Waggoner v. Western Carolina Publishing Co., 190 N.C. 829 (1925)

Dec. 23, 1925 · Supreme Court of North Carolina

190 N.C. 829

MRS. J. E. WAGGONER v. WESTERN CAROLINA PUBLISHING COMPANY.

(Filed 23 December, 1925.)

1. Principal and Agent — Scope of Agent’s Authority — Ratification—Newspaper Circulation Contest.

Where the plaintiff has been induced by the false and fraudulent representation of the agent of a newspaper in a circulation campaign, to pay out her own money for subscriptions for newspapers, sent by her to other persons, and has knowingly retained the money: Held, upon the principle of ratification of an agent’s act the defendant newspaper may not avoid liability upon the ground that the agent was acting beyond the scope of his authority to -the plaintiff’s knowledge.

2. Gaming — Newspaper Circulation Contest — Fraud—In Pari Dilicto— Contracts.

Where the agent of the defendant in a newspaper circulation contest has wrongfully induced the plaintiff to pay to him her own money for sending tlie newspapers to others, and she sues upon the agent’s fraud and deceit, recovery may be had upon the grounds alleged, and the position of the defendant that the transaction was against good conscience and public morals, and that no recovery could be had because plaintiff was m pari MUoto, is unavailable.

3. Contracts — Public Policy — Immoral Contracts — Actions.

A contract contravening sound public policy or contra bonos mores is void, and an action thereon may not be maintained in our courts.

Appeal by defendant from Stack, J., at May Term, 1925, of Catawba.

Civil action to recover tbe sum of $500 alleged to bave been fraudulently obtained from tbe plaintiff by tbe defendant’s agent and representative while conducting a subscription prize contest.

It is alleged, and supported by evidence, that tbe defendant is engaged in tbe publication of a newspaper, The Times Mercury, at Hickory, N. C.; tbat during tbe month of November, 1922, in an effort to increase tbe circulation of said newspaper, tbe defendant inaugurated a subscription campaign, in which prizes were offered to successful contestants, according to certain terms, rules, conditions and provisions, duly published in said newspaper prior to and during said campaign; tbat tbe defendant’s agent, one Stevens, who was in charge of and conducting tbe campaign for tbe defendant and who was informed at all times as to tbe standing of tbe different contestants, falsely and fraudulently represented to plaintiff tbat if she would put, first $200 and then later $300, in said campaign, subscribing out of her own funds for the equivalent of 100 and later 150 copies of tbe paper at tbe price of $2.00 per annum, and sending them to such persons as she cared to name, she would thereby certainly win tbe first prize offered, to wit, a Studebaker automobile; tbat relying upon these representations, which were false and fraudulently made, tbe plaintiff was induced to part with $500 in tbe manner suggested; tbat she did not win tbe first prize, or tbe automobile, though she did win tbe third prize, a diamond ring, which her husband carried home, but which, according to plaintiff’s testimony, she did not accept — • same having been tendered back to tbe defendant, before and at tbe time of trial, and tbat tbe defendant received her money under tbe conditions above set out and refused to return any part of. it after notice from tbe plaintiff and before any of tbe names furnished by her bad been placed on tbe defendant’s subscription list, or at least before tbe papers were mailed to those from whom she did not bave bona fide subscriptions.

Upon denial of liability and issues joined, tbe jury returned tbe following verdict:

“1. Did tbe defendant, through its agent, Stevens, fraudulently obtain from tbe plaintiff $500 in cash, as alleged in tbe complaint? Answer: Yes.

“2. If so, wbat amount, if any, is tbe plaintiff entitled to recover of tbe defendant? Answer: $500 witb interest tbereon from 29 November, 1922.”

From a judgment on tbe verdict in favor of plaintiff, tbe defendant appeals, assigning errors.

A. A. Whitener for plaintiff.

B. J. Mander, J. W. Aiken and Self & Bagby for defendant.

Stacy, O. J.,

after stating tbe case: Tbe defendant earnestly contends tbat if tbe false and fraudulent representations charged against its agent were made by bim, be was acting beyond tbe scope of bis authority, without tbe knowledge, consent or contrivance of tbe defendant, and contrary to tbe published rules under which tbe contest was being conducted, and tbat all this was done witb tbe full knowledge of both plaintiff and defendant’s agent, for which reason, defendant says, tbe plaintiff ought not to be permitted to maintain this action.

In reply to this position, it would seem to be sufficient to point out tbat, witb full knowledge of all tbe circumstances, tbe defendant has received and still bolds tbe money fraudulently obtained by its agent from tbe plaintiff. Tbe defendant will not be permitted to repudiate tbe act of its agent as being beyond tbe scope of bis authority, and at tbe same time accept tbe benefits arising from wbat be has done while acting in its behalf. Starkweather v. Gravely, 187 N. C., 526. It is a rule too well established to admit of debate tbat if a principal, witb full knowledge of tbe material facts, takes and retains tbe benefits of an unauthorized act of bis agent, be thereby ratifies such act, and witb tbe benefits be must necessarily accept tbe burdens incident thereto or which naturally result therefrom. Tbe substance of ratification is confirmation after conduct. 2 C. J., 467. It is also a settled principle of ratification tbat tbe principal must ratify tbe whole of bis agent’s unauthorized act or not at all. He cannot accept its benefits and repudiate its burdens. Bank v. Justice, 157 N. C., p. 375.

Tbe defendant, therefore, having taken and received tbe benefits arising from the unauthorized act of its agent, must be held liable to suit upon tbe principle of ratification, if tbe act of tbe agent imports such liability. Sprunt v. May, 156 N. C., 388.

Eesponsibility for tbe act of its agent having been resolved against tbe defendant under tbe principle of ratification, it is thereupon, in view of this position, earnestly contended tbat tbe understanding between plaintiff and defendant’s agent was a thoroughly immoral conspiracy, contrary to public policy, and tbat tbe courts ought not to aid tbe plaintiff in her attempt to enforce any supposed rights which she may have, arising out of such understanding or agreement.

It is undoubtedly tbe law that whatever contravenes sound morality, or is contra bonos mores, vitiates any contract and renders void any engagement founded upon it. “Ex turpi contractu actio non oritur” was tbe maxim of tbe common law and it is still good today. No action can be maintained on an immoral or iniquitous contract. Munday v. Whissenhunt, 90 N. C., 458. Tbe courts will not paddle in muddy water, but in sucb cases tbe parties are remitted to tbeir own folly. And if tbe purpose of tbe present suit were to recover tbe automobile, or to force tbe defendant to live up to tbe agreement of its agent, tbe plaintiff, bad sbe participated or acquiesced in tbe fraud, might be face to face with tbe lesson, taught every day in tbe school of experience, that sbe cannot safely put her money in tbe bands of one who promises to return it with usury made out of ill-gotten gains. Tbe expression, “He that will steal for me will steal from me,” coined by a distinguished citizen in describing tbe discovery of a Western ranchman while dealing with bis herdsmen, contains a bit of philosophy, or a nugget of truth, which tbe plaintiff, no doubt, can appreciate more keenly today than sbe could in November, 1922.

But tbe plaintiff’s cause of action is not based on contract, nor is sbe seeking to bold anything awarded to her in tbe contest. Sbe is suing in tort to recover tbe amount of money obtained from her by tbe false and fraudulent representations of tbe defendant’s agent. Her action is one for pure fraud and deceit. Gladstone v. Swaim, 187 N. C., 712. We do not think it is open to tbe defendant on tbe present record to say to tbe plaintiff: “My agent lured you into a gamble, therefore take your loss.” S. v. Smith, 152 N. C., 798. Tbe jury has found that tbe plaintiff did not participate in a gaming enterprise, but that sbe was induced to part with her money solely upon tbe false and fraudulent representations of tbe defendant’s agent.

Tbe plaintiff bad a right, under tbe rules of tbe contest, to purchase any number of subscriptions, either with her own money or with money contributed by others. What sbe did was entirely legitimate, according to her allegation, and many bona fide subscriptions were secured or purchased by her. With these sbe is content. But tbe gravamen of her complaint is that tbe defendant’s agent fraudulently induced her to put an additional $500 of her own money into tbe campaign, which sbe would not have done but for sucb false and fraudulent representations. Tbe plaintiff limits her action to one for fraud or deceit. For this sbe has been allowed to recover and for nothing else.

Tbe record presents no reversible error, hence tbe verdict and judgment will be upheld.

No error.