Gosliner v. Grangers' Bank of California

California Supreme Court Apr 11, 1899 No. S. F. No. 988Published

Before: Gray

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Holding. The court held that the defendant bank was not liable for the plaintiff's unpaid claims because the evidence failed to establish an actual or ostensible agency relationship between the bank and the purchasers of the goods, nor was there an express or implied contract for the bank to pay for the supplies.

Issues

Whether the defendant bank is liable for goods sold to third parties under a theory of ostensible agency.
Whether an incidental benefit received by a mortgagee from goods supplied to a mortgagor is sufficient to create an implied contract to pay for those goods.

Disposition. Affirmed

Quotations verified verbatim against the opinion

“An agency is ostensible when the principal intentionally, or by want of ordinary care, causes a third person to believe another to be his agent who is not really employed by him.”

“To obtain judgment against defendant it was necessary for plaintiff to show the existence of a contract and promise, either express or implied, made in person or through an agent on the part of defendant to pay for the goods.”

Synopsis

Principal and Agent—Ostensible Agency—Belief of Authority.— He who seeks to charge a principal with the acts of an ostensible agent must himself believe that the agent had authority as such from the alleged principal.

Id.—Ostensible Agency of Purchaser fob Mortgagee—Goods Charged to Purchaser—Finding.—An action for goods sold and delivered cannot he maintained against a mortgagee of the purchaser, oh the ground of ostensible agency of the purchaser for the mortgagee, from whom the money was borrowed by the purchaser to carry on the business in relation to which the goods were sold, where it appears that the plaintiff knowing the relations between the purchaser and the mortgagee, charged the goods to the purchaser, and not to the mortgagee. In such ease, a finding against the ostensible agency is supported by strong evidence tending to show that plaintiffs did not believe that the goods were purchased for the mortgagee.

Id.—Incidental Benefit to Mortgagee.—The incidental benefit to the mortgagee arising from the delivery to the mortgagee of crops grown and harvested by the purchaser which were the subject of the mortgage, and from the furnishing of the goods to the purchasers, to enable them to grow, mature, and harvest the crops so delivered, though having some weight as evidence, in connection with other circumstances, to show the existence of a contract, express or implied, made by the mortgagee or through his agent to pay for the goods, is not sufficient, standing alone, to base a right of action against the mortgagee for goods sold and delivered.

GRAY, C. This is an action for goods sold and delivered. The case was tried before the court without a jury, the defendant had judgment, and the plaintiff appeals therefrom and from an order refusing to grant a new trial.

[226]The defendant was a banking corporation, doing business as such in the state of California, with its principal place of business in the city of San Francisco. Its principal business seems to have been, so far as appears in this case, loaning money to farmers to carry on farming operations, taking mortgages on their crops planted and to be planted, teams, machinery, ec cetera, to secure such loans.

During the years 1893-94 and 1894-95 Thomas L. Reed, then "farming from fifteen thousand to twenty-five thousand acres of land under cropping contracts, made an agreement with the defendant bank to furnish him (Reed) with “the money to do the work with and furnish the stuff to raise the crops.” Defendant took mortgages upon Reed’s crops, also upon his mules, et cetera, as security. At this time Reed was largely indebted to the bank, and it was agreed that the mortgages taken should secure the payment of this past indebtedness as well as the advances to be made during the year.

All of the crops, mules, and farming implements were turned over to the defendant, and it realized therefrom some fifty-six thousand or fifty-eight thousand dollars.

This action is brought to recover of defendant the price of the supplies furnished by plaintiff to Thomas L. Reed for these years—1893-94 and 1894-95—and which supplies have not been paid for.

Substantially the same agreement was made by the defendant bank with John R. Reed for the year 1894-95, Mr. Gosliner being present at the time. It was agreed to pay plaintiff for the supplies so furnished, every three months, with checks drawn by John R. Reed on the bank.

The supplies were purchased from plaintiff, and were used upon the ranches of John R. Reed for the purpose of putting in the crops which were mortgaged to defendant, all of which crops were delivered to defendant as agreed.

The supplies furnished for the first nine months were paid for with checks drawn by Reed on the bank; for the last three months they were not paid. It is sought in this action to recover from defendant for the supplies furnished during the last three months.

Gosliner v. Grangers' Bank of California

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