Harry E. Keeler Electric Co. v. Domingo Rodriguez

Summary

This 1922 Supreme Court case established important precedents regarding agency authority and payment obligations in commercial transactions. Harry E. Keeler Electric Co. sold an electric plant to Domingo Rodriguez through intermediary A.C. Montelibano, who was authorized only to find customers for a 10% commission. When Rodriguez paid the full purchase price to Montelibano (who lacked authority to collect), the company sued for non-payment. The Supreme Court reversed the lower court, ruling that payment to an unauthorized agent does not discharge the debtor's obligation. The Court emphasized that persons dealing with assumed agents must verify their authority at their peril, and agents cannot establish their own authority through representations. This case reinforced Civil Code provisions requiring payment to authorized recipients and established that commercial relationships require careful verification of agency authority.