Butler v. Maples - 76 U.S. 766 (1869)
U.S. Supreme Court
Butler v. Maples, 76 U.S. 9 Wall. 766 766 (1869)
Butler v. Maples
76 U.S. (9 Wall.) 766
1. An authority to an agent to buy cotton in a certain region and its vicinity and to buy generally from whomsoever the agent, not his principals, might determine -- one having in view not merely a single transaction or a number of specified transactions, but a class of purchasers and a department of business -- makes a general agency to buy the cotton there, and if the agent, holding himself out as the general agent, purchase there under his power, he may bind his principal in violation of special instructions not communicated to his vendors, and of which they had neither knowledge nor reason to suspect the existence.
2. Where evidence showed that a region in the South which had been previously in possession of the rebel army was evacuated by them, and that the citizens generally had taken the oath of allegiance or obtained protection papers, the grant of a permit by a proper Treasury agent to purchase cotton authorized by Treasury regulations, to be granted only in cases where the country was within the occupation of the military lines of the United States, raises at least a prima facie presumption of the country's being within such occupation.
3. Where such permits were always in the same form, a printed one, and on a suit against a party to whom one has been granted the permit granted to him has not been produced on call, the Treasury agent who granted it may properly state its contents from his knowledge and recollection of them.
4. A Treasury permit to a firm to buy cotton authorized them to buy through their agent.
During the late rebellion, cotton having been an object whose acquisition was desired by the people of the North, its purchase within the Confederate lines was resorted to not infrequently by a certain class of traders from the loyal states. Such trading was unlawful as trading with an enemy,
and was moreover made void by statute. But trading in a prescribed form, under certain conditions, within the insurrectionary region, if the same had been brought within the lines of the national military occupation, was made lawful by Treasury regulation if the trading was carried on under a permit from certain officers of the Treasury Department.
In this state of things, one Shepherd, living in Desha County, Arkansas, a county in the east of that state and situate on the Mississippi, some distance below Memphis, Tennessee, made a purchase of 144 bales of cotton from a person named Maples, living not far from him, Shepherd professing in what he did to act in the name of a firm known as Bridge & Co., whose members were living and trading at Memphis, and which was composed of Butler and Hicox, with other persons.
At the time of this purchase, Memphis was and had been for a long term in the quiet occupation of the federal troops.
"The Confederate forces had evacuated Little Rock, the capital of Arkansas, and all the country south of the Arkansas River and had fallen back through the southwestern portion of the state to the Red River and into Texas. There was not an organized force of Confederates near the village of Red Fork, in Desha County, nor a Confederate post or force nearer than one hundred and fifty or two hundred miles from Red Fork. There were very few if any straggling soldiers in that portion of Arkansas on which Red Fork is situated. The citizens generally took the oath of allegiance to the United States, and many, if not most of them, procured what were called protection papers from the United States."
The cotton bought by Shepherd was bought by him as it lay, he agreeing to pay for it forty cents a pound as soon as it could be weighed. Having been weighed, he removed fifty-four bales of it, but ninety bales were burned before it could be placed in a boat to be carried up the river. The fifty-four bales removed were got on board and sent to Bridge & Co., and Maples, the vendor, went to Memphis to see them. He saw Hicox, who wholly denied Shepherd's
agency, refused to pay anything for the cotton that was lost, but agreed to pay fifty cents a pound for these fifty-four bales that had arrived. Maples took this sum, supposing, as he alleged, that the assertions about Shepherd's want of authority were true, and only on that account. Seeing Shepherd afterwards, Shepherd informed him that they were not true, and Butler and Hicox still denying wholly Shepherd's authority to make the contract and to bind the firm, and still refusing to pay for the cotton that was burnt, Maples sued them in the court below to recover the price. [Footnote 1]
On the trial it was testified to by one Carleton (under objection) that at this time he was the Treasury agent, and that he had issued to the firm of Bridge & Co. a "permit" to purchase and transmit to market one thousand five hundred bales of cotton within the lines of federal military occupation, first special agency. [The admission of his testimony was excepted to, both because the witness should have produced his official books and because a permit to Bridge & Co. was none to Shepherd.] This agency included so much of the states of Alabama, Mississippi, Arkansas, and Louisiana as was occupied by the national forces operating from the north. There was a printed form, as it appeared, invariably used. The defendant below did not produce this permit, though served with a notice to do so.
The evidence of Shepherd's authority to make the contract for the defendants and bind them to its performance, so far as it was direct, was of two kinds. The first and principal was an article of agreement made on the 16th day of October, A.D. 1863, between Bridge & Co. and Shepherd, describing him as of Desha County, Arkansas. The agreement declared its purpose to be
"purchasing R. C. Stone's and such other cotton as said Shepherd may be able to purchase in said county and vicinity, under the conditions and restrictions hereinafter set forth."
Having thus declared its purpose, it recited that Bridge & Co. had furnished to Shepherd
$4,000, and stipulated that they would furnish him such other money from time to time as might be necessary to purchase said cotton. By the instrument it was further agreed that Shepherd should buy the cotton if it could be bought at the price set forth therein and as much more as he could on the best possible terms, not paying an average of more than thirty cents per pound for middling cotton, and lower in proportion to the grade, to be delivered at such times and places of shipment as might be agreed upon. It was further agreed that Shepherd should pay as little as possible on the cotton until it should be delivered on a boat or within protection of a gunboat, and that when thus delivered on the boat and paid for, the property and ownership thereof should vest exclusively in the said Bridge & Co. except as in the agreement was provided for his share of the profits. The instrument then stipulated that Bridge & Co. should ship the cotton to Memphis, sell it to the best possible advantage, and, after reimbursing themselves the purchase money, the cost of hauling, shipping, drayage, commissions &c., should pay Shepherd one-eighth part of the net profits. It also provided that contracts, shipments, permits &c., necessary to purchase and get the cotton to Memphis should be in Shepherd's name, and that Bridge & Co. might thus use his name when necessary.
The other direct evidence of the agency was supplied by the testimony of one Martin, a witness for the defendants. He was sent by them to Arkansas with money and instructions for Shepherd, the instructions being that he should purchase cotton for the firm, but was not to agree to pay more than from thirty to thirty-five cents per pound for it. He might make small advances, but he was instructed not to pay the balance of the purchase money or make it payable until the firm should be able to send a boat up the Arkansas River for the cotton and until it was in their possession, weighed, and placed on the boat. He was directed to take no risk for the firm of the destruction of the cotton by incendiaries or in any other way except to the extent of the money advanced. There was other indirect evidence of
Shepherd's agency to which it is not necessary now to refer. Clothed with such powers and under such instructions, he bought cotton of divers persons (including the one hundred and forty-four bales bought of Maples) representing himself to be the agent of Bridge & Co., though not speaking of his written authority or of any particular instructions.
The evidence being closed, the court charged the jury, and among other things said as follows:
"What is military occupation is a question of law, to be decided by the court, and I instruct you that if you believe the testimony in the case as to the location of federal forces and garrisons in the region of country where the contract was made, and (as to the desire of the inhabitants) submitting to the authority of the government to restore their relations with the government, as manifested by their taking the oath of allegiance and applying for and receiving 'protection papers,' then there was such a military occupation as is contemplated by the laws of Congress referred to."
"But in addition to this, the special agent of the Treasury Department, who was authorized to grant permits, exercised judicial functions in deciding what country was within the lines of military occupation, and when he granted a permit to buy cotton in a designated region, the permit itself was a decision by him that the region so designated was so occupied. When an officer of the government thus clothed with judicial functions grants a permit in the exercise of those functions, it would be very unjust to hold the party receiving the permit and acting under it responsible for that decision."
"These questions disposed of, the case is resolved into a question of agency. Now did Shepherd have authority to bind defendants by that contract?"
"A principal is bound by all that a general agent does within the scope of the business in which he is employed as such general agent, and even if such general agent should violate special or secret instructions given him by his principal and not disclosed to the party with whom the agent deals, the principal would still be bound if the agent's acts
were within the scope of the business in which he was employed and of his general agency."
"However a party dealing with a general agent who seeks to hold the principal bound for the agent's acts or contracts must show, in order to recover, that the agent held himself out as general agent and that in fact he was such general agent."
"If Shepherd held himself out as the general agent of Bridge & Co., then the defendant is bound by the contract which he made with the plaintiff for the cotton notwithstanding Shepherd may have agreed to pay more for the cotton than his principal had authorized, and if, as general agent for Bridge & Co. to buy cotton in Desha County, Shepherd was not authorized by Bridge & Co. to buy cotton except to be delivered on board the boat, and in violation of their instructions he did buy the plaintiff's cotton, and agreed to receive and accept delivery of it elsewhere than on the boat, unless the plaintiff knew of these instructions, the defendants are bound by the contract which Shepherd made, because it was within the scope of his general agency just as much as was the agreement to give for the cotton a larger price than that to which he was limited by the instructions of Bridge & Co."
"But it is said that the plaintiff agreed to rescind and abandon the contract made with Shepherd, and made a new contract with the defendant Hicox by which he sold to Hicox the fifty-four bales of cotton not burned at fifty cents per pound, and that this discharges the former contract made with Shepherd. The effect of the new contract must depend on the circumstances. If the plaintiff and Hicox came together and made a contract about the fifty-four bales when all the facts were known to the plaintiff -- that is if the plaintiff knew that Shepherd had exceeded his authority, and then made the new contract as proven, this new contract would discharge the defendant from the former contract between the plaintiff and Shepherd. But in order that the new contract might have this effect, the plaintiff must have known all the facts, all about Shepherd's authority, and if
not thus advised -- if anything known to Hicox which the plaintiff was entitled to know was not disclosed to him -- he was not bound by the new contract and the defendant was not discharged from the old one."
The defendant excepted to the charge upon the following points:
1. That the written agreement or power of attorney introduced in evidence by plaintiff established that Shepherd was the general agent of Bridge & Co.
2. That in granting the permit proved by Carleton, the Treasury officer exercised judicial functions and decided conclusively that the region of country to which the permit relates was within the lines of military occupation, and that as a matter of law, upon the proof in the case as to the condition of the country, and upon the permit granted to Bridge & Co., that Desha County was, at the date of contract, in November, 1863, within the lines of military occupation of national forces operating from the north.
That the court erred,
3. In the instruction given as to general and special agency, because the same was not applicable to the proof in the case, was irrelevant therefore, and calculated to mislead the jury, and also because, as abstract propositions of law, the instruction upon this point is erroneous.
4. In that part of the charge which relates to the new contract between Hicox and the plaintiff, by which Hicox bought the fifty-four bales of cotton at fifty cents per pound, and which stated to the jury the effect of the new contract.
Verdict and judgment having gone for the plaintiff, the defendants brought the case here on the exceptions to the evidence and to the charge.