Story Case

Clarence Burnham, the agent of the Western Fuel Company, bought for that company four cars of nut coal and two cars of lump coal. This purchase was made without the authority of the company. The lump coal arrived at the fuel company's yards, and was unloaded by its authorized workmen. Two days later the nut coal arrived, and not being of the grade the company desired, it refused to accept these cars, saying that Burnham had no authority to contract for this coal. The company which sold the coal thereupon brought suit for damages. What are its rights?

Ruling Court Case. Elberts Vs. Silover, Volume 44 Michigan Reports, Page 519

An itinerant book agent wandered into the office of a Michigan Justice of the Peace. He was soliciting orders for a local history published by his principal, Elberts. The price of the book was $10. The Justice of the Peace thought it too high but the agent was insistent. Finally the generous justice said that he would take a set upon condition that the fees of his office until the time of delivery should constitute the purchase price. The book agent, ignorant of the limited jurisdiction of the justice, gladly accepted. The agent carried a small order book in which buyers signed their names. At the top and bottom of each page in conspicuous print was the statement that the price of the book was $10, and that no agent had authority to reduce the price. In this book the Justice of the Peace signed his name, but with the condition above referred to. Elberts brings this action for the recovery of the $10. The Justice of the Peace brought into court $4.27, as the amount of fees collected in the meanwhile and made a tender thereof to Elberts.

Justice Cooley delivered the opinion:

The plaintiff cannot recover. It is clear that the agent had no authority whatsoever to make the particular contract which he attempted to make with the Justice of the Peace. Authority to do this was expressly denied him, and when the defendant signed his name to the book he expressly said he would not give $10 for it. Under these conditions there was no authorized contract at all.

"When the plaintiffs discovered what the agent had done," Justice Cooley speaking, "two courses were open to them, to ratify his contract, or to repudiate it. If they ratified it, they must accept what he agreed to give. If they repudiated it, they must decline to deliver the book under it. But they cannot ratify it so far as it favors them, and repudiate so far as it does not accord with their interests. They must deal with the defendant's undertaking as a whole, and cannot make a new contract by the selection of stipulations to which separately he has never assented." Therefore, the Justice of the Peace is liable only for the fees he received, and which were tendered in court. The whole contract is ratified and not merely the part beneficial to the principal.

Ruling Law. Story Case Answer

When once the principal has in his possession all the material facts concerning a transaction, and deliberately ratifies that transaction, it is wholly binding upon him, both as to the benefits and burdens. A principal cannot ratify that part of a transaction which is beneficial and repudiate that which is not. If the principal's agent sells the principal's horse and guarantees the soundness of the horse, the principal cannot accept the sale unless he is willing to stand by the warranty of soundness.

In the Story Case, the company selling the coal can recover because the contract was entire for both kinds of coal. The Western Fuel Company could not therefore accept a portion of the coal and refuse to accept the remainder, it must ratify the contract of the agent as to the whole, and cannot ratify as to part and repudiate as to part.