Story Case

Heber Davis, acting as agent for Charles Hos-tetter, purchased an automobile from James Owen. Owen did not know that Davis was acting as agent at the time of the making of the contract. Two days later Davis informed him of that fact, stating that he must look to Hostetter for the money and the acceptance of the car. Owen, nevertheless, determined to hold Davis on the contract. Can this be done?

Ruling Court Case. Raymond Vs. Crown And Eagle Mills

Rogerson was a duly authorized agent of the Crown and Eagle Mills, and, as such, was empowered to transact all their business. In pursuance of this power he purchased certain goods from Raymond, the plaintiff, telling him at the time that the goods were to be used by the Crown and Eagle Mills, and he ordered them to be so marked. Raymond did not know that Rogerson was acting for the Crown and Eagle Mills, and made no inquiries. They delivered the goods to the Mills, and charged the goods to Rogerson personally.

Raymond sued Rogerson for the price thereof. Before the writ was served he discovered that the Crown and Eagle Mills was the principal and the name of the corporation was inserted in the writ. After the case was tried and carried to the Supreme Court on appeal, the name of Rogerson was stricken by leave of the Court.

It was contended by the Crown and Eagle Mills that it was not liable, because the plaintiff gave voluntary credit to the agent Rogerson when he had knowledge or means of finding out that he was a mere agent acting for the Crown and Eagle Mills.

The following general principles were stated by the Court: "The authorities are universal in maintaining the doctrine that when the principal is unknown to the vendor at the time of the sale, he may, upon discovering the principal, resort to him or to the agent with whom he dealt, at his election.

As to the contention that the purchaser had means of finding out who was the principal, the Court said: "There must be actual knowledge, on the part of the vendor of the relation of the parties and their interest in the matter, to exonerate the principal by giving credit to the agent as his debtor. If, with such knowledge on the part of the vendor, he chooses to give credit to the agent, he discharges the liability of the principal. It is, however, not enough that there exist circumstances that would, in the minds of some men, have awakened suspicion which would lead to further inquiry. "If the vendor did not have knowledge at the time the sale was made that there was a principal, he may at any time later, on learning about the principal, hold the latter. If he chooses to hold the latter he cannot hold the agent. But, until he does choose to hold the principal, he has the agent liable on the contract.

Ruling Law. Story Case Answer

When a third person contracts with an agent, not knowing that he is acting as an agent, it would be very unfair if the third person could not hold the agent with whom he intended to contract. So, it is well settled that the third person may look, either to the principal, as we have seen above, or he may look to the agent, to whom he, in fact, gave credit. He cannot, of course, hold both and he must elect which one he desires to hold.

Owen can hold Davis, in the Story Case, on the contract. Owen contracted with Davis, relying on Davis' credit, and he is not obliged, unless he choose to do so, to accept Hostetter on the contract.