Opinion
Decided February 5, 1929.
If one party to a contract of sale of goods employ a broker and the other party treat with the broker and enter into a contract with him, as soon as the terms of the oral contract are settled the broker has the authority of both parties to make and sign a memorandum of its terms.
The ordinary bought and sold notes of a broker together constitute a binding memorandum which is sufficient to satisfy the statute of frauds, if it states only the essential terms of the bargain including the names of the parties, the subject-matter and the price, although the broker made no entry on his books.
It is sufficient usually for the party suing to prove only one of the notes; and the other will be presumed to correspond with it in the absence of evidence to the contrary.
Though the production in evidence of a broker's note does not prove his authority to execute it for the party to be charged, the broker's acts together with acts and conduct of the party may constitute links in a chain of circumstances from which such agency may be inferred.
ASSUMPSIT, to recover damages for breach of contract in refusing to accept a car-load of potatoes. Trial by a referee, who reported a summary of the evidence and found the facts.
The plaintiffs specified that the defendant purchased of them through a broker a car of potatoes at a price fixed, which in the aggregate was in excess of five hundred dollars; that the plaintiffs shipped the car, but that the defendant wrongfully refused to accept or pay for it, whereupon the potatoes were resold at a loss.
The plaintiffs submitted a copy of a broker's signed memorandum of sale, which was received in evidence without objection and is made a part of the record here. Its material portions are as follows:
"LEEMAN-CALLAHAN Co. 46 Clinton Street, Boston . . . .
BROKERS STANDARD MEMORANDUM OF SALE
In Person . . . . Check Telephone x Date ordered 8/11/25 How Sold Telegraph " confirmed 8/11/25 Letter
When the terms of sale have been agreed upon the broker shall fill out this Standard Memorandum of Sale in triplicate, sending one copy to the seller, one to the buyer and retaining the third copy for his own file. Unless the seller or the buyer makes immediate objection upon receipt of his copy of this Standard Memorandum of Sale, showing that contract was made contrary to authority given the Broker, he shall be conclusively presumed to agree that the terms of sale as set forth herein are fully and correctly stated.
City Boston Date 8/11/25 192- Sold to C. M. McCormack Manchester N.H. Ship to Manchester N.H. Destination. . .
Sold for account of Green Bennett Houlton Me.
. . .
Time of Shipment tomorrow
. . .
Sale made (F. O. B. or Delivered) delivered
. . .
QUANTITY COMMODITY AND SPECIFICATIONS PRICE
1 Minimum car Bulk one Cobblers
300 cwt
delivered Signed Leeman Callahan Co. BUYER'S COPY Broker W. P. C."
Mr. Green, one of the plaintiffs, testified to the sale of the car-load of potatoes to the defendant through said broker on August 11, to the terms of sale, to the shipment of the car on August 12 and to the forwarding on the same day of a draft with the bill of lading with directions to notify the defendant; also to the receipt, on August 13, of a telegram dated August 13, 11 A.M., as follows: "Green and Bennett: Houlton, Maine. This to notify you cancel car potatoes, cannot use. C. M. McCormack." He further testified that this telegram was reforwarded to him in New York too late for cancellation of the shipment or for diverting the car; that, thereupon on August 16 or 17, he went to Manchester and, upon the refusal of the defendant to speak to him, sold the car at the market and at a loss of $330.
The plaintiffs submitted a copy of the freight bill, and showed by the testimony of the railroad freight agent at Houlton that the car was shipped August 12, 9:35 A.M., that a bill of lading was issued to the plaintiffs for the car consigned to the defendant at Manchester, N.H., and that the railroad company would not have stopped or diverted the car before it had reached its destination without the return of the bill of lading. There was evidence that cars of perishable stock go through in twenty-four hours.
The defendant rested without submitting any evidence, and entered motion for nonsuit, citing the statute of frauds.
The referee found, among other facts: "On August 11, 1925, the plaintiffs of Houlton, Maine, engaged Leeman Callahan, brokers in Boston, to sell a car load of potatoes to the defendant. The freight agent at Houlton, issued a bill of lading to Green Bennett plaintiffs, consigned to C. M. McCormick defendant, at Manchester, N.H. The car left Houlton en route to Manchester, August 12, at 9.35 A.M. Order for potatoes was taken by brokers in Boston, after brokers had telephoned to McCormick at Manchester. The car load weighed 33,000 pounds was sold on Aug. 11, at $3.00 per hundred pounds or $900. August 12, the date car was shipped to the plaintiffs at Manchester with instructions to notify defendants, the plaintiffs drew draft for $876.15, sent same with bill of lading and instructions to notify defendant and charged to defendant account. On August 13, at 11.00 o'clock A.M., defendant sent telegram canceling the order. . . . Upon arrival of car in Manchester, the defendant refused to accept potatoes and on Aug. 18, the potatoes were sold . . . for $660. or at the rate of $2.00 per hundred pounds. This was the market price for that day and indicated a drop of $1.00 per hundred pounds since Aug. 11, the date the order was taken . . . . the refusal of defendant to receive or pay for potatoes resulted in a loss to plaintiff of $330. . . .
"The purchase and resale of potatoes are all evidenced by original entries and exhibits in the case. The evidence presented at the hearing tended to show that the brokers in Boston telephoned to McCormick at Manchester, and as a result of said telephone conversation, took the order; that on August 13 two days later, McCormick while the goods were in transit to Manchester, canceled the order by telegram. None of the requisites of Sect. 4, Chap. 166 Public Laws was shown, except as acceptance may be inferred or shown under division III of Sect. 4, upon facts herein set forth. The defendant did not testify, and offered no witnesses. If upon these facts, the plaintiff is entitled to judgment, the loss to him is $330. and interest."
The court, upon consideration of the referee's report, upon the facts found by the referee, gave the plaintiffs a verdict for the damages reported, to which the defendant excepted. Transferred by Burque, J.
Frederic E. St. Cyr (by brief and orally), for the plaintiffs.
James A. Broderick (by brief and orally), for the defendant.
The defendant's motion for a nonsuit is based upon the claimed unenforceability of the alleged contract for want of compliance with the requirements of the statute of frauds. The plaintiffs rely upon the broker's memorandum of sale as a sufficient compliance with the third of the three alternative requisites by which the non-enforceability of a verbal contract may be overcome, to wit: "some note or memorandum in writing of the contract or sale . . . signed by the party to be charged or his agent in that behalf." P. L., c. 166, s. 4. The issue involves (1) the validity and proof of brokers' notes as memoranda under the statute and (2) the sufficiency of the evidence of the broker's authority to sign the same for this defendant.
1. The sufficiency, as well as the essentials and manner of proof, of brokers' notes as memoranda under the statute is well established by the authorities. "The customary authority of brokers is for the most part so well settled, as to be no longer a question of fact dependent upon evidence of usage, but a constituent part of that branch of the common law known as law-merchant, or the custom of merchants." Benj., Sales (6th ed.) 320. The law merchant is a part of our common law of contracts for the sale of goods. P. L., c. 166, s. 73. When a broker has succeeded in making a contract he usually delivers to each party written notes containing the terms, which are more commonly called bought and sold notes. Benj., Sales, 321.
The defendant's contention that it is of controlling importance that the broker was first employed by the plaintiffs is without merit. "At the outset the broker is the agent of the party who first employed him, but he becomes the agent of the other also, when the latter instructs him to close the bargain . . . . When so authorized he has, like other agents, implied authority to do whatever is necessary and proper to carry his authority into effect, including herein the signing of the necessary memorandum." 1 Mechem, Sales, s. 464; Coddington v. Goddard, 16 Gray 436, 445. "If . . . one party to a contract of sale employ a broker, and the other party treat with the broker and enter into a contract with him, knowing him to be acting as a broker, he does by that very act apparently confer on him authority to bind the contract in the manner in which brokers do usually bind it." Benj., Sales, 320; Bacon v. Eccles, 43 Wis. 227, 241. As soon as the terms of the oral contract are settled, the broker has the authority of both parties to make and sign a memorandum thereof. Benj., Sales, 336; Story, Sales, s. 87; Hinckley v. Arey, 27 Me. 362, 364; Remick v. Sandford, 118 Mass. 102, 107; Hobart v. Lubarsky, 215 Mass. 528.
The statute presupposes a verbal contract (Jacobson v. Perman, 238 Mass. 445), and is satisfied if the required memorandum states only its essential terms, including the names of the parties, the subject matter and the price. 1 Mechem, Sales, ss. 433, 467; Browne, Stat. of Frauds (5th ed.), s. 251a; Carter v. Company, 184 Mo. App. 523, 528; Kinney v. Horwitz, 93 Conn. 211. See Sabre v. Smith, 62 N.H. 663, 664.
"It is clearly settled that the bought and sold notes together constitute a binding memorandum, though the broker make no entry in his book." Browne, Stat. of Frauds, s. 351; Story, Sales, s. 87; Goom v. Aflalo, 6 B C 117; Hawes v. Forster, 1 Moo. R. 368; Butler v. Thomson, 92 U.S. 412; Bibb v. Allen, 149 U.S. 481, 495, 496; Roach v. Lane, 226 Mass. 598; Kinney v. Horwitz, supra.
"It is usually sufficient for a party suing to put in evidence only one of the notes." Benj., Sales, 324; Greeley-Burnham Co. v. Capen, 23 Mo. App. 301. "If either the bought or the sold note alone be produced, the other will be presumed to correspond with it, in the absence of evidence to the contrary." Browne, Stat. of Frauds, s. 351; Benj., Sales, s. 337. "The presumption was that the bought and sold notes did not vary; and that if they did, it was for the defendant to prove the variance." Benj., Sales, 330; Parton v. Crofts, 16 C. B. (N.S.) 11. It is sufficient if the plaintiff produces the note received by him from the broker and shows the employment of the latter by the defendant. Hawes v. Forster, 1 Moo. R. 368.
The plaintiffs' copy of the broker's note here in evidence contains the necessary essentials and is sufficient evidence of a compliance with the statutory requisite, provided the broker's authority is otherwise established.
2. The only doubtful question presented is the sufficiency of the evidence to support the implied finding of the court that the defendant closed the bargain through Leeman-Callahan Co. and thereby authorized the broker to sign a binding memorandum thereof.
To be sure there is no direct evidence of the fact. The broker's memorandum, though admitted in evidence without objection, does not prove the authority of the broker to execute it. Although agency may not be thus proven by the admission of the agent, his acts may constitute links in a chain of circumstances from which such agency may be inferred. Had the broker, produced as a witness, testified to forwarding the duplicate memorandum to the defendant, the latter's telegram and subsequent silence would have been persuasive evidence of the defendant's admission of the purchase and of the broker's agency. Newberry v. Wall, 84 N.Y. 576, 581, 582. While this desirable link in the chain of circumstances is wanting, the record nevertheless discloses a situation in view of which the defendant's attesting act and conduct, though less persuasive, are not without force.
The plaintiffs employed the broker to sell the car of potatoes to the defendant and, as a consequence, received from them a memorandum of sale in accepted form, designed to record a sale to the defendant consummated by telephone, and purporting to be identical with a like memorandum simultaneously sent to the defendant. Pursuant to its terms shipment was made by the plaintiffs, and draft with bill of lading forwarded with instructions to notify the defendant. After the expiration of the requisite period for the arrival of the car, and for the receipt by the defendant of the notice of the draft and bill of lading, the latter undertook to cancel the order by a telegram addressed to the plaintiffs, giving as his sole excuse "cannot use." The market price in the interim had dropped one dollar per bushel. One of the plaintiffs then visited the defendant, who refused to speak to him. At the trial where the issue was upon the defendant's wrongful refusal to accept the potatoes, the defendant was confronted with plaintiffs' testimony of the claimed sale to him through the broker, together with the broker's memorandum thereof. He made no testimonial denial, and presented no evidence to meet any inferences which might be drawn from these proven facts, relying solely upon a motion for a nonsuit. He is, therefore, not in a position to complain if conclusions adverse to him are reached upon less satisfactory evidence.
Even if the telegram might be construed to be a denial of liability, it does not necessarily follow that it might not evidence such an admission of the making of the contract and of the memorandum as would take it out of the statute. Browne, Stat. of Frauds, s. 354a; Bailey v. Sweeting, 9 C. B. (N.S.) 843, 857, 861; Wilkinson v. Evans, L. R., 1 C. P. 407, 410; Heideman v. Wolfstein, 12 Mo. App. 366, 369; Greeley-Burnham Co. v. Capen, 23 Mo. App. 301, 304, 305.
The terms of the telegram in view of the proven happenings are significant. The foisting on the defendant of an unauthorized car load of potatoes would naturally have prompted a denial of an order, a refusal to receive and a request for an explanation. Instead of a denial he wired the plaintiffs a notice to "cancel car potatoes," which, given its common undeleted signification, would ordinarily be understood to mean "cancel my order for a car load of potatoes." Instead of calling for an explanation for an unauthorized shipment, he offered an explanation for not receiving the potatoes, namely, "cannot use." In other words, a situation which called for some act of repudiation was met by an implied admission and avoidance. The defendant's conduct was consistent only with a knowledge that the shipment was to be made. It is but a fair deduction from the telegram that he had in some manner authorized it. As he had no direct communications with the plaintiffs, it is a fair inference that such authorization had been through the broker by whose hands alone the order had come to the plaintiffs. If so, it is also fair to assume that he duly received and had before him a copy of the memorandum of sale. The defendant did not choose to meet, by denial or explanation, the inferences which were logically to be drawn from his telegram, and from his refusal to speak to one of the plaintiffs who called on him August 16 or 17 to discuss the situation.
The uncontradicted and unexplained act and conduct of the defendant, under the circumstances proved, constituted competent and sufficient evidence to support the implied findings that he entered into the parol contract of sale through the broker, and thus authorized it to make and sign the necessary memorandum to make the sale effective.
Judgment on the verdict.
All concurred.