Macke vs. Camps

One who clothes another with apparent authority as his agent and holds him out to the public as such cannot be permitted to deny the authority of that person to act as his agent, to the prejudice of innocent third parties dealing with such person in good faith.

The plaintiffs, B. H. Macke and W. H. Chandler, were partners doing business under the firm name Macke, Chandler & Company, engaged in the sale of goods. The defendant, Jose Camps, operated a hotel with a bar and restaurant annexed, known as the "Washington Cafe," which he had subleased from one Galmes for a period of one year under a written contract dated May 25, 1904. Ricardo Flores was present at the execution of that contract and was identified therein as "managing agent." The dispute arose from goods sold on credit to the Washington Cafe on Flores's orders during the defendant's absences in the provinces.

The plaintiffs, B. H. Macke and W. H. Chandler, partners doing business under the firm name Macke, Chandler & Company, sold and delivered various bills of goods to the defendant, Jose Camps, at his place of business known as the "Washington Cafe" during the months of February and March, 1905. The goods amounted to ₱351.50, of which ₱174 had been paid on account, leaving a balance of ₱177.50. Before instituting the action, the plaintiffs made demand for payment of the balance, but the defendant failed and refused to pay.

The orders for the goods were placed by one Ricardo Flores, who represented himself to be the agent of the defendant. B. H. Macke testified that he shipped the goods to the defendant at the Washington Cafe on Flores's order, that Flores acknowledged receipt and made partial payments totaling ₱174, and that when demand for the balance was made, Flores stated he lacked the necessary funds and that the plaintiffs would have to await the return of the defendant, who was then visiting in the provinces. Macke further testified that the goods were ordered on the credit of the defendant, that he had made inquiries satisfying him as to both the defendant's credit and Flores's authority to act as his agent, and that he always believed Flores was the defendant's agent. When Macke went to the Washington Cafe to collect, he found Flores apparently in charge of the business and claiming to be the defendant's business manager.

A written contract dated May 25, 1904, was introduced in evidence, showing that one Galmes, the former owner of the Washington Cafe, had subrented the building to the defendant for one year for the purpose of carrying on the business, with the defendant obligating himself not to sublet or subrent without Galmes's consent. The contract was signed by the defendant, and Flores's name appeared thereon as a witness. Attached to the contract was an inventory of furniture and fittings signed by the defendant as "sublessee," at the foot of which appeared the word "received" followed by Flores's name and the words "managing agent." Galmes testified that he could not tell whether Flores was working for himself or for someone else — that is, whether Flores was managing the business as agent or sublessee.

The defendant did not take the stand nor call any witnesses, relying wholly on his contention that the foregoing facts were insufficient to establish that he received the goods for which payment was demanded. The trial court found in favor of the plaintiffs, and the defendant appealed.

• Insufficiency of Evidence: The defendant-appellant contended that the facts established by the plaintiffs' evidence were not sufficient to prove that he received the goods for which payment was demanded, and thus that no agency relationship binding him had been shown.

• Agency — Apparent Authority: Whether Ricardo Flores was the agent of the defendant with authority to bind him for the payment of goods ordered on the defendant's credit.

• Agency — Apparent Authority: Yes. The evidence was sufficient to sustain a finding that Flores was the defendant's authorized managing agent, and the defendant, having clothed Flores with apparent authority, could not deny that authority to the prejudice of innocent third parties dealing in good faith.

• Agency — Apparent Authority: The written contract introduced in evidence established that the defendant was the owner of the business and the bar at the Washington Cafe. Flores's signature on the inventory attached to that contract was accompanied by the title "managing agent," and at the time the purchases were made Flores was apparently in charge of the business, performing the duties usually entrusted to a managing agent, particularly during the defendant's prolonged absences in the provinces. These circumstances left little room to doubt that Flores was the authorized agent of the defendant. The Court applied the principle that one who clothes another with apparent authority and holds him out to the public as his agent cannot deny that authority to the prejudice of innocent third parties dealing in good faith. This principle was reinforced by the statutory presumption in subsection 1, section 333 of Act No. 190, that whenever a party has, by his own declaration, act, or omission, intentionally and deliberately led another to believe a particular thing true and to act upon such belief, he cannot in any litigation arising out of such declaration, act, or omission be permitted to falsify it. Furthermore, unless the contrary appears, the authority of an agent must be presumed to include all the necessary and usual means of carrying the agency into effect. As managing agent of a hotel bar, Flores had authority to buy reasonable quantities of supplies necessary for carrying on the business, especially given the defendant's prolonged absences. An examination of the account items confirmed that Flores was acting within the scope of his authority, and the orders were binding on the principal. In the absence of evidence to the contrary — the defendant having neither testified nor called witnesses — the evidence furnished satisfactory proof of delivery as alleged.

• Apparent Authority / Agency by Estoppel — One who clothes another with apparent authority as his agent and holds him out to the public as such cannot be permitted to deny the authority of that person to act as his agent, to the prejudice of innocent third parties dealing with such person in good faith. The Court applied this doctrine to hold the defendant liable for goods ordered by Flores, who was designated "managing agent" on the sublease contract inventory and was apparently in charge of the business during the defendant's absences.

• Presumption of Incidental Authority in Agency — Unless the contrary appears, the authority of an agent must be presumed to include all the necessary and usual means of carrying the agency into effect. The Court held that Flores, as managing agent of a hotel bar, had authority to purchase reasonable quantities of supplies necessary for the business, particularly in light of the principal's prolonged absences.

• Estoppel by Declaration, Act, or Omission (Section 333, Act No. 190) — Whenever a party has, by his own declaration, act, or omission, intentionally and deliberately led another to believe a particular thing true and to act upon such belief, he cannot in any litigation arising out of such declaration, act, or omission be permitted to falsify it. The Court treated this statutory presumption as conclusive and applied it to the defendant's conduct in allowing Flores to appear as his managing agent.

• "One who clothes another apparent authority as his agent, and holds him out to the public as such, can not be permitted to deny the authority of such person to act as his agent, to the prejudice of innocent third parties dealing with such person in good faith" — This is the ratio decidendi of the case, articulating the doctrine of apparent authority as a form of estoppel against the principal.

• "unless the contrary appears, the authority of an agent must be presumed to include all the necessary and usual means of carrying his agency into effect." — This passage defines the presumption of incidental authority, frequently cited in subsequent agency jurisprudence to establish the scope of an agent's power.

• "That Flores, as managing agent of the Washington Cafe, had authority to buy such reasonable quantities of supplies as might from time to time be necessary in carrying on the business of hotel bar may fairly be presumed from the nature of the business, especially in view of the fact that his principal appears to have left him in charge during more or less prolonged periods of absence" — This passage applies the presumption of incidental authority to the specific facts, illustrating how the nature of the business and the principal's absence inform the scope of the agent's authority.

• 15 Conn., 347; 90 N.C. 101; 15 La. Ann., 247; 43 Mich., 364; 93 N.Y., 495; 87 Ind., 187 — American authorities cited in support of the proposition that, unless the contrary appears, the authority of an agent is presumed to include all necessary and usual means of carrying the agency into effect. These were followed as persuasive authority.

• Section 333, Subsection 1, Act No. 190 (Code of Civil Procedure) — Provides that whenever a party has, by his own declaration, act, or omission, intentionally and deliberately led another to believe a particular thing true and to act upon such belief, he cannot in any litigation arising out of such declaration, act, or omission be permitted to falsify it. The Court applied this provision as a conclusive presumption to estop the defendant from denying Flores's authority as his managing agent.

Arellano, C.J., Torres, J., and Willard, J., concurred.

• Tracey, J. — Dissented. The text provides no summary of the reasoning underlying the dissent.