Summary
In Hyatt v. Clark (118 N.Y. 563) ratification was found where a landlord failed to disaffirm an unauthorized lease executed by her agent and without objection accepted rent for over four years with knowledge of infirmity and the terms of the lease.
Summary of this case from Holm v. C.M.P. Sheet MetalOpinion
Argued January 31, 1890
Decided February 25, 1890
William Man for appellant. Joseph H. Choate and Sanger Davis for respondent.
We do not deem it important to decide whether the power of attorney authorized Mr. Lake to execute the lease in question or not, because, in either event, the same result must follow, under the circumstances of this case.
If, on the one hand, he acted without adequate authority in giving the lease, both the lessor and lessee knew it, for both knew the facts and both are presumed to have known the law, and the former, at least, had an absolute right to disaffirm the contract. As she knew the contents of the power of attorney and the lease, and that the latter was executed by her agent in her name, it was not necessary that she should be informed of the legal effect of those facts. ( Kelley v. Newburyport Amesbury Horse R.R. Co., 141 Mass. 496; Phosphate Lime Co. v. Green, L.R. [7 C.P.] 43; Mechem on Agency, § 129.)
Whether influenced by caprice or reason, if she had promptly notified the lessees that she repudiated the lease because her agent had no power to execute it, their rights would have been forthwith terminated and they would have had no lease. The right to disaffirm on one tenable ground, would, if acted upon have been as effective as the right to disaffirm upon all possible grounds. Under the condition supposed, the law gave her the same right to disaffirm without any agreement to that effect, that she would have had if her agent, being duly authorized to lease, had expressly provided, in the written instrument, that she could disaffirm, if she chose to do so. Therefore, by accepting the rent of the demised premises for more than four years without protest or objection, she ratified the lease as completely as she could have, if she had known of two grounds upon which to disaffirm, instead of only one. Two grounds could not make the right any more effectual than one. If she had the right at all, the number of grounds upon which she could justify its exercise is unimportant. Her ratification was none the less complete, because, being unwilling to run the risk of a doubtful question of law, she did not at once act as she would have acted if she had known all of the facts. As said by the court in Adams v. Mills ( 60 N.Y. 539), "the law holds that she was bound to know what authority her agent actually had." Having executed the power of attorney, she is conclusively presumed to have known what it meant and the extent of the authority that it conferred. (Best on Ev. 123; Whart. on Ev. § 1241.)
If the lease was ultra vires, therefore, by ratifying it, she in legal effect executed and delivered it herself, and whatever was said between Lake and Clark, became immaterial. Even if they agreed that she should have the right to disapprove, it is of no importance, because she had that right without any such agreement. If her agent had no power to execute the lease, the delivery thereof, whether absolute or conditional, could not affect her rights. If she was dissatisfied with it, she could have been relieved of all responsibility thereunder by promptly saying to the lessees: "This contract was not authorized by the agency I created, and I refuse to be bound by it." After that there would have been no lease. If the action of her agent was unauthorized, it did not bind her, until by some act of ratification she bound herself. By ratifying, she waived any right to disaffirm upon any ground, known or unknown, because the lease did not exist, as a lease, by the act of her agent, but by her own act of confirmation.
If, on the other hand, Mr. Lake was duly authorized to give the lease, certain presumptions of controlling importance spring from that fact. He is presumed to have disclosed to his principal, within a reasonable time, all of the material facts that came to his knowledge while acting within the scope of his authority.
It is laid down in Story on Agency (§ 140), that "notice of facts to an agent is constructive notice thereof to the principal himself, where it arises from or is at the time connected with the subject-matter of his agency, for, upon general principles of public policy, it is presumed that the agent has communicated such facts to the principal, and if he has not, still the principal having intrusted the agent with the particular business, the other party has a right to deem his acts and knowledge obligatory upon the principal."
In other words, she was chargeable with all the knowledge that her agent had in the transaction of the business he had in charge. ( Ingalls v. Morgan, 10 N.Y. 178; Adams v. Mills, supra; Myers v. Mutual Life Ins. Co., 99 N.Y. 1, 11; Bank of U.S. v. Davis, 2 Hill, 451; Higgins v. Armstrong, 9 Col. 38.)
It was his duty to keep her informed of his acts and to give her timely notice of all facts and circumstances which would have enabled her to take any step that she deemed essential to her interests.
She does not question the good faith of Mr. Lake, and there is no proof of fraudulent collusion between him and Mr. Clark, who, while under no obligation to inform Mrs. Hyatt of the facts, had the right to assume that her agent had done so. ( Ingalls v. Morgan, supra; Meehan v. Forrester, 52 N.Y. 277; Scott v. Middletown, U. . W.G.R.R. Co., 86 id. 200.)
It was her duty to protect her interests by selecting an agent of adequate judgment, experience and integrity, and if she failed to do so, she must bear the loss resulting from his inexperience, negligence or mistaken zeal. After the lapse of sufficient time, therefore, she is presumed to have acted, with knowledge of all the acts of her agent, in the line of his agency.
By accepting and retaining the rent, which was the fruit of her agent's acts, for nearly five years without objection, she is presumed to have ratified that act. ( Hoyt v. Thompson 19 N.Y. 207; Alexander v. Jones, 64 Iowa 207; Heyn v. O'Hagan, 60 Mich. 160; 2 Greenl. on Ev. §§ 66, 67.) Without expressing any dissatisfaction to the lessees, she received eighteen quarterly payments of rent before electing to avoid the lease. She made no offer to return any part of the rent so paid, although she tendered back the amount deposited to her credit for the nineteenth quarter at the time that she demanded possession of the premises.
Independent of what she is presumed to have known through the information of her agent, she in fact knew the terms of the lease and that it was executed by Mr. Lake in her name.
Upon her arrival in this country in September, 1880, she visited the premises and saw the additions and improvements that the tenants were making thereto, and at that time as well as subsequently, rent was paid to her in person. Apparently she had all the knowledge that she cared to have, for she made no inquiry of her agent until about six months previous to the expiration of the first term of five years, and not until after the lessees had given notice of their election to continue the lease for a second term. Thinking that the rent was low, she then tried to find out something from her agent that would enable her to avoid the lease, and as the result of her efforts in this direction, ascertained the fact upon which she bases her right to succeed in this litigation. But it was then too late for her to disaffirm, because her long silence and many acts of ratification had been relied upon by the tenants, who had expended a large sum of money in making permanent improvements upon the property. Having received the benefits of the contract, she could not, after years of acquiescence, suddenly invoke the aid of the courts to relieve her of any further obligation, because she had but recently discovered a fact that she should have ascertained, and which the law presumes that she did ascertain, long before. (1 Am. Eng. Encyc. of Law, 429.)
We think that after ample opportunity for election and action, she ratified the lease and that her ratification was irrevocable.
In each action the order appealed from should be affirmed and judgment directed upon the stipulation in favor of the respondent, with costs of appeal to this court in one action only.
All concur, except HAIGHT, J., not sitting.
Order affirmed, and judgment accordingly.