Opinion
Argued June 21, 1889
Decided October 8, 1889
George H. Fisher for appellants. J. Hampden Dougherty for respondent.
The plaintiff seeks to recover the contract-price, for a lot of mustard seed sold through a broker by him to the defendants.
The defense, as stated by the answer, was that the sale was by sample and that the bulk did not correspond with the sample, but was dirty, impure and inferior to the sample. It also alleged that this dirt and impurity was not discoverable upon inspection, and that the plaintiff knew the seed was dirty and impure, and upon the sale fraudulently represented that the same was clean and free from dirt and impurity, with the view of cheating and defrauding the defendant and to prevent such an examination of the seed as would have shown the dirt therein.
Upon the trial a written contract of sale was proved, showing a sale by sample. The evidence clearly established that the bulk delivered corresponded with the sample; but it was also shown that the seed was dirty and impure and that the plaintiff knew this fact. It was also proved on the trial that this impurity could be discovered by rubbing the grain in the hands, or on white paper; but whether it was visible and apparent from mere inspection was, upon the evidence, a disputed question.
The plaintiff's counsel at the close of the evidence moved that a verdict be directed in his favor, and the defendants made a similar motion on their own behalf. The latter motion was denied, and the defendants excepted. The defendants then moved that the case be sent to the jury. This motion did not state any question of fact desired to be submitted to the jury, and the motion was denied, to which decision the defendants excepted. The court thereupon directed a verdict for the plaintiff, to which direction the defendants excepted.
There was no error in these rulings upon the evidence as it stood, and unless there has been some error in the exclusion or admission of evidence to the prejudice of the defendants, the judgment should stand.
The defendants, however, claim that evidence offered by them tending to show that the contract of sale was obtained by fraudulent representations on the part of the plaintiff, was improperly excluded. The case shows that the defendants on the trial offered to prove that the broker making the contract for the plaintiff, represented that the seed proposed to be sold was clean and free from impurities. This evidence was objected to by the plaintiff, and excluded by the court upon the ground that it tended to vary, enlarge and contradict the contract of sale. To this decision the defendants excepted.
There can be no question about the correctness of this ruling, if the evidence tended only to establish a warranty different from that expressed in the contract. The contract by its terms secured to the defendants a right to have the bulk of the goods sold correspond, as to quality and appearance, with the sample. ( Hargous v. Stone, 5 N.Y. 73; Beirne v. Dord, id 95.) And the defendants were precluded by well settled rules from showing, by parol, a more enlarged or different contract. The offer in this case, however, went further than this, and tended to show that the contract itself was procured by fraudulent representations. The representations attempted to be proved related to the character and quality of the thing offered for sale, and were material under one of the defenses set up in the answer. The manifest tendency of such a representation was to throw the purchaser off his guard and lead him to forego an examination which he might otherwise make. Under the evidence in this case it cannot be assumed, as matter of law, that these defects were visible or known to the purchaser, and it, therefore, became a question for the jury to determine whether the defendants were, in fact deceived by the representation. This evidence was expressly offered for the purpose of showing fraud, and we think it was competent upon that issue. ( Hall v. Erwin, 66 N.Y. 649; Johnson v. Hathorn, 2 Abb. Ct. App. Dec. 465; Mead v. Bunn, 32 N.Y. 275.) Whether the defect was invisible and the defendants were, in fact, deceived, relying upon the representation, and omitted to make such an examination of the seed as they might otherwise have made, was for the jury to determine upon all the evidence. ( Day v. Pool, 52 N.Y. 416. ) There is no doubt of the general rule that to a certain extent a principal is bound by the representations of his agent made in effecting a sale of property. Such an agent must be presumed to possess authority to make such representations in regard to its quality and condition as usually accompany such transactions, and his principal cannot receive the fruits of a bargain without adopting the instrumentalities employed by his agent in bringing it to a consummation. ( Bennett v. Judson, 21 N.Y. 238.)
In an action between vendor and vendee, knowledge possessed by either the principal or the agent is, respectively, imputable to each other, and an agent, whose principal has knowledge of latent defects in property proposed to be sold, cannot honestly represent to its intending purchaser that it is free from such defects. It is well settled in this state that a principal cannot retain the benefits of a contract obtained through the misrepresentations of his agent, even though the principal was ignorant of the representation and really intended no fraud. It was held in Bennett v. Judson ( 21 N.Y. 238), that a vendor of land is responsible for material misrepresentations, in respect to its location and quality, made by his agent without express authority, and in the absence of any actual knowledge by either the agent or the principal, whether the representations were true or false. In Hathaway v. Johnson ( 55 N.Y. 96) the court said: "The authority of the agent to make the purchase of the malt is not denied, and the rule is stated by Mr. Justice STORY (Story on Ag. § 134), that when the act of the agent will bind the principal, then his representations, declarations and admissions respecting the subject-matter will also bind him, if made at the same time, and constituting a part of the res gestæ. That the principal is liable for the fraudulent conduct and representations of the agent, made in the course of his dealings for the principal, when the principal has received and retained the fruits of the fraud, is affirmed by the general current of authority. ( Hern v. Nichols, 1 Salk. 288; Crofut v. Fowke, 6 M. W. 358; Murray v. Mann, 2 Exch. 537; Bennett v. Judson, 21 N.Y. 238.)
It is consonant with reason and justice that a principal should not be allowed to profit by the fraud of his agent; and if he adopts the contract made in his behalf, although ignorant of the fraud, he should be held liable to make compensation to the party injured by it. ( Sandford v. Handy, 23 Wend. 260; Griswold v. Haven, 25 N.Y. 595; Indianapolis, etc., R.R. Co. v. Tyne, 63 id. 653.)
In accordance with these views there should be a new trial.
The judgments of the courts below should, therefore, be reversed and a new trial ordered, with costs to abide the event.
All concur.
Judgment reversed and new trial ordered.