Maryland Casualty Co. v. Peoples , 26 Pa. Super. 142 ( 1904 )

Opinion by

Henderson, J.,

It is not claimed by the appellant that the defendant had given any general authority to Todd with reference to the insurance branch of his business, or that he was employed as his broker to attend to that business, or that he had conferred upon him any apparent authority by reason of the course of dealing between them. Todd’s only authority grew out of the acceptance of his written proposition for insurance of February 9, 1901, by the defendant, and he was expressly and especially authorized to deliver a policy according to the terms of that proposition. His authority was limited by his instructions. He was a special agent of the defendant to do a particular thing. He had not acted for the defendant in any capacity before that. No usage or custom of the business was shown which permitted him to exceed his instructions. It is claimed, however, by the appellant that a distinction exists between the power of a special agent and a broker, and that where one employs the latter to do a particular thing, he is bound by any contract of the agent made within the apparent scope of his authority. The proposition is that where one employs a broker to do a particular thing he invests him with all of the authority of a general agent. Where a broker is employed to transact the business of a particular kind of his principal he is thereby constituted a general agent as to such business, and his private instructions will not affect third parties with whom he dealt within the apparent scope of his employment.

The question for consideration is not whether, where one is engaged to procure insurance for another, the person so employed is the agent of the insured and not of the company, but, was the person employed a general or a special agent. Does the fact that the agent in the case under consideration was a broker endow him with powers different from a special agent ? None of the cases cited by the learned counsel for the appellant sustain the position contended for. It may be conceded, as in Williams v. Getty, 31 Pa. 461, that if appellant holds out the agent to the world as a general agent in the transaction of his business, any contract made by him within the scope of that business will bind the principal, although there may be as between the principal and agent a restriction upon the general authority of the latter; and that the agent of a bank, as in Hill v. Nation Trust Co., 108 Pa. 1, whose business it was to certify the checks of depositors, could bind the bank in favor of an innocent holder, although against instructions he certified the check of a drawer who had at the time no funds in the bank; and that, as in Insurance Company v. McLanathan, 11 Kan. 533, an agent of an insurance company having blank policies signed by the home officers of the company, to be binding when countersigned by the agent, and authorized to issue such policies, could bind the company within the apparent scope of his authority; and that, as in Whilden v. Merchants National Bank, 64 Ala. 1, a broker engaged in the business of buying cotton for his principal, and authorized to draw on him for the purchase money, could bind his principal in favor of a bank which has cashed a draft so drawn, although the cotton may not have been bought in conformity to the ins tractions of the principal, but, in each of these cases, the agent exercised the functions of a general agent of the principal, and none of them was employed to execute a special commission involving a single transaction. None of the cases decides that merely because the agent is a broker he may disregard his instructions and still bind his employer. A broker employed • to do a particular thing is limited by the terms of his authority, but, in the execution of his commission, he may bind his principal within the apparent scope of that authority.

“ A broker’s powers are limited by the duty he undertakes, by the instructions he receives, and by the general scope of that branch of the business which he pursues, and he certainly has no general capacity to make contracts for his principal outside of those limits: ” Mechem on Agency, sec. 939.

“ If a broker be employed to make one particular purchase of goods of a certain description and price, -his principal will not be bound by his contract if the broker departs from his instructions in either of these particulars: ” Paley on Agency, page 208.

The casé of Stollenwerck v. Thatcher, 115 Mass. 224, denied the power of a cotton broker to deliver drafts attached to the bills of lading for cotton sold by him, in violation of the instructions of his principal, and holds that “ a broker being a special agent authorized to deliver the bill of lading only upon -the payment of the bill of exchange drawn against the goods and attached to the bill of lading, could not bind his principal by delivery made without such payment.”

In the case of Bush v. Cole, 28 N. Y. 261, the owner of real estate in Brooldyn placed his property in the hands of auctioneers for sale with limitation as to the price. The property wás sold at auction for a less price than that named by the owner. The court held that the contract made by the auctioneers was not binding on the owner; that the defendants were constituted agents for a particular purpose and under a limited power, and could not bind their principal beyond their authority.

The authority of a broker was considered in Smith v. McCann, 205 Pa. 57. In that case the defendant gave to a real estate broker the exclusive right to sell a piece of real estate at a stipulated price within sixty days. The broker made a contract of sale, in which the time for the completion of the transaction was extended for thirty days in addition. The purchaser filed a bill for specific performance, and the court held: “The employment of Mr. Kearns was only as a real estate broker, and it was not within the scope of his authority as such to bind his principal by an agreement, the terms of which were not authorized by him, and which was never brought to his notice or accepted by him. If the agent had power to go beyond the power of his written authority, and, as in this case, extend the authorized time limit for an additional thirty days, he would have power to extend it for an indefinite period.”

It was held in Clark v. Cumming & Co., 77 Georgia, 64, that “ a broker is a special agent, and derives his power and authority to bind his principal from the instructions given him by his principal. When definite instructions are given by the principal to the broker to sell goods for him at a certain specified price for a certain time and day only, this will not authorize the broker to contract and sell the same kind of goods for his principal at a different and subsequent time for the same price.”

\We cannot assent to the prosposition that if one transmit an order to a broker in stock or produce or insurance or any other subject of commerce with a limitation as to price or amount or time, the broker may enter into a contract in violation of his instructions which will bind his principal in the absence of conduct on the part of the latter from which a general authority might be inferred. Special orders involving large sums are daily given, and, if it be claimed that brokers so receiving them may disregard their instructions and make different contracts for their principals, clear authority should be shown for such a rule of law. The authority given to Todd was special, and nothing developed in the case gave him apparent authority to bind the defendant beyond the scope of the instructions given by him.

The effect of the adoption by the principal of the act of his agent does not arise in the case. The policy delivered conformed to' the terms of the agreement between Todd and the defendant, and the latter had no notice until after the expiration of the time limit in the policy that the contract was not that made by the company. The alteration of the policy is not chargeable to the defendant, as it was delivered by the company to Todd to be given him. The company also charged the amount of the premium to Todd, and authorized him to collect it from the defendant. By so doing it constituted Todd its agent for the delivery of the policy: Lebanon Mut. Insurance Co. v. Erb, 112 Pa. 149; Arthurholt v. Insurance Co., 159 Pa. 1.

The fprgery was committed while the policy was in the hands of Todd for delivery. As soon as the fact was discovered, the defendant repudiated the contract alleged by the . plaintiff to have been made with the defendant. The defendant was not responsible for his failure to disavow the contract claimed by the company at an earlier date.

The judgment is affirmed.