Commercial Solvents v. Johnson

Annotate this Case

69 S.E.2d 716 (1952)

235 N.C. 237

COMMERCIAL SOLVENTS, Inc. v. JOHNSON et al.

No. 92.

Supreme Court of North Carolina.

March 19, 1952.

*719 Chas. B. McLean and Lucas & Rand, all of Wilson, for plaintiff, appellee.

Gardner, Connor & Lee, Wilson, for defendants, appellants.

JOHNSON, Justice.

The defendants' chief assignments of error challenge the action of the trial court in (1) excluding evidence proffered by the defendants in support of their counterclaim, (2) allowing the motion for judgment of nonsuit on the counterclaim, and (3) the charge of the court on the issue of debt in the plaintiff's action.

1. The excluded evidence and judgment of nonsuit in respect to the counterclaim. The excluded testimony consists of a mass of extra-judicial declarations and statements allegedly made by the plaintiff's agent Snyder, by which the defendants sought to prove that the plaintiff waived the right, or estopped itself, to terminate the consignment contracts under which the defendants had been receiving consignment shipments of anti-freeze compounds.

Conceding, but not deciding, that the excluded testimony may have probative force as tending to establish the facts alleged in the counterclaim, nevertheless it would seem that no sufficient foundation was laid to make this evidence admissible.

While proof of agency, as well as its nature and extent, may be made by the direct testimony of the alleged agent, Jones v. Carolina Power & Light Co., 206 N.C. 862, 175 S.E. 167, nevertheless it is well established that, as against the principal, evidence of declarations or statements of an alleged agent made out of court is not admissible either to prove the fact of agency or its nature and extent. West v. A. P. Messick Grocery Co., 138 N.C. 166, 50 S.E. 565; Parrish v. Boysell Mfg. Co., 211 N.C. 7, 188 S.E. 817; 1 Meacham on Agency, 2d Ed., § 285.

And in applying this rule, ordinarily the extra-judicial statement or declaration of the alleged agent may not be given in evidence, unless (1) the fact of agency appears from other evidence, and also unless it be made to appear by other evidence that the making of such statement or declaration was (2) within the authority of the agent or (3), as to persons dealing with the agent, within the apparent authority of the agent. Salmon v. Pearce, 223 N.C. 587, 27 S.E.2d 647; D'Armour v. Beeson Hardware Co., 217 N.C. 568, 9 S.E.2d 12; Am.L.Inst. Restatement, Agency, Vol. 2, § 285; Annotation 3 A.L. R.2d at page 598. See page 599, note 6.

When these preliminary factors have been proved by evidence aliunde, then evidence of extra-judicial statements of the agent, when otherwise relevant and competent, may be introduced as corroborative of other evidence, Hester v. Horton Motor Lines, 219 N.C. 743, 14 S.E.2d 794; 3 C.J. S., Agency, § 322, p. 280, or as substantive evidence bearing on the main issue in suit as a part of the res gestae. Queen v. Dixie Fire Insurance Co., 177 N.C. 34, 97 S.E. 741; Guilford Lumber Mfg. Co. v. Johnson, 177 N.C. 44, 97 S.E. 732; Miller v. Cornell Young Co., 187 N.C. 550, 122 S.E. 383; National Exchange Bank v. Sklut, 198 N.C. 589, 152 S.E. 697.

It follows, then, that the proffered evidence was properly excluded, unless it appears from the admitted evidence (1) that Snyder was the plaintiff's agent, and (2) that either (a) the excluded statements of Snyder were made within the actual *720 scope of his authority, or (b) that, as to the defendants, the statements were made within the scope of Snyder's apparent authority.

The fact of Snyder's agency and the extent of his authority are shown by his deposition, offered in evidence by the defendants. From this it appears that the scope of his authority was limited to doing sales-promotion work in respect to the plaintiff's line of chemicals. As he put it, he was "* * * to promote the qualities of * * * radiator chemicals," and to do "missionary work with the wholesale jobbers' salesmen there,Wilson Motor Parts salesmen and their affiliated branches, merely explaining the merits of the Stop Leak, the Anti-Rust, the Quick Flush, the Dry-Ex and the Radiator Cleaner that Commercial Solvents Corporation manufactured * * *." And such is the thread of all the admitted evidence in the case. It all tends to show that Snyder's authority was limited to promotional work, with no evidence being susceptible of the inference that Snyder possessed actual authority to modify the contractual relations between the plaintiff and the defendants.

This brings us to an examination of the defendants' contention that the excluded statements and declarations of agent Snyder were admissible under the doctrine of apparent authority. Here, again, it must be kept in mind that before this doctrine may be invoked, the apparent authority relied on must be shown by evidence aliunde. The controverted extra-judicial statements and declarations may not be used for the purpose of enlarging the agent's authority. Norfolk Southern Railroad Co. v. Smitherman, 178 N.C. 595, middle of page 599, 101 S.E. 208.

Moreover, since the doctrine of apparent authority rests upon the principle that where one of two innocent parties must suffer, the one must bear the burden who places another in a position to cause loss, it necessarily follows that the doctrine may not be invoked by one who knows, or has good reason for knowing, the limits and extent of the agent's authority. In such case the rule is: "Any apparent authority that might otherwise exist vanishes in the presence of the third person's knowledge, actual or constructive, of what the agent is, and what he is not, empowered to do for his principal". 2 C.J.S., Agency, § 92, p. 1189.

An examination of the record in the light of these controlling principles discloses that the admitted evidence, standing alone, is insufficient to support the inference that, as to the defendants, Snyder had apparent authority to make the statements and declarations shown in the excluded testimony. On the contrary, all the admitted evidence tends to show the defendants knew, or had good reason to know, that Snyder's actual scope of authority was limited to promoting the plaintiff's regular line of chemicals. Neither of the defendants dealt with Snyder at any time on a contractual level. There is no evidence that Snyder ever made personal contact with the defendant Bailey. This defendant did not go upon the witness stand. The other partner, the defendant Johnson, testified to no dealings with Snyder affecting the contractual relations between his firm and the plaintiff corporation. Johnson said that Snyder on arriving introduced himself as being with the plaintiff. "He showed me some samples of chemicals of Commercial Solvents that he was demonstrating * * *." Snyder made no demonstration for Johnson, who said, "I just saw the literature." After this, as the evidence developed in the trial below, Snyder was out in the trade areas promoting the qualities of the plaintiff's line of chemicals, part of the time with one of the defendants' salesmen, but never any more, according to the record, did he make contact with either of the defendants.

Also, the evidence tends to show that all previous contractual dealings were conducted between the defendants themselves and executives of the plaintiff corporation. The record reflects no evidence tending to show that either of the defendants was misled in respect to the scope of Snyder's authority.

*721 Since the admitted evidence in no aspect supports the inference that Snyder possessed either the actual or apparent authority to waive or modify the existing contractual relations between the parties, error may not be predicated upon the excluded evidence.

The evidence bearing upon the counterclaim, when considered in its light most favorable to the defendants, is insufficient to make out a prima facie case. The court below properly allowed the motion for nonsuit.

2. The charge of the court on the issue of debt.It seems to be conceded, and rightly so, that there was sufficient evidence to carry to the jury the plaintiff's case involving the issue of debt. On this phase of the case, the defendants challenge the correctness of this instruction: "The Court instructs you peremptorily if you believe all the evidence in this case that you will answer this issue `$2,006.93 with interest from the 30th of April, 1948.' There it is, gentlemen. Go out and say how you answer it."

Here, the defendants contend that the court in effect directed a verdict for the plaintiff; and that this may not be done in favor of the party who has the burden of proof.

However, the instruction as given left it to the jury to determine whether they believed the evidence. Hence it was not a directed instruction. See McCracken v. Clark, N.C., 69 S.E.2d 184, and cases there cited.

In the instant case all the evidence tends to show that the plaintiff was entitled to recover the full amount sued for. No evidence was offered contra, and defendant D. A. Johnson on cross-examination admitted the correctness of the account.

Ordinarily, where all the evidence points in the same direction, with but one inference to be drawn from it, an instruction to find in support of such inference, if the evidence is found to be true, will be upheld. Proffitt Mercantile Co. v. State Mut. Fire Ins. Co., 176 N.C. 545, 97 S.E. 476; Holt v. Maddox, 207 N.C. 147, 176 S.E. 261; Davis v. Warren, 208 N.C. 174, top of page 177, 179 S.E. 329.

The form of the instruction as given has the sanction of numerous decisions of this Court. Holt v. Maddox, supra; Davis v. Warren, supra; Nelson v. Atlanta Home Ins. Co., 120 N.C. 302, bot. p. 304, 27 S.E. 38; First Nat. Bank of Kansas City v. Griffin, 153 N.C. 72, bottom of page 75 and top of page 76, 68 S.E. 919. See, however, Morris v. Tate, 230 N.C. 29, top of page 33, 51 S.E.2d 892, where a more exact formula is given. See also comment of Stacy, C. J., in Brooks v. Orange Rice Mill Co., 182 N.C. 258, middle of page 260, 108 S.E. 725.

Other exceptive assignments of error (including those relating to the dismissal of the defendants' second counterclaim by judgment of nonsuit), not set out in the defendants' brief, or in support of which no reason or argument is stated or authority cited, are deemed abandoned. Rule 28, Rules of Practice of the Supreme Court, 221 N.C. 544, at p. 562 et seq.; Dillingham v. Kligerman, N.C., 69 S.E.2d 500.

No error.