WILLIAM ISELIN & CO., Inc.
v.
SAUNDERS et al.
No. 311.
Supreme Court of North Carolina.
March 29, 1950.*615 Henry B. Edwards, Shelby, for plaintiff, appellee.
J. R. Davis, Kings Mountain, for defendants, appellants.
ERVIN, Justice.
The transactions giving rise to this litigation are susceptible of several constructions which would have afforded the defendants either complete or partial exoneration from liability to the Falcon Sportswear Company if it had sued the defendants directly upon the claim now in suit.
The Falcon Sportswear Company could not have recovered of the defendants for goods sold and delivered without establishing a contract, either express or implied, between it and the defendants, obligating the defendants to accept and pay for the goods.
All direct negotiations on the part of the defendants were had with the Consolidated Clothiers, which may have been acting in *616 any one of three distinct capacities. It may have been a selling agent for the Falcon Sportswear Company, or an independent dealer, or a purchasing agent for the defendants.
Upon one view, the circumstances in the record harmonize with the conclusion that the Consolidated Clothiers acted either as an independent dealer, or as a selling agent for the Falcon Sportswear Company; that it offered to sell goods to the defendants either upon its own account, or in behalf of the Falcon Sportswear Company as its principal; that the defendants rejected the offer; and that in consequence no contract ever came into existence obligating the defendants to purchase goods from either the Consolidated Clothiers as an independent dealer, or from the Falcon Sportswear Company as its principal. Dodds v. St. Louis Union Trust Co., 205 N.C. 153, 170 S.E. 652.
Upon another aspect, the transactions between the parties are consistent with the deduction that the Consolidated Clothiers was an independent dealer; that the defendants gave the Consolidated Clothiers an order for goods; that the Consolidated Clothiers turned the order over to the Falcon Sportswear Company, which undertook to fill the order on its own account, and which shipped the goods to the defendants; and that the defendants refused to accept the goods from the Falcon Sportswear Company, and declined to have any dealings with it. If such was the case, the defendants did not become liable to the Falcon Sportswear Company; for they had no agreement with it. The law declares that "everyone has a right to select and determine with whom he will contract, and can not have another person thrust upon him without his consent." Arkansas Valley Smelting Co. v. Belden Mining Co., 127 U.S. 379, 8 S. Ct. 1308, 1309, 32 L. Ed. 246. See, also, in this connection: Hardy v. Williams, 31 N.C. 177; Cincinnati Siemens-Lungren Gas Illuminating Co. v. Western Siemens-Lungren Co., 152 U.S. 200, 14 S. Ct. 523, 38 L. Ed. 411; School Sisters of Notre Dame v. Kusnitt, 125 Md. 323, 93 A. 928, L.R.A.1916D, 792; 46 Am. Jur., Sales, section 42.
Upon a third appearance, the circumstances in the record support the proposition that the Falcon Sportswear Company, acting through its agent, Consolidated Clothiers, contracted to sell certain goods to defendants by sample; that in legal consequence the Falcon Sportswear Company impliedly warranted that the bulk of the goods would correspond with the sample in kind and quality; that the Falcon Sportswear Company breached this implied warranty by shipping to the defendants inferior goods, which did not correspond with the sample in kind and quality; and that the defendants forthwith rejected the goods because of the breach of warranty and returned them to the Falcon Sportswear Company. If this was the situation, the defendants were not obligated to pay the Falcon Sportswear Company for the rejected goods. Daniels & Cox v. Southern Distributing Co., 178 N.C. 15, 100 S.E. 112; Williston on Sales, (Rev. Ed.), Vol. 1, section 255.
Upon a fourth view, the testimony in the record justifies the inferences that the defendants had had no dealings with the Falcon Sportswear Company, and had never held the Consolidated Clothiers out as authorized to act for them; that on or about October 18, 1946, the defendants employed the Consolidated Clothiers as a special agent with the limited power to buy not exceeding 50 pairs of pants for them; that the Consolidated Clothiers exceeded its limited authority, and undertook to enter into a contract with the Falcon Sportswear Company in the name of the defendants, purporting to bind the defendants to purchase 100 pairs of pants from the Falcon Sportswear Company at a price of $9.50 per pair; that the Falcon Sportswear Company endeavored to perform this alleged contract on its part by shipping 100 pairs of pants in two equal consignments from St. Louis to the defendants at Kings Mountain; and the defendants forthwith refused to accept the consignments, and caused them to be returned to St. Louis, where the Falcon Sportswear Company declined to receive them. If this was the state of things, the defendants were liable to the Falcon *617 Sportswear Company for the price of only 50 pairs of the pants. This is true because a special agent can only contract for his principal within the limits of his authority, and a third person dealing with such an agent must acquaint himself with the strict extent of the agent's authority and deal with the agent accordingly. Graham v. Mutual Life Insurance Co., 176 N.C. 313, 97 S.E. 6; Swindell v. Latham, 145 N.C. 144, 58 S.E. 1010, 122 Am. St. Rep. 430; Mechem on Agency, 2d Ed., Vol. 1, section 742; 2 Am.Jur., Agency, section 96; 2 C.J.S., Agency, §§ 93, 114.
Notwithstanding the testimony tending to negative or minimize liability of the defendants to the plaintiff's alleged assignor, i. e., the Falcon Sportswear Company, the court instructed the jury in a portion of the charge, which is the subject of the ninth assignment of error, to award the plaintiff the full amount sued for, i. e., $950.00, in response to the only issue submitted to it in case it "should find from the evidence, and its greater weight, that the account in question was sold and assigned to the plaintiff for a valuable consideration and without any notice of fault before maturity, and that the same has not been paid by the defendants."
In so charging the jury, the court committed substantial error, entitling the defendants to a new trial. The instruction contravenes the well-settled principle that the assignee of a nonnegotiable chose in action, though he buys it for value, in good faith, and before maturity, takes it subject to all defenses which the debtor may have had against the assignor based on facts existing at the time of the assignment or on facts arising thereafter but prior to the debtor's knowledge of the assignment. G.S. § 1-57; In re Wallace, 212 N.C. 490, 193 S.E. 819; Ricaud v. Alderman & Flanner, 132 N.C. 62, 43 S.E. 543; Clinton Loan Association v. Merritt, 112 N.C. 243, 244, 17 S.E. 296; Spence v. Tapscott, 93 N.C. 246, 248; Havens v. Potts, 86 N.C. 31; First Nat. Bank v. Bynum, 84 N.C. 24, 37 Am.Rep. 604; Martin v. Richardson, 68 N.C. 255; Harris v. Burwell, 65 N.C. 584; Mosteller v. Bost, 42 N.C. 39; Lackay v. Curtis, 41 N.C. 199; King v. Lindsay, 38 N.C. 77; Moody v. Sitton, 37 N.C. 382; McKinnie v. Rutherford, 21 N.C. 14; Jordan v. Black, 6 N.C. 30. This rule is the inescapable corollary of the bedrock proposition that the assignor of a nonnegotiable chose in action can not confer upon the assignee a greater right than he possesses.
The verdict and judgment are vacated, and the defendants are granted a
New trial.