would carry out the alleged September agreement by taking over and p'aying the face value of the outstanding accounts, etc., due and owing plaintiffs at the termination of the alleged agreement, had no greater authority in respect to ratifying it than Alexander had in respect to making it.

In our opinion plaintiffs failed to show that Alexander had any authority, apparent or otherwise, to make in behalf of the defendant company the alleged agreement sued upon. The trial court therefore did not err in directing a verdict for the defendant. This conclusion disposes of the case and renders it unnecessary to consider other-questions discussed by counsel in their briefs.

The judgment should be affirmed; and it is so ordered.