News Publishing Co. v. Guardian Thrift Co.

California Court of Appeal Dec 5, 1929 No. Docket No. 3830.Published

Before: Pinch

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Holding. The court held that the defendant corporation was not liable for supplies ordered by an unauthorized third party, as there was no evidence of ostensible authority, ratification, or a valid account stated.

Issues

Whether the defendant corporation is liable for supplies ordered by an unauthorized individual under the theory of ostensible authority.
Whether the defendant's use of supplies, under the belief they were provided by a promoter, constitutes ratification of an unauthorized purchase.
Whether an account stated exists where there was no prior indebtedness and the defendant lacked knowledge of the billing.

Disposition. affirmed

Quotations verified verbatim against the opinion

“Defendant’s use of the supplies, under the belief that they were being furnished by Tobin in accordance with his agreement, did not constitute a ratification of Daniel’s unauthorized act, the defendant having no knowledge of such act.”

“An account stated requires that there be an acknowledgment of a previous indebtedness, since such indebtedness constitutes the consideration upon which the new contract is based.”

PINCH, P. J.

The plaintiff brought this action to recover the amount alleged to be due on several stated accounts. Judgment was entered in favor of the defendant and the plaintiff has appealed.

There is little conflict in the evidence. Where it is conflicting, only the evidence which supports the findings and judgment will be stated. It appears that W. IT. Tobin was engaged in promoting the organization of industrial loan corporations known as Guardian Thrift Companies. During the months of September and October, 1926, he was promoting the organization of such a corporation under the name of the Guardian Thrift Company of Susanville. About the middle of October his stepson, C. B. Daniels, gave the plaintiff an order for printed forms for the defendant. The name “Guardian Thrift Company of Susanville” was not printed in any of the forms except the stock certificate book. The name printed in the other forms was “Guardian Thrift Company of -.” It does not appear by what authority Daniel placed the order for these forms, but he was not authorized to act for the defendant. November 6, 1926, Tobin made a written offer, directed to the “Organization Committee, Guardian Thrift Company, Susanville, California,” in which he stated:

“As you are about to engage in the industrial loan business in Susanville, I take occasion to address you as follows:

“I own and control certain plans, designs, forms, working sheets and other data, especially adapted to the conduct and operation of the business in which you propose to engage. These plans, etc., are generally known as the Guardian Plan, and I make the following proposition:

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“I will give you the full and exclusive use, for Lassen County, California, during your charter existence of all these said plans, designs, forms, etc., and all other data under my control, necessary for the proper conduct of your business. I will supply you, without expense to you, all forms, designs, plans, etc., in sufficient quantity to operate your company for the first twelve months. Thereafter said supplies will be furnished to you at net cost to me.

“I will furnish competent instructors to teach your employees how to properly handle and conduct your business in all its details; such instructors to be furnished at my expense and to remain without cost to your company until your employees are thoroughly competent to carry on the work.

News Publishing Co. v. Guardian Thrift Co.

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PINCH, P. J.

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