
    Adolph Harder and Robert Rosenberg, Respondents, v. The Continental Printing and Playing Card Company, Appellant.
    (Supreme Court, Appellate Term,
    June, 1909.)
    Principal and agent — Rights and liabilities of principal as to third person — Rights and liabilities as undisclosed principal — Liability of undisclosed principal on contract — Upon an unauthorized transaction.
    Where an agent acting within his authority, or whose acts are subsequently ratified, buys goods in his own name for the benefit of an undisclosed principal, who receives the goods, the latter as well as the former is bound.
    
      But, where the principal furnishes the funds for the purchase before it is made and the agent, without disclosing his principal and without the principal’s knowledge or consent, buys on credit, the principal will not.be bound.
    Appeal by the defendant from a judgment of the City Court of the city of New York, entered in favor of the plaintiffs upon the verdict of a jury, and also from an order denying a motion for a new trial.
    J. A. Seidman, for appellant.
    Katz & Sommerich (Maxwell C. Katz and Otto C. Sommerich, of counsel), for respondents.
   Gildersleeve, J.

The complaint alleges that between the 8th day of October, 1907, and the 8th day of February, 1908, plaintiffs, at the special instance and request of defendant, sold and delivered to the defendant goods, wares and merchandise of the reasonable and agreed value of $1,427.27, of which defendant has paid on account $400, leaving a balance due to plaintiffs from defendant of $3,027.27. The answer is a general denial. It appears that the goods were sold to one Buckham and delivered to bim at defendant’s place of business; and defendant claims that the goods were sold and delivered to Buckham individually and not to defendant, while plaintiffs claim that Buck-ham was acting as agent for defendant, although plaintiffs did not discover such agency until after the sale and delivery of the .goods and until after they had commenced an action therefor against Buckham. Upon such alleged discovery, they apparently abandoned their case against Buckham and elected to pursue the alleged undisclosed principal. In April, 1907, Buckham told one of the plaintiffs that he desired to go into business on his own account as soon as he left the employment of the Tower Manufacturing Company, where he was then employed, and plaintiff said he would sell him postal cards on credit. In May, 1907, defendant made a contract of employment with Buckham; but the latter did not actually enter defendant’s employment, under such contract, until January 1, 1908. In September, 1907, Buckham gave a written order for post cards to plaintiffs, in his individual name, upon which were written the words, “ according to arrangement with Hr. Rosenberg,” which latter was one of the plaintiffs who had told Buckham, in April, 1907, that plaintiffs would sell Buckham cards on credit, as above mentioned. In October, 1907, plaintiffs, upon said order, sent the postal cards in cases to said Buckham, 4077—4085 Park avenue, Hew York, which was the address given by Buckham on said order, and which was defendant’s place of business. In December, 1907, Buckham and one Westerhouse, who was the secretary of defendant, executed and filed a certificate that they transacted the business of general merchandise, post cards and novelties at 4083 Park avenue, Hew York, defendant’s place of business, under the name of the “ Import Post Card & Hovelty Mailing Co.; ” and they issued a circular of their goods, which contained the very articles that had been sold by plaintiffs to Buckham. It further appears that the goods in suit were finally sold to defendant’s customers, and defendant received payment therefor by checks to its own order, and that defendant’s checks were also used to pay freight charges and duties on the goods in suit, and also in part payment of plaintiffs’ bill. It is also in evidence that, on the same day that the certificate of the “ Import Post Card & Hovelty Co.” aforesaid was made, the said Wester house, who was one of the signers of said certificate and also, at that time, secretary of defendant, signed the following paper: “ We have received the shipment of post cards from Ad. Harder, Hamburg, billed to S. T. Buckham, amounting to $4,689.50 marks, and hereby release Hr. S. T. Buckham of all personal liability pertaining to payment on same. Continental Printing & Playing Card Co. 4077—4085 Park Avenue, H. Y. (signed) H. L. Westerhouse.” The words Continental Printing & Playing Card Co., 4077-4085 Park Avenue, H. Y.” were stamped on the paper with a rubber stamp, and there is no evidence as to when and by whom they were so stamped; nor docs it appear that such stamp was' usually used, in signing agreements or contracts or receipts, by defendant. Defendant claims that Westerhouse was without authority to make this paper for defendant and that his act was never ratified by defendant. The evidence of Westerhouse would seem to indicate that another stamp of slightly different kind was usually used in signing such documents. Defendant sought to show that the checks of defendant used to pay freight charges and duties and in part payment of plaintiffs’ bill were money advanced to Buckham and that the moneys received by defendant for the post cards sold by defendant or by the Import Post Card & Hovelty Co.” were credited to Bnckham’s account. In March, 1908, some months after Buckham had entered defendant’s employment, but before the giving of defendant’s checks, as aforesaid, it appears, ■from the testimony of defendant’s business manager, which testimony was not specifically rebutted by plaintiffs, Buck-ham was unable to make payment for plaintiffs’ postal cards and asked more money from said manager, who refused to give it; but it was agreed that defend ant. would take from Buckham a quantity of the postal cards, paying him therefor, and that Buckham would sell the same for the defendant. In this manner defendant accounts for two checks given by defendant to Buckham for $300 and $100, respectively, dated March 7, 1908, and March 10, 1908, and indorsed over by Buckham to plaintiffs, and which constitute the $400 alleged in the complaint to have been paid by defendant to plsirtiffs in payment on account of the claim in suit. Defendant further sought to show that after defendant had advanced to Buckham the amount required for the payment of duties and freight charges, Buckham billed through defendant all the goods sold by him, and defendant credited Buckham with all payments received on account thereof. As the jury found for plaintiffs, the latters’ evidence as to all controverted questions of fact has been accepted as the correct version. Defendant was not allowed by the court to show that, before plaintiffs had discovered, or pretend to have discovered, the alleged fact that defendant was the undisclosed principal of Buckham, the defendant, in good faith, had paid Buckham for the goods purchased by him from plaintiffs, and settled its account with Buckham, for which Buckham released defendant. Assuming plaintiffs were correct in their claim that defendant was the undisclosed principal of Buckham, it was error to exclude the evidence of defendant aforesaid. The rule of agency, where the principal is undisclosed, is as follows: If the agent buy in his own name, but for the benefit of his principal, without disclosing the name of the principal, the latter as well as the former will be bound, provided that the goods are received by the principal, and the agent, in making the purchase, acted within his power as agent, or that his acts were subsequently ratified by the principal; but, if the principal furnished the agent with the money with which to make the purchase, before the purchase, and the agent, without the knowledge or consent of the principal, purchased the property upon credit, without disclosing his principal, then the principal will not be bound to the seller; and also, where, as is claimed here, the purchase has been made by the agent, upon credit, authorized by the principal, but without disclosing his name, and payment is subsequently made by the principal to the agent in good faith, before'the agency is disclosed to the seller, then the principal will not be liable. Laing v. Butler, 37 Hun, 144-151; Huffcut, Agency (2d ed.), 168; Story, Agency, § 449; Knapp v. Simon, 96 N. Y. 284; Fish v. Wood, 4 E. D. Smith, 327. It is true that the answer is a general denial only, and payment is an affirmative defense. McKyring v. Bull, 16 N. Y. 297. The general denial put in issue only the matters which plaintiffs were bound to prove to make out their case (Milbank v. Jones, 127 N. Y. 370), and under the general denial the defendant could not prove a defense founded on new matter not referred to in the pleadings. Weaver v. Barden, 49 N. Y. 289; Dubois v. Hermance, 56 id. 674. A general denial, however, permits defendant to controvert by evidence anything which plaintiff is bound in the first instance to prove in order to make out his case, or anything he is permitted to prove for that purpose under the complaint. Brady v. Hutkoff, 13 Misc. Rep. 515; affd. on opinion below in 155 N. Y. 681. Under the allegation of the complaint that $400 had been paid to plaintiffs by defendant on account, .plaintiffs were allowed to show what purported to be such payments, and thus the door was opened to defendant to show that such payments were really made to Buckham under a complete settlement with him before plaintiffs discovered the alleged agency of Buckham. So that, although payment is usually an affirmative defense that should be pleaded (Baker v. Loring, 92 Hun, 61), still, under the allegations of the complaint and the proofs presented at the trial by the plaintiffs herein, defendant was at liberty to show that plaintiffs’ allegations and proofs were untrue. -Strauss v. Yarlo, 45 How. Pr. 481. Had the payment of $400 on account been as alleged by plaintiffs, it could have been construed as a ratification of the pretended agency of Buckham; and it was competent for defendant to show how it was not such ratification. Furthermore, the evidence as to the agency of Buckham and as to the authority of Westerhouse to make the paper, above quoted, assuming for defendant the responsibility of Buck-ham, or as to any ratification by defendant of the acts of either Buckham or Westerhouse, hardly seems to be such as warranted the jury in finding for plaintiffs.

The judgment and order appealed from must be reversed and a new trial ordered, with costs to appellant to abide the event.

MacBean and Seabttry, JJ., concur.

Judgment and order reversed and new trial ordered, with costs to appellant to abide event.  