Opinion
Decided October 13, 1932.
Agency — Principal liable for agent's misrepresentations, when — Implied or apparent scope of employment — Real estate sales agent represented good cesspool on premises — Questions for jury — Whether agent acted within employment, and premises had cesspool as represented — Principal not responsible for agent's deceit, when — Charge to jury — Special instruction properly refused — Preponderance of evidence required, when.
1. Whether there was good cesspool on premises at time of sale thereof, as represented by vendors' agents, held for jury.
2. Agents employed to negotiate sale of realty, as well as to find buyer, held impliedly authorized to make representations that premises had good cesspool thereon.
3. Principal's liability for agent's acts and representations depends on extent to which he permitted agent to hold himself out as such and what prudent person in good faith would reasonably believe agent's authority to be under circumstances.
4. Whether agent acted within implied or apparent scope of employment is fact question for jury to determine from all facts and circumstances in evidence.
5. Generally, principal is not responsible for agent's deceit, unless agent was authorized to deal with property in such manner that principal should be bound in good morals and equity by agent's statements.
6. Request for charge to find for defendant, "if you find from the evidence," etc., instead of, "if you find from the preponderance of the evidence," held improper in form.
ERROR: Court of Appeals for Stark county.
Mr. Oscar M. Abt, for plaintiffs in error.
Mr. Paul G. Weber, for defendant in error.
This case comes into this court on a petition in error to the common pleas court of Stark county, wherein Martha W. Wilson was plaintiff and Earl D. Taylor and Ruth Taylor were defendants.
In her petition the plaintiff alleges that during the month of May, 1928, in consideration that she would buy of the defendants certain premises situated in the county of Stark, for the price of $9,650, defendants through their agents, George H. Feezel and Harold Bordner, falsely and fraudulently represented, with intent to deceive plaintiff, that said premises had thereon a good cesspool, a mighty good one; that plaintiff relied upon such representations; that said representations were false and untrue and at the time they were made defendants and each of them knew that said representations were false and untrue, and that the same were made for the purpose of deceiving and defrauding this plaintiff; that as a result of said alleged fraudulent representations plaintiff was damaged, in that the water from rains and waste backed up into the cellar, making the house damp, giving off nauseating odors, and causing plaintiff and her family to suffer severe colds; that at times plaintiff could not fire the furnace because of the amount of water in the cellar, and was compelled to expend money for repair and to put the property in proper condition — for all of which plaintiff says she has been damaged in the amount of $2,000 by reason of said false and fraudulent representations, for which amount she asks judgment.
Defendants filed an answer in which they admit that plaintiff and defendants entered into a contract whereby they agreed to exchange properties, and that as a result defendants transferred to plaintiff the property described in plaintiff's petition. They admit, also, that George H. Feezel and Harold Bordner negotiated the transaction between plaintiff and defendants, and they then deny generally all the other allegations contained in the petition.
The petition in error sets forth many grounds of claimed error, but the three principal grounds stressed in argument and brief of plaintiffs in error are: First, that under the evidence in this case the court should have sustained the motion of the defendants made at the conclusion of plaintiff's case and renewed at the conclusion of the entire case; second, that the court erred in refusing defendants' request No. 3 before argument; third, that the court erred in its charge to the jury.
We deem it unnecessary for a proper determination of this case to quote at length the testimony produced in the court below. The principal question at issue in the lower court was an issue of fact, namely, was there a good cesspool, such as alleged and described in plaintiff's petition, and were the defendants bound by their agents' representations about the same?
The question of whether there was a good cesspool or a good drainage system on the premises conveyed at the time of sale was a question of fact for the jury, and the jury must have found that there was not. An examination of the record clearly shows that the cesspool or drainage was faulty.
We note that the premises in question were located in a suburban section which had no public sewer. It would therefore follow that whatever sewage system the premises did have was solely within the personal knowledge of the defendants, and it was physically impossible for plaintiff below to ascertain same by personal observation. Hence, she was obliged to make inquiry. She was on the premises and in the home of the defendants below with the defendants' agents, and it was from defendants' agents that plaintiff was informed as to the kind and character of sewage the property had.
We are of the opinion that the agents of defendants had implied authority to do more than just find a buyer and make the representation about the cesspool described in the petition. Defendants admit that their agents negotiated the transaction between the plaintiff and the defendants. In other words, they do not claim that said agents were employed merely to find a buyer or to bring the parties together.
For a proper determination of the first-claimed ground of error, we believe the true test to be a determination of the exact extent the principal permitted the agent to hold himself out as such, and what a prudent person in good faith, under the circumstances, would reasonably believe such authority to be. 1 Ohio Jurisprudence, 677.
"The rule in civil cases, which holds the principal, as to third persons, liable for the acts of his agent done within the general scope of his authority, irrespective of actual instructions that were unknown to the person dealing with the agent. In such case, as between the principal and a third person dealing with the agent on the faith of his apparent authority, the law conclusively presumes the actual authority of the agent to be what it openly appears to be; while, as between the principal and agent, the extent of the actual authority may be shown." Anderson v. State, 22 Ohio St. 305, 307.
"The general rule is, that as to third persons the principal is liable for the acts of his agent done within the general scope of his authority, and that such authority may be general, though limited to a particular business." Withers v. Ewing, 40 Ohio St. 400, 405.
"The extent of the agent's authority may be shown by the terms of the appointment, if they are explicit, or it may be shown by a course of dealing by which the agent is held out as having an authority which would include the act in question." Bradford Belting Co. v. Gibson, 68 Ohio St. 442, 449.
"False and fraudulent representations by an agent may affect the principal because he has expressly or impliedly authorized representations to be made by the agent and the latter made false and fraudulent ones." 2 Mechem on Agency (2nd Ed.), Section 1776.
So that after all, the question of whether the agent acted within the scope (implied or apparent) of his employment is to be gathered from all the facts and circumstances in evidence and is a question of fact for the jury.
It has been held that a vendor of real estate, seeking to enforce contract made by his agent, is bound by representations to purchaser made by his agent, though not himself having knowledge thereof. Jonas v. Swetland Co., 29 Ohio App. 4, 162 N.E. 755.
Where, in the sale of real estate, certain facts are accessible to the vendor only, and he knows that such facts cannot, by reasonable diligence, observation, and judgment, exercised by the vendee, be ascertained, the vendor is bound to disclose the facts. Thompson on Real Property, vol. 5, Section 4304.
As a general proposition a principal is not responsible for the deceit practiced by his agent, unless there is something in the nature of the engagement, the terms of employment, or the powers conferred, broad enough to include a power on the part of the agent to deal with the property in such manner that the principal, in good morals and equity, ought to be bound by what the agent may have said.
With reference to the second claimed ground of error, relating to defendants' request No. 3, we are of the opinion that the trial court was justified in refusing to give the same. We are of the opinion that the request was not applicable to the proven facts in the instant case and was not proper in form. The request as made said, "If you find from the evidence." It should have said, "If you find from the preponderance of the evidence." The facts in this case, as a matter of law, do not warrant the finding of a double agency.
It therefore follows that we find no error in the instant case, and the finding and judgment of the court below will be, and the same hereby is, affirmed.
Judgment affirmed.
MONTGOMERY, J., concurs.
I dissent from the major conclusion reached in this cause for the reason that the question presented is a new one in this state, with no direct precedent, and it seems to me the better policy is to adopt the sounder reason advanced by the Arizona court in Light v. Chandler Improvement Co., 33 Ariz. 101, 261 P. 969, 59 A.L.R., 107.
Had this been a case wherein the vendor was directly responsible for the fraud proved, or had he had knowledge thereof before delivery of the deed, it would have been his duty to have made full disclosure of the truth to the vendee concerning the concealed appliance.
To my notion it is a matter of common knowledge that a real estate agent's authority is limited, in that it ends when he has procured a purchaser willing, able, and ready to enter into a contract of purchase. It is also the common understanding that the vendor usually reserves to himself the power to conclude the sale. This was what followed in this instance. It would have been no hardship for the vendee to have then made inquiry of that of which he was greatly concerned.
In this controversy the vendor had no knowledge of the broker's false representation, and I concede that had the vendor had such knowledge the vendee might have elected to pursue his remedy of rescission or retain possession and title and sue for damages; but when a vendor is without knowledge of his broker's fraudulent misrepresentations and conduct, he is not liable for such until he has sought rescission of the vendee, for it is not equitable or just that the vendor be forced into a contract of sale to which he did not agree, and be made to part with his title for a less sum than he was willing to sell.
The cases of Freyer v. McCord, 165 Pa., 539, 30 A. 1024; Dellwo v. Petersen, 32 Idaho 172, 180 P. 167; Mayo v. Wahlgreen, 9 Colo. App., 506, 50 P. 40; Samson v. Beale, 27 Wn. 557, 68 P. 180; Lansing v. Coleman, 58 Barb. (N.Y.), 611; Nupen v. Pearce, 235 F., 497, 149 C.C.A., 43; and Decker v. Fredericks, 47 N.J. Law, 469, 1 A. 470, support the reason advanced in the recent Arizona case above cited.
It is therefore my view that the petition and proof were deficient, in that it was not pleaded and proved that rescission had been refused by the vendor. A demurrer to the evidence was well taken, and the motion for a directed verdict should have been sustained.