
    Lizzie Merkel, Plaintiff, v. Alexander Lazard and Others, Defendants.
    First Department,
    June 15, 1906.
    Principal and agent — apparent authority — when question of apparent authority of agent is for jury.
    The principal is bound not only by the acts of his agent which are within the scope of his authority, but also by such acts as justify a party dealing with the agent in believing that the principal has given him authority to do them.
    The plaintiff went to the office of a firm of stockbrokers during business hours, and, being acquainted with a bookkeeper in' their employ, made certain purchases of stock through the bookkeeper, giving checks drawn to the plaintiff’s own order in payment. The bookkeeper purchased the stock in his own name from his employers, but reported to the plaintiff on the firm stationery that it had been purchased for her. The purchases were marked paid with a stamp used by the defendants, and it was shown that the bookkeeper had in other instances purchased stock for other persons, though as a matter of fact he had no express authority to buy or sell stock for customers.
    
      Reid, that the question as to whether the defendant had given the bookkeeper apparent authority to act was for the jury, and that a direction of a verdict for the plaintiff was error.
    Motion by the defendants, Alexander Lazard and others, for a new trial upon a ease containing exceptions, ordered to be heard at the Appellate Division in the first instance upon the Arerdict of a jury in favor of the plaintiff, rendered by direction of the court after a trial at the Mew York Trial Term in January, 1906.
    
      R. F. Rabe, for the plaintiff.
    
      Louis Marshall, for the defendants.
   McLaughlin, J.:

o This ease comes before the court on exceptions ordered to be here heard in the first instance. The defendants are bankers and brokers doing business in the city of Mew York under the name of Lazard Freres. For many years prior to the month of April, 1905, it had in its employ as a clerk, one Krumnow, whose duties were to attend to the posting of books of account relating to business between the firm and its foreign correspondents. • Tie was not authorized to buy or sell stocks or bonds for customers of the firm, or to deal with them in regard to such subjects. Nor was he authorized to receive money or checks from customers of the firm, his sole duties being limited to those above stated. The work which he performed was at a desk in an inner office, somewhat removed from the desk or ■ counter at which business was transacted with customers. He resided at Hoboken, N., J., where the plaintiff and her husband lived, and was on intimate terms with them in a social.way. The plaintiff testified that she and her' husband were on terms of social intimacy with Krumnow, and one time when they were at dinner she asked him if his firm boughfand sold stocks, and he informed her that it did. She then said she had a little money she would like to invest, and he responded, “ Oh, well, all right, come over.” Subsecpiently and on the 18th of November, 1902, she drew $2,000 ■ from the Hoboken Savings Bank in the form of a check payable to her own order, and went to the office of the defendant and asked for Krumnow. He was then in the inner office at his desk, but was' sent for and came out and had a conversation with her, at which she stated she would like to invest this money on a margin. Krmnnow said to her: “ Yon just wait a minute and I will go in and speak to our broker.” He xrent to the inner office, but returned shortly, saying that the broker advised not to buy on a margin, but to buy outright. She then inquired what were good stocks to buy. Krumnow specified several, and she thereupon indorsed and delivered the check to him for the purpose of buying certain shares of stock. A few months later she again went to the office of the defendant and asked for Krumnow. He was sent for, came out of the inner office, had a conversation with her, and at its conclusion she decided to buy certain other shares of stock, and for that purpose gave to Krumnow a check for $2,000, drawn by the treasurer of the Trust Company of New Jersey to her own order, she indorsing it in blank. Some time thereafter she again went to the office of defendant, had a conversation with Krumnow under circumstances similar to those previously had, and she then gave him a check for $500 to buy certain other shares of stock. The check', immediately following each transaction, was turned over by Krumnow to the defendant in payment of stocks purchased by him in his own name. The stocks purchased by Krumnow with plaintiff’s money were fifty shares of Texas Pacific, fifty shares of Erie and twenty-five shares of Southern Pailway Company, which, as soon as purchased by the defendants, were delivered to him in accordance with the custom of the stock exchange. It appeared that, so far as the defendants were concerned, plaintiff’s name was never mentioned in any of the transactions or in any connection with the purchases referred to. She never had an account on defendants’ books, and, so far as the firm knew, it never received her money nor had possession of any stocks belonging to her.

Immediately following each transaction between plaintiff and Krumuow he sent to her on the printed letterheads of the defendants a statement as to the purchases made, which purported to be signed in the name of the defendants, and her purchases were marked “ Paid ” by means of a rubber stamp used in the cashier’s department. He also, from time to time, sent her statements purporting to be accounts current, on printed forms of the firm, stating the condition of her account. These accounts and statements, it is claimed, were all forgeries. They were all in the handwriting of Krumuow, and there was nothing on the books of the firm indicating that any such accounts or statements had ever been sent out, and he never was authorized by the firm to issue any statements or accounts to the plaintiff or any other customer.

In the latter part of March or first of April, 1905, plaintiff’s husband informed Krumuow that he was going to Germany, and would like to have some of his'wife’s money that had been delivered to the" defendants for the jmrchase of stock and he would come to the office at a time stated and get a letter of credit. Krumuow answered : “ All right, I will have it ready for yon as soon as you come, so that all you need to do is to sign it, and that is all.” The plaintiff’s husband thereafter went to the office of the defendants, asked for his letter of credit, and was then informed that neither he nor his wife had any account on defendants’ books. He then asked for Krumuow, and it turned out he was not in the office. This interview led to the discovery of the fraud perpetrated upon the plaintiff. A few days later Krumnow conveyed the equity in a- house which he owned to the plaintiff, and a day or so thereafter he suddenly died, whether by his own hand or not does not clearly appear. Subsequently plaintiff brought this action to recover from the defendants the money as represented by the checks which she indorsed and delivered to Krumnow.

Defendant, by its answer, denied any liability. At the conclusion of the trial the defendants’ counsel moved for the direction of a verdict, which was denied, and an exception taken. Plaintiff’s counsel then moved for the direction of a verdict, but before the same was decided defendants’ counsel asked to go to the jury upon certain questions of fact. This request was denied, exception taken, and the court thereupon directed a verdict for the plaintiff for the full amount claimed, to which, as appears from the order denying a motion for a new trial, an exception was taken, which was ordered to be heard in the first instance by the Appellate Division.

I am of the opinion that the exception to the denial of defendants’ request to go to the jury was well taken. . Krumnow was in the employ of the defendants as a bookkeeper, and there was no evidence that he was authorized'to do any work except such as was immediately connected with or incident to that, which did not. include the buying or selling of stocks or bonds or the transaction of business with customers in relation to such matters. The defendants were bound by the acts of Krumnow in so far as they had given him authority or the appearance of authority. The general rule is that a principal is not only bound by the acts of his agent which are within the scope of his authority, but also by such acts as justify a party dealing with him in believing that the principal has given him authority to do them. (Walsh v. Hartford Fire Ins. Co., 73 N. Y. 5; Edwards v. Dooley, 120 id. 540; Hanover Bank v. American Dock & Trust Co., 148 id. 612.)

Here, as already indicated, there was no evidence that Krumnow was specifically authorized to deal with the plaintiff. There was some evidence that the defendants had given him the appearance of authority, and whether it was sufficient to justify the plaintiff in dealing with him to believe that he had actual authority, was a question for the jury. It certainly was not of such a character as justified the court in holding, as a matter of law, that the plaintiff had a right to rely upon his apparent authority and by reason thereof the defendants were bound by his acts. The transactions took place in the defendants’ office, during business hours; the checks were payable to the plaintiff’s order, were indorsed in blank by her, and immediately following delivery they were used by defendants’ bookkeeper in purchasing stock in his own name. This, taken in connection with the fact that statements were immediately sent to the plaintiff on defendants’ stationery, on which the purchases were marked “ Paid ” by a stamp used by their cashier, and that the bookkeeper had in at least two other instances dealt with two other customers in relation to the purchase of stocks, or bonds, presented a question of fact and not of law. It was for the jury to say whether the defendants had given Krunmow apparent authority to deal with the plaintiff and which justified her in believing that he had actual authority from the defendants to receive her money and purchase the stocks directed by her. This question, therefore, should have been submitted to the jury with appropriate instructions hearing on the subject.

It follows that the exceptions are sustained and a new trial ordered, with costs to defendants to abide event.

O’Brien, P. J., Ingraham and Houghton, JJ., concurred; Patterson, J., concurred in. result.

Exceptions sustained and new trial ordered, costs to defendants to abide event. Settle order on notice.  