Bridge v. New Amsterdam Casualty Co.

HOUSER, J.

On the trial of this action in the lower court, New Amsterdam Casualty Company, a corporation, and James Cochran, Robert Seanor and Milton Shafer, each as an individual, were the defendants. From the judgment which was rendered in favor of plaintiff, two separate appeals were taken; one by all the individual defendants and the other by New Amsterdam Casualty Company. The pertinent facts as they appear from the record, together with a decision as to the law affecting the points which are applicable to all the defendants, are set forth in the opinion of this court filed in the appeal presented by the individual defendants Cochran, Seanor and Shafer. The following opinion relates to those legal questions which arise from the facts of the ease which concern New Amsterdam Casualty Company only.

It is first urged by this appellant that since it appears that its relationship with its agents Cochran, Seanor and Shafer was evidenced by a written agreement, the entire scope of the agency was necessarily governed, restricted and limited by the provisions of such agreement; and consequently, on the trial of the action, that it was prejudicial error on the part of the trial court to admit evidence which had a ten

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dency to enlarge, or to modify, or in anywise to alter the scope of the powers of the agents, as expressed in the written agreement of the parties; and thereupon to instruct the jury with reference thereto.

■ It may be that in the absence of the usual and ordinary exceptions to the rule which assumes that the provisions of a written contract correctly and finally express the agreement of the parties thereto,—as between the immediate parties to a contract of agency, the principle of law for the application of which to the facts herein appellant contends, would be applicable. But as between the principal to such a contract and third persons, who, in good faith, in the usual course of business, and on general appearances permitted or encouraged to exist by the parties to the contract, may deal with the acknowledged agent in ignorance of the limitations or the restrictions on the powers of such agent, the general effect of the rule is that the secret provisions of any contract between the principal and the agent are of no consequence; nor have they any binding force. And so, in the absence of some' special reason by which third persons who deal with the agent are required to make inquiry regarding the powers of the latter, it is firmly established in the law that, notwithstanding the existence of a written contract between the principal and the agent by the provisions of which the rights, powers, obligations and duties of the respective parties thereto are carefully defined and strictly limited,—in an action against the principal in which the rights of such third parties are involved or in issue,, evidence is admissible which tends to broaden or to increase the power of the agent as expressed in the written contract, and thus create a liability on the part of the principal greater than that contemplated by the provisions of the written agreement respecting such agency. (2 Cor. Jur. 564, 920, and authorities there cited.) Manifestly, in such circumstances, the question of the existence of alleged enlarged or more inclusive powers of the agent is one of fact; and when the issue with reference thereto is to be submitted to a jury for its determination, it becomes the imperative duty of the trial judge to instruct the jury as to the law governing the situation.