Summary
In Oliver v. Eureka Springs Sales Co., 222 Ark. 94, 96, 257 S.W.2d 367, 368, failure to fully disclose the principal resulted in a decree of enforcement of a contract against the sales company. It was stated therein: "There is some indication that Oliver might have discovered the identity of the seller by examining the sales company's books, but he was certainly under no duty to do so and therefore cannot be charged with the information an investigation would have disclosed."
Summary of this case from Barrett v. RumelioteOpinion
No. 5-80
Opinion delivered May 4, 1953.
1. SALE — STOLEN PROPERTY. — Where appellee sold heifers without knowledge that they were stolen, the finding of the court that appellee was not, on failure of title, liable to the purchaser for price paid for the reason that appellee had acted only as an agent or broker for the one who employed appellee to sell the heifers at auction is not supported by the evidence. 2. SALES — AUCTION. — Appellee, in selling the heifers, acted as agent of H who employed it to sell them, and it can escape liability only by showing that the identity of its principal was disclosed. 3. SALES — UNDISCLOSED PRINCIPAL. — If it was appellant's understanding that H who engaged appellee to sell the heifers was an undisclosed principal, he may treat appellee as a party to his contract. 4. SALES — UNDISCLOSED PRINCIPAL. — Even if appellant realized that appellee was, in selling the heifers, acting as the agent of some unnamed principal, such principal was only partially disclosed and he is entitled, on failure of title to the heifers purchased, to enforce the contract as against the agent. 5. SALES. — Since appellant was under no duty to examine the books of appellee to determine the owner of the heifers, he cannot be charged with knowing what an investigation would have disclosed. 6. PLEADING — DEMURRER. — Appellant having sued appellee and ID and S, owners of appellee sales company, the demurrer of ID and S should have been overruled. 7. SALES — EVIDENCE. — Testimony of a part owner of appellee that the records of appellee showed that H brought the heifers to the sales barn was inadmissible as the records were the best evidence.
Appeal from Carroll Circuit Court, Western District; Maupin Cummings, Judge; reversed.
J. B. Milham, for appellant.
J. E. Simpson, for appellee.
The principal question in this case is whether a sales company which innocently sells stolen property at public auction can be held liable to the buyer for the failure of title.
The Eureka Springs Sales Company owns a sales barn at which livestock are regularly sold at auction. On May 19, 1951, Fred Oliver bid for, and became the purchaser, of three heifers. It happened that the animals were stolen property, and Oliver, after having paid their value to the true owner, brought this action to recover the amount of his bid. The trial court, sitting without a jury, found that the defendant sales company had no knowledge that the heifers were stolen property and had acted merely as an agent or broker for Harve Hopper, who had employed the sales company to sell the heifers on a commission basis. Upon this finding the court entered judgment for the defendant.
The evidence does not support the judgment. The sales company was not a broker, since it had been entrusted with the custody of the animals. Bouvier's Law Dictionary (3d Rev.), "Brokers"; Harby v. City of Hot Springs, Ark., II S.W. 694. Instead, the sales company was acting as Hopper's agent, and it can escape liability only by showing that the identity of its principal was disclosed. There is no testimony to that effect. Oliver testified that as far as he knew the sales company was the owner of the animals offered for sale. If that was Oliver's understanding Hopper was an undisclosed principal, and Oliver may treat the sales company as a party to the contract. Shelby v. Burrow, 76 Ark. 558, 89 S.W. 464, 1 L.R.A., N. S. 303.
The defendant showed that in no instance does it have title to the livestock sold at the sales barn, and it may be inferred that Oliver knew this. Nevertheless it is not suggested that the auctioneer announced the names of the persons whose stock was being sold. At most Oliver realized that the sales company was acting as the agent of some unnamed principal. If so, the principal was only partially disclosed, and Oliver is entitled to enforce the contract as against the agent. Cooley v. Ksir, 105 Ark. 307, 151 S.W. 254, 43 L.R.A., N. S. 527. There is some indication that Oliver might have discovered the identity of the seller by examining the sales company's books, but he was certainly under no duty to do so and therefore cannot be charged with the information an investigation would have disclosed. Rest., Agency, 9, Comment d.
A new trial being necessary, two other errors should be mentioned. First, the complaint alleged that the heifers were sold to Oliver by the sales company, Roy Dennis, and Hobart Stanley, and judgment was prayed against all three. The court sustained demurrers interposed by Dennis and Stanley. Construed liberally, the complaint states a cause of action against these defendants, and on remand their demurrers should be overruled. Second, a part owner of the sales company testified that he had no recollection of the sale to Oliver but that he had examined the company's records and had found that the heifers were brought to the sales barn by Harve Hopper. The records were the best evidence; so the plaintiff's objection to the testimony should have been sustained.
Reversed.