Morton v. State Road Commission

By agreement of counsel for claimants and the special assistant attorney general these claims were heard together and the matters arising upon them respectively will be considered in a single opinion.

The claims are prosecuted in this court on the theory that in the year 1934 one T. S. Ray, then superintendent of a prison labor camp in Clay county, West Virginia, purchased from claimants B. F. Morton, G. S. Johnson, assignor of Sizemore Brothers, and A. B. & J. G. Mullins, certain lumber for the use and benefit of the state road commission, that the state accepted and received the benefit of said lumber and never made payment therefor, and that in equity and good conscience it should make such payments. The state, on the other hand, takes the position that the lumber for which awards are sought was sold to the state, not by Morton, Johnson and Mullins, but by one N. Kinniston, to whom payment in full was made for such lumber.

Claimant B. F. Morton seeks an award of $75.00, which amount he claims to be the balance due on account of 10,000 feet of bridge flooring sold by him to the road commission, at $20.00 per thousand feet. Claimant, W. E. Sizemore, as Sizemore Bros., assignee of G. S. Johnson, seeks an award for 4363 feet of oak lumber at $18.00 per thousand feet and 1894 feet of oak lumber at $20.00 per thousand feet, making a total of $116.41. Claimants A. B. & J. G. Mullins, seek an award of $780.00, claimed to be the balance due them on account of 30,000 feet of oak lumber sold to the state at $20.00 per thousand feet. Each claimant also seeks interest on the amount claimed to be due for which an award should be made. Interest, however, could not be allowed under the court act if awards were made.

The same witnesses testified in support of each claim insofar as it was intended to show that a contract between claim*182ants and the state existed. We do not think, however, that such evidence shows that T. S. Ray was acting on behalf of the state or that he had authority to purchase said lumber and make the state liable for its payment. At most it only appears from the record that Ray was superintendent of prison labor in Clay county. There is not even a presumption that he was agent of the state to purchase the lumber in question. There is no proof to show the existence of such agency. The most careful and analytical consideration of the evidence fails to show that claimants have established that T. S. Ray was the agent of the state for the purpose of purchasing lumber, or that he did actually as such alleged agent purchase said lumber, for which claimants seek awards, for the state. One dealing with an agent of the state is bound to know the extent of the' authority of such agent. Where a person deals with an agent, it is his duty to ascertain the extent of his agency. He deals with him at his own risk. The law presumes him to know the extent of the agent’s power; and, if the agent exceeds his authority, the contract will not bind the principal, but will bind the agent. Rosendorf v. Poling, 48 W. Va. 621. The general rule is that one dealing with an agent is bound at his peril to know the agent’s authority. Uniontown Grocery Company v. Dawson, 68 W. Va. 322.

Claimants introduced J. M. Lorentz, who was maintenance superintendent for Clay county in 1934, as a witness in support of their claims. His testimony throws much light upon the situation. He testified that G. S. Johnson, assignor of Sizemore Bros., had an order from N. Kinniston; that Ray looked after her business; that along about that time she did quite a lumber business with the state, and that it was “hard to beat her out of an order”; that the purchase order for the lumber in question was from said N. Kinniston; that she paid Johnson $20.00 per thousand and sold the lumber to the state for $30.00 per thousand and that later she and Ray intermarried.

*183When Claimant Morton claimed to have contracted with Ray for the lumber the Kinniston woman was with Kim. (Transcript, p. 11). Later when he was trying to get payment for the lumber he found Ray and the Kinniston woman together at Charleston. (Transcript, p. 12). She took part in the negotiations. (Transcript, p. 11). When Ray talked with Morton about buying lumber “there was a lady with him, when he was up there a time or two.” (Transcript, p. 11). She was present when the order was given for the lumber.

It is made clear from the evidence that a close relationship existed between Ray and the Kinniston woman prior to their marriage, that they were frequently together, and that in the case of the claim of B. F. Morton two separate payments were made to him, not by the state road commission, but by the personal check of said Ray, amounting in the aggregate to $150.00. We are impressed by the thought that the association of Ray and the Kinniston woman was of such a nature and character as to put claimants upon notice in their dealings with them.

The evidence submitted in opposition to the claims shows conclusively that the lumber for which the three claimants seek awards was sold by the said N. Kinniston to the state and that she was paid in full therefor. As we view the situation no question of fraud arises between the state and the claimants. If any fraud were perpetrated it was by N. Kin-niston. At the time that the lumber was sold the statute expressly provided how bids should be submitted and contracts entered into for the purchase of said lumber. This method seems to have been observed by the Kinniston woman. She submitted her bids and received purchase orders. She furnished the lumber to the state and was paid in full for the contract price thereof. It is reasonably apparent that the lumber of claimants was sold to the Kinniston woman and that she in turn sold it to the state. She received from the state the price which it contracted to pay her for said lumber, but failed to make settlement with those from whom she purchased it. *184We see no reason, therefore, why the state should pay twice for the same lumber.

The very purpose of the creation of the court of claims was to provide a method for the careful investigation of claims asserted agaiinst the state to the end that proper recommendation should be made to the Legislature concerning them. If we should make awards in favor of these claimants for the amounts asked by them we would establish a precedent that would “lay down the bars” and afford opportunity for all manner of claims to be filed in this court. We can extend our sympathy to the claimants in the unfortunate predicament in which they find themselves on account of the transaction which they had for the sale of their lumber, but under the evidence offered in support of said claims we cannot see that they are entitled to call upon the state for the payments which should have been made by the Kinniston woman. The claimants should have been governed by the law if they intended to sell their lumber to the state. They should have submitted bids and received orders of purchase from the state. The evidence does not show that the claimants, or either of them, made any inquiry for the purpose of ascertaining whether or not Ray had authority to make purchase of lumber for the state and bind the state for payment. The transaction in each case was loosely and indifferently conducted.

Recommendations for the payment of public revenues are not properly to be indiscriminately made. If the court of claims were to do so its usefulness as a special instrumentality of the Legislature would soon be at an end.

Majority members of the court are of opinion that claimants did not, in fact, sell their lumber to the state, that they have wholly failed to establish the agency of Mr. Ray to purchase said lumber, and that the claims should be denied and dismissed.

*185An order will, therefore, be made by a majority of the court denying the three above captioned claims and dismissing the same from the docket of the court.

dissenting.

Under the facts as shown by the record and as governed by the law, I find myself in disagreement with the opinion rendered by the majority and feel that to carry out the conclusion therein set forth would be a miscarriage of justice.

A reading of the record reveals that Ray was the agent of the state road commission and as such agent had the right to contract for lumber to be used in the construction and maintenance of bridges along the state roads and highways in Clay county. The state at no place in the record repudiates the relation with Ray as its agent in the purchase of the lumber in question.

The majority opinion is based upon the proposition of law that one deals with an agent at his own peril. This proposition in my judgment, has no application whatever to the facts as shown in the hearing of these claims. Ray had the right to make the contracts in question; he was not exceeding his authority in making them; his agency has not been denied nor have his powers of contract been disputed in any way so far as this record reveals. In fact, it was these very contracts that he had made with these claimants, that brought about the delivery of the lumber in question necessary to carry on the projects of road improvement in which the state, through the state road commission, was then engaged. These were executed contracts and the work of the agent, Ray, accepted by the state and consequently binding upon it. The question here is plainly not what power did Ray possess, but rather did the state accept and receive the benefit of the contracts made with these claimants. The law which the majority *186seeks to impose in this matter contemplates a case in which, by reason of the agent exceeding his authority, no contract exists that will bind the principal. Such is the sum and substsince of the decision in Rosendorf v. Poling, 48 W. Va. 621, and used as the basis for the majority opinion. There the agent sought to make a contract beyond his powers which was repudiated by his principal, and which repudiation was sustained by the court. That law is not applicable to these claims. The agent Ray did not exceed his authority. He had the right to make the contracts in question, as he did make them, and in all justice and equity the state has the obligation to pay these claimants what is fairly due them for the materials and the lumber they furnished and which the state accepted and is using.

The majority opinion indicates that Ray was not acting on behalf of the state. In the name of common sense for whom was he acting — wasn’t it by reason of his acts that the state obtained the lumber, used it in the construction of the bridges and roadways, and has been receiving the benefit of the material since that time? It is not true that Ray was merely the superintendent of prison labor in Clay county. He had full authority for contracting for the lumber which was used on the bridges and roadways by the state road commission. These facts are not denied and stand out boldly when one fairly reads the record as made in the presentation of these claims.

I repeat, these were all executed contracts. Whatever was done by the agent was accepted by the principal and therefore there is no application of the theory that one deals with an agent at his own risk, and to now allow the state to enjoy the benefits of these claimants’ labor and material which they furnished, without compensation is to my mind unwarranted and highly improper. The state especially should not be allowed to have the benefit of an unjust and illegal enrichment without paying for the material furnished. That there was fraud perpetrated upon the state in these transactions, there can be no question, but it was perpetrated not by these claim*187ants, but by the state’s own agent, Ray himself; and we are well aware of the fact, that the fraud of the agent after obtaining the contracts in question cannot be chargeable in any manner to innocent persons with whom he contracted, but the damage, if any, must be borne by his principal.

Whatever was done by Ray after obtaining these orders cannot affect the rights of these claimants; and, by the way, since some question has been raised as to whether or not these small sawmill owners who are here involved, strictly complied with the law in the matter of submitting their offers to sell, notwithstanding the fact that the material was accepted, and used, by the state, let me say that in one instance, at least, as revealed by the testimony, namely that of Mullen, a bid was submitted through the accredited agent, Ray himself.

If after obtaining these bids and before the lumber was delivered, Ray planned some fraud with Mrs. Kinniston, and raised the price of the lumber, it was a fraud perpetrated upon the state by Ray himself, and as for these innocent claimants they cannot be held liable, for, so far as the evidence is concerned they had no connection whatsoever with such acts. The testimony reveals that they dealt with Ray in making these contracts and no one else. The undisputed testimony shows that Ray was the accredited agent of the state. The testimony fails to show the slightest repudiation of Ray’s powers. The testimony shows that these were executed contracts and not governed in any sense by the law sought to be applied in the majority opinion.

The testimony further shows that this lumber was accepted by the state and has been, used during all that period for the benefit of its roads and in the construction and maintenance of the bridges in question. The testimony shows (Lorentz record p. 40) that Ray was the agent and was carrying on the work of the road improvement in Clay county at the time.

*188Considering all these circumstances and facts and the law-applicable, thereto, I would find that the claimants had sustained their claims and were entitled to awards accordingly.

upon petition for rehearing.

After these claims had been denied and dismissed by majority members, and the filing of a dissenting opinion by the presiding judge, claimants presented their petition praying for a rehearing of the claims. Although this petition tendered nothing more than slight ground for such rehearing, it was nevertheless, granted. And now after careful reexamination of the original record and due consideration of the record upon rehearing majority members of the court find themselves unable to recommend to the Legislature the payment of the claims involved in these cases.

As shown in the original majority opinion the claims are prosecuted upon the theory that the lumber for which claimants seek awards was purchased by the state of West Virginia by and through its agent, T. S. Ray. Upon the original hearing and upon the rehearing the state contested the right of claimants to awards. We fail to perceive where the state at any time recognized the alleged agency of Ray. The claims have at all times been contested. We are unable to find anything in the original record or the record on rehearing even tending to establish that Ray was agent of the state vested with power and authority to purchase the lumber for which these claims are made. The evidence does show very clearly, however, that N. Kinniston had orders from the state for lumber to be supplied by her. It further shows that she was paid for lumber which in every respect corresponded with the lumber which claimants say was purchased by Ray.

J. M. Lorentz who, at the time the lumber was furnished for which claimants seek payment, was county maintenance superintendent for Clay county, West Virginia, was introduced as a witness on behalf of claimants. He stated that T. S'. Ray *189was acting superintendent of the prison labor operating in Clay county. When asked if he knew anything about Ray having purchased timber he answered in the affirmative; and when requested to tell what he knew about the G. S. Johnson lumber, answered: “Well, Mr. Johnson had an order from — I presume it was from N. Kinniston, but I think Mr. Ray looked after Miss Kinniston’s business, seemed to at least. . . .” Johnson was the assignor of Sizemore Brothers.

Claimant Morton said that N. Kinniston was present with Ray when he cotracted for the rale of his lumber. She and Ray discussed with him the bill of lumber which they desired him to cut. She and Ray together were buying his lumber. Transcript, pagesi 11 and 12. Ray made two payments- on account of the purchase, one of $50.00 and the other of $100.00, each by his personal check. The road commission at no time recognized any obligation on its part to pay for any part of the lumber embraced in these claims to any person other than N. Kinniston. The conviction is inescapable that it was she who purchased the lumber for which these awards are now asked to be made. Subsequently she and Ray intermarried. At last account he was in Siberia and she had but recently removed from Louisville, Kentucky, for parts unknown.

The record wholly fails to establish the agency of Ray. to purchase lumber and bind the state for its payment. At most he was but an employe or servant of the state. His duties were those incident to the position of acting superintendent of prison labor. Nowhere in the record does it appear that he had power or authority to buy lumber for the road commission.

“Acts of a private agent may bind the principal where they are within the apparent scope of his authority; but not so with a public officer, as the State is bound only by authority actually vested in the officer, and his powers are limited and defined by its law.” State v. Chilton, 49 W. Va. 453.

*190In the same case it is held:

“A state is not bound by the unauthorized acts of public officers. Their misconduct is no' estoppel against the state.”

How, therefore, could a mere employee or servant of the state bind it for the payment of these claims? In the case of Daugherty v. Board of Education, 86 W. Va. 522, it is held:

“One dealing with an officer or official body is bound to take knowledge of his or its authority.”

The orders heretofore entered in these cases denying awards and dismissing the claims are now ratified and confirmed by majority members of the court.

dissenting.

For the reasons heretofore assigned in my dissenting opinion and which reasons I feel have been strengthened by the record upon rehearing, I would approve the claims as filed, believing that to do otherwise is to work an injustice on these claimants and deprive them of money rightfully due for the lumber obtained by the state and used by it for its benefit.