UNIVERSITY OF CALIFORNIA LOS ANGELES SCHOOL OF LAW LIBRARY OF 1 fr J)ont6oo8 Aeries Of elementary treatises on all the principal subjects of the law. The special features of these books are as follows: 1. A succinct statement of leading principles in blacklet- ter type. 2. A more extended commentary, elucidating the princi- ples. 3. Notes and authorities. Published in regular octavo form, and sold at the uniform price of $3.75 per volume, including delivery- Bound In American Law Buckram. 1. Norton on Bills and Notes. (3d Ed.) 2. Clark on Criminal Law. (2d Ed.) 3. Shiprnan on Common-Law Pleading. (2d Ed.) 4. Clark on Contracts. (2d Ed.r 5. Black on Constitutional Law. (3d Ed.) 6. Fetter on Equity. 7. Clark on Criminal Procedure. 8. Tiffany on Sales. (2d Ed.) 9. Glenn on International Law. 10. Jaggard on Torts. (2 vols.) 11. Black on Interpretation of Laws. (2d Ed.) 12. Hale on Bailments and Carriers. 13. Smith on Elementary Law. 14. Hale on Damages. (2d Ed.) 15. Hopkins on Real Property. 16. Hale on Torts. 17. Tiffany on Persons and Domestic Relations. (2d Ed.) 18. Croswell on Executors and Administrators. 19. Clark on Corporations. (2d Ed.) 20. George on Partnership. 21. Shipman on Equity Pleading. 22. McKelvey on Evidence. (2d Ed.) 23. Barrows on Negligence. 24. Hughes on Admiralty. 25. Eaton on Equity. 26. Tiffany on Principal and Agent. 27. Gardner on Wills. 28. Vance on Insurance. 29. Ingersoll on Public Corporations. 30. Hughes on Federal Jurisdiction and Procedure. 31. Chi Ids on Suretyship and Guaranty. 32. Costlgan on American Mining Law. 33. AVilson on International Law. 34. Gilmore on Partnership. 35. Black on Judicial Precedents. 36. Tiffany on Banks and Banking. In preparation: Handbooks of the law on other subjects to be an- nounced later. Published and for sale by WEST PUBLISHING CO., ST. PAUL, MINN. CMMJ HANDBOOK OF THE LAW OF PRINCIPAL AND AGENT By FRANCIS B. TIFFANY J >U AUTHOR OF DEATH BY WRONGFUL ACT, LAW OF SALES, ETC ST. PAUL, MINN. WEST PUBLISHING CO. 1903 44 T441U COPYRIGHT, 1908, BT WEST PUBLISHING CO. cut PREFACE. The object of this book, as has been explained more fully in the introductory chapter, is to present the general rules and principles of that part of the law of Agency which may con- veniently be classed under the head of Principal and Agent. Topics wtyich are commonly classed under the head of Master and Servant have been largely excluded, or have been dis- cussed only incidentally. The scope of the book has been thus limited both because it was the desire of the writer to treat the matters considered with greater fullness of illustra- tion in text and notes than would have been possible had its scope been enlarged, and because the matters excluded have been covered by other books in the Hornbook Series. The subject presents many difficult points as to which there is conflict of opinion, sometimes in respect to the rules, some- times in respect to the reasons for the rules. It has been the aim to discuss these questions briefly and, when possible within the limited compass of an elementary book, to give expression to the views of the judges in leading cases ; and on all points treated to cite, in addition to the leading cases, a sufficient number of the later cases to make the book service- able to the practitioner as well as to the student. The author desires to express his obligation to the many writers who have contributed to formulate and classify this branch of the law, and particularly to Story, whose Com- mentaries are still indispensable to the student; to Prof. Floyd R. Mechem, whose great treatise deservedly ranks as a standard of authority; to Prof. Ernest W. Huffcut, whose (v) VI PREFACE. recent book has done so much to clarify and illuminate the subject; to William Bowstead, Esquire, whose Digest of the Law of Agency admirably fulfills its object of reducing the English law to a concise statement of definite rules and princi- ples; and to Prof. Eugene Wambaugh, whose full and dis- criminating Selection of Cases forms a basis for the study of Agency. F. B. T. St Paul, June 1, 1908. TABLE OF CONTENTS. PART L IN GENERAL. CHAPTER I. INTRODUCTORY. Section Page 1. Agent Defined Broadest Sense .................... 1-4 2. Narrower Sense .............................. 1-4 3. Servant and Agent Distinguished ................... 5-14 CHAPTER n. CREATION OF RELATION OF PRINCIPAL, AND AGENT- APPOINTMENT. 4. Creation of Relation .............................. 15-16 5. Estoppel ..................................... 15-16 6. Agency by Appointment ........................... 16-19 7. Form of Appointment ............................. 20-33 8. Appointment to Execute Deed .................... 20-33 9. Agency by Estoppel .............................. 34-38 10. Agency from Necessity ............................ 39-45 CHAPTER CREATION OF RELATION OF PRINCIPAL AND AGENT (CON- TINUED) RATIFICATION. 11. Agency by Ratification ............................ 46-47 12. What Acts may be Ratified ....................... 48-54 TIFF.P.& A. (vii) Viii TABLE OF CONTENTS. Section 13. Ratification of Forgery 14. Conditions of Performance of Act 54-57 15. Who may Ratify SS- 60 16. How an Act may be Ratified 60 17. Knowledge of Facts 61-75 18. Effect of Ratification 75-89 CHAPTER IV. WHAT ACTS CAN BE DONE BY AGENT ILLEGALITY CA- ' PACITY OF PARTIES JOINT PRINCIPALS AND AGENTS. 19. What Acts can be Done by Agent 90-93 20. Dlegality of Object 90-93 21. Capacity of Parties Principal 94-105 22. Capacity of Parties Agent Capacity to Act 105-110 23. Capacity to Enter into Contract of Agency 105-110 24. Joint Principals 110-112 25. Joint Agents 112-115 CHAPTER V. DELEGATION BY AGENT SUBAGENTS. 26. Delegation of Authority 116-117 27-28. When Authority to Delegate will be Implied 117-123 29. Responsibility for Acts of Subagent Privity of Con- tract 123-125 80. When Authority to Create Privity of Contract will be Implied 126-132 CHAPTER VI. TERMINATION OF RELATION. 81. Modes of Termination 133 32. Termination by Limitation ..133-135 TABLE OP CONTENTS. Section Page 33. Termination by Act of Party 136-143 34. Termination by Operation of Law 143-151 35. Notice to Third Persons Estoppel 151-152 86. Irrevocable Authority Authority Given as Security.. 152 37. Authority Coupled with an Interest 152 38. Authority to Discharge Liability Incurred by Agent 153-165 CHAPTER VH. CONSTRUCTION OF AUTHORITY. 89. Express Authority Power of Attorney 167 40. Informal Authority 168-173 41. Ambiguous Authority 168-173 42. Implied Authority 174-179 43. Express Authority Incidental Powers Implied 174-179 44. Powers Implied from Usage 174-179 PART II. RIGHTS AND LIABILITIES BETWEEN PRINCIPAL AND THIRD PERSONS. CHAPTER VIH. LIABILITY OF PRINCIPAL TO THIRD PERSON- CONTRACT. 45. Liability on Contract Disclosed Principal 180 46. Apparent Authority 180 47. Estoppel 181-202 48. Scope of Particular Agencies 203-228 49. Contract Induced by Collusion of Other Party and Agent 229-230 TABLE OF CONTENTS. CHAPTER IX. LIABILITY OF PRINCIPAL TO THIRD PERSON- CONTRACT (CONTINUED). flection Pa * e 50. Liability upon Contract Undisclosed Principal In General 231-235 61. Parol Evidence 231-235 52. Liability of Undisclosed Principal 235 53. Election to Hold Agent 235 54. Settlement with Agent 235 55. Contract under Seal 235 56. Negotiable Instrument 236-246 CHAPTER X. ADMISSIONS BY AGENT NOTICE TO AGENT. 67. Admissions by Agent When Competent 247-257 58. Incompetent to Prove Authority 247-257 59. Notice to Agent Imputed Notice Notice in Course of Employment 257 60. Knowledge Acquired in Other Transaction 257-258 61. General Exception Adverse Interest of Agent. .258-267 CHAPTER XL LIABILITY OF PRINCIPAL TO THIRD PERSON TORTS AND CRIMES. 62. Liability for Torts Act Commanded or Ratified 268-269 63. Liability of Master for Tort of Servant 269-275 64. Liability of Principal for Tort of Agent In Gen eraL , 275 65 Fraud 275-276 66. Fraud not for Principal's Benefit Estoppel 276-297 67. Liability for Crimes ..297-301 TABLE OF CONTENTS. CHAPTER LIABILITY OF THIRD PERSON TO PRINCIPAL, Section Page 68. Contract Contract In Name of Principal 302-303 69. Defenses 302-303 70. Contract on Behalf of Undisclosed Principal 303 71. Defenses Against Undisclosed Principal 304-314 72. Quasi Contract 314-315 73-76. Torts Property Wrongfully Disposed of 315-323 77. Following Trust Funds 323-326 78. Fraud and Deceit 326-328 79. Collusion with Agent 326-328 80. Loss of Service Caused by Wrongful Act 328-329 PART in. RIGHTS AND LIABILITIES BETWEEN AGENT AND THIRD PERSON. CHAPTER LIABILITY OF AGENT TO THIRD PERSON (INCLUDING PAR TIES TO CONTRACTS). 8L Liability on Authorized Contract I.. 830 82. Nature of Contract 831-332 83. Parties to Instrument under Seal 332-336 84. Parties to Negotiable Instrument 336-337 85. Parol Evidence 337-355 86. Parties to Contract not Sealed or Negotiable 355 87. Written Contract 365 87a. Parol Evidence 356-368 88. Oral Contract . ..856-368 Xll TABLE OP CONTENTS. Section 89. Public Agent 856-368 90. When Apparent Agent Is Keal Principal 356-368 91. When Agent Acts Without Authority Implied Warranty of Authority .368-376 92. Measure of Damages for Breach of War- ranty 368-376 93. Liability on Quasi Contract Money Received in Good Faith 376-378 94. Money Obtained Wrongfully 376-378 95. Money Received from Principal for Third Per- son 378-379 96. Liability for Torts 379-385 97. Nonfeasance .' 379-385 CHAPTER XIV. LIABILITY OP THIRD PERSON TO AGENT. 98. Liability on Contract Right of Agent to Sue ..386-391 99. Intervention by Principal 386-391 100. Defenses 386-391 101. When Professed Agent is Real Principal 391-393 102. Liability for Money Had and Received 393-394 103. Liability for Torts 894 PART IV. RIGHTS AND LIABILITIES BETWEEN PRINCIPAL AND AGENT. CHAPTER XV. DUTIES OF AGENT TO PRINCIPAL, 104. Duties of Agent to Principal In General 895-396 105. Duty to Obey Instructions . .396-404 TABLE OP CONTENTS. Xlll Section 106. Duty to Exercise Skill, Care, and Diligence 405-415 107. Duty to Exercise Good Faith 415-426 108. Duty to Account 426-438 CHAPTER XVI. DUTIES OF PRINCIPAL TO AGENT. 109. Duties of Principal to Agent In General 439-440 110. Duty to Remunerate 440-444 111. Implied Contract ... 440-444 112. Right to Remuneration Performance by Agent 445446 113. Same Performance Prevented Employment at will of Principal 447-453 114. Revocation in Breach of Contract 447-453 115. Revocation by Operation of Law 447-453 116. Renunciation by Agent 453-454 117. Agent's Misconduct or Breach of Duty 454456 118. Duty to Reimburse and Indemnify 456-458 119. Illegal Transactions 459-462 120. Rights of Subagent . . .". 462-463 121. Personal Remedies of Agent 463 122. Lien of Agent Particular Lien 464-473 123. General Lien 464-473 124. Lien Possessory 464-473 125. Lien of Subagent 474-475 126. Right of Stoppage in Transitu 475-476 APPENDIX. (Page 477.) t .. HAND-BOOK OP THE LAW OF PRINCIPAL AND AGENT, PART I. IN GENERAL. CHAPTER I. INTRODUCTORY. 1. Agent Defined Broadest Sense. 2. Narrower Sense. 8. Servant and Agent Distinguished. AGENT DEFINED BROADEST SENSE. 1. An agent, in the broadest sense, is a person authorized by another, called the principal, to act on his behalf. SAME NARROWER SENSE. 2. An agent, in the narrower sense in which the term is used to distinguish the person to whom it is so ap- plied from other so-called agents, is a person author- ized by another, called the principal, to act on his behalf, and represent hint, in bringing him into legal relation with a third person. The foregoing definitions by implication embrace a defini- tion of principal, whether in the broader or narrower sense. The terms "principal" and "agent" * are difficult to define, because they are used in different senses. In the broader 1-2. i The following are some of the definitions of "agent": "An agent is a person duly authorized to act on behalf of an- TIFF.P.& A. 1 2 INTRODUCTORY. (Ch. 1 sense in which the terms are frequently used, the relation of principal and agent exists whenever, by reason of authority conferred by one person upon another to act on his behalf, the act of the latter not necessarily an act authorized is by law imputed to the former. Using the terms in this broad sense, if one person, pursuant to the command of another, does an act which is a trespass, thereby subjecting the latter to liability for the tort, the former is the latter's agent. And if a person who is employed by another to do work under his direction and control, and therefore technically termed a servant, in the course of the employment does an act which injures a stranger, and for which, although it was in fact un- authorized or even forbidden, the law declares that the em- ployer must answer, the actual tort feasor is in the commis- sion of the act the agent of the person who employed him to work, and the latter is a principal. The actual doer of the act is said to be the agent of the other, because in the commis- sion of the act he represents him ; that is, because the act, in respect to the obligations and rights to which as between the other and third persons it gives rise, is in legal effect the other, or one whose unauthorized act has been duly ratified." Evans, Agency, 1. "An agent is one who acts for and in the stead of another, termed the principal, either generally or in some particular business or thing, and either after his own discretion in full or in part, or under a specific command." Bishop, Contracts, 1027. "An agent is a person having express or implied authority to represent or act on behalf of another person, who is called his principal." Bowstead, Dig. Ag. art. 1. "When a person is employed to bring his employer in legal rela- tions with a third person, he is an agent." Wright, Prin. & Ag. 2. "An agent is n representative vested with authority, real or os- tensible, to create voluntary primary obligations for his principal, by making contracts with third persons, or by making promises or representations to third persons calculated to induce them to change their legal relations." Huffcut, Ag. (2d Ed.) 17. "One who represents another, called the principal, in dealing with third persons." Oal. Civ. Code, 2295; Mont. Code, 3070; N. D. Rev. Code, 4303. 1-2) AGENT DEFINED. 8 other's act. The person who does a representative act may conveniently be designated as the representative, and the per- son represented as the constituent. In its br6ad sense, agency is the relation between constituent and representa- tive. 8 The terms "principal" and "agent," and even "agency," are, * The following are some of the definitions of "agency": "The relation of principal and agent takes place wherever one person authorizes another to do acts or make engagements in his name." Dunlap's Paley on Agency, 1. "In the common language of life, he, who, being competent, and Bui juris, to do any act for his own benefit, or on his own account, employs another person to do it, is called the principal, constituent, or employer; and he, who is then employed, is called the agent, attorney, proxy, or delegate of the principal, constituent, or em- ployer. The relation, thus created, between the parties, is termed an agency." Story, Agency, 3. "Agency is founded upon a contract, either express or implied, by which one of the parties confides to the other the management of some business, to be transacted in his name or on his account, and by which the other assumes to do the business and to render an account of it" 2 Kent, Com. 612. "Agency is a contract by which one person, with greater or less discretionary powers, undertakes to represent another in certain business relations." Wharton, Agency, 1. "Agency Is a legal relation, founded upon the express or implied contract of the parties, or created by law, by virtue of which one party the agent is employed and authorized to represent and act for the other the principal in business dealings with third per- sons." Mechem, Agency, 1. "Agency is a relation between two persons such that the act of the former, called the agent, is by law imputed as the act of the latter, who Is called the principal." Campbell, Sale of Goods & Commercial Agency, 519. "Agency is a term signifying the legal relations established when one man is authorized to represent and act for another and does so represent and act for another." Huffcut, Ag. (2d Ed.) 5. "The relation of principal and agent arises whenever one person, expressly or by implication, authorizes another to act for him, or subsequently ratifies the acts of another in his behalf." Ga. Code 1882, 2178. 4 INTRODUCTORY. (Ch. 1 however, also used in a narrower sense." In this sense, they are confined to the relation between constituent and repre- sentative when the authority is conferred for the purpose of creating a new legal relation between the constituent and a third person and the act authorized is of a nature to create such new relation in common language, when the repre- sentative, or agent, is authorized to represent the constituent, or principal, in business dealings with third persons. It is with agency in this narrower sense that this book is mainly concerned. Authority How Derived. Strictly speaking, a person cannot be an agent except by virtue of authority derived from, or conferred upon him by, another to act on his behalf. 4 It is enough to say here that the authority need not exist at the time of the performance of the act, for under certain conditions the authority may be conferred subsequently, by ratification. 5 Again, although no authority has been conferred, a person may be estopped to deny that another is his agent.* The manner in which the authority may be derived will be discussed in detail in treat- ing of the mode in which the relation of principal and agent may be created. "It is to be regretted that the word 'agency' should be used to cover the whole field of representation, and that the word 'agent' should at the same time be used as the name of the rep- resentative in one branch of it. If there were another word for agency (e. g., *representation'), or another word for agent (e. g., deputy'), many tedious circumlocutions might be avoided. It might be better still if the whole field were called the 'Law of Repre- sentation,' while the branch known as the 'Law of Principal and Agent' were called the 'Law of Agency,' and that known as the Law of Master and Servant,' were called the 'Law of Service.' " Buffcut, Ag. (2d Ed.) 10, note 5. As to so-called agency by necessity, post, p. 39. Post, p. 48. Post, p. 34. 3) SERVANT AND AGENT DISTINGUISHED. SERVANT AND AGENT DISTINGUISHED. 3. A servant, as distinguished from an agent in the nar- rower sense, is a person employed by another, called the master, to render to him, subject to his direction and control, personal service in the performance of acts which are not of a nature to create new legal relations between the employer and third persons. It is plain good sense to hold a man responsible for the acts which he has caused to be done and for their probable consequences, whether through natural forces or human agencies. 1 If the law went no further than to hold the em- ployer answerable for acts which he had actually authorized, the problems presented would be comparatively simple. In many cases, however, he is held responsible in tort for the wrongful act of a person employed by him, although he did not authorize it and even forbade it, and is held answerable for a contract, although in making it his agent exceeded or violated his instructions. Two principal questions in the law of representation are concerned with the liability of the em- ployer in tort and in contract for the acts of his representa- tive in excess or in violation of the authority actually confer- red. Where one person is employed by another to perform acts which have not for their object the creation of new legal re- lations with third persons, but which in distinction to such acts may be called, very roughly, manual and mechanical, unless the acts authorized are essentially of a character to in- fringe the rights of others, the employer cannot properly be said to authorize the person whom he employs to subject him to liabilities. Nevertheless, if the latter, in the course of his employment and in furtherance of it, commits a tort, the em- ployer may be answerable for it. Whether he is so answer- able depends upon whether the person committing the tort was employed in a character which the law has seen fit to 3. * O. W. Holmes, Jr., 4 Harv. L. Rev. 347. 6 INTKODUCTOBT. . regard as representative, and depends in most cases upon whether the relation of master and servant exists between the employer and the employed. The master is liable for the torts of his servant, committed in the course of and in fur- therance of the employment, notwithstanding that the wrong- ful act was not authorized or was forbidden. Same Servant, Agent, and Independent Contractor. The relation of master and servant exists only between persons, one of whom, the servant, is employed by the other, the master, to perform services subject to the employer's order and control. "A master is one who not only prescribes to the workman the end of his work, but directs , or at any moment may direct, the means also, or, as it has been put, retains the power of controlling the work ; and he who does work on those terms is in law a servant, for whose acts, neglects, and defaults * * * the master is liable." 2 On the other hand, if the person employed is one who under- takes to produce a given result, but is free to select the means and methods of accomplishment, in things not speci- fied beforehand, and the employer does not retain the right to order and control the manner in which the work shall be done, the person employed is an "independent contract- or," for whose wrongful acts, neglects, and defaults the em- ployer is not liable. 8 Yet even where the relation is that of employer and independent contractor, if that which the con- tractor is employed to do is in itself wrongful, as a trespass or a nuisance, the employer is answerable for the injury, be- cause he has in effect commanded or authorized the wrong- ful act. 4 When, on the other hand, one person employs another to perform on his behalf acts which have for their object the creation of new legal relations with third persons, the lia- bility of the employer for the acts of the person whom he employs depends in the main upon different considerations. Pollock (Webb's) Torts, 92. * Post, p. 270. Pollock (Webb's) Torts, 93. 3) SERVANT AND AGENT DISTINGUISHED. 7 In this case the employer does, or may, authorize the agent to subject him to liabilities, as well as to acquire rights on his behalf, in other words to represent him, for such is the very purpose of the authority. The agent is authorized to do for his employer acts which are of a nature to bring him into contractual relations, as by making offers, representa- tions, and promises, or which are of a nature to affect his ex- isting contractual or other legal relations by way of perform- ance, discharge, and enforcement. It is his function to cre- ate new relations, usually, if not always, by inducing third persons to act. The third person is, as a rule, dealing with the agent, and bound at his peril, if he would hold the prin- cipal responsible, to ascertain the extent of the agent's au- thority. It is true that the principal may be liable for the contract of his agent made in excess of the authority actually conferred, but this can never be if the third person has no- tice of the limits of the authority. As against third persons who deal with the agent without notice of limitations upon his authority, he has the powers usually confided to an agent of the character in which the agent is employed, which may exceed the authority actually conferred, and within the lim- its of those powers he can bind his principal by contract; but, as against persons with such notice, he cannot bind the principal unless the contract was actually authorized. 6 Whether the agent is subject to the direction and control of the principal, as a servant is subject to the direction and control of his master, is immaterial. It is, indeed, the duty of an agent to obey the instructions of his principal, 8 and hence to a greater or less extent an agent, as such, is, with- in the scope of his agency, subject to the principal's direction and control. But where the employer, by the very nature of the authority, gives to the person whom he employs the right to represent him, to create new legal relations between him- self and third persons, the question of how far the employer retains the power of control has no bearing upon the em- Post, p. 180 et seq. Post, p. 396. 8 INTRODUCTORY. (Ch. 1 plover's liability. That consideration is material only when the. employment is for the performance of what have been termed manual and mechanical acts, in determining whether the person employed is a servant or an independent con- tractor. An independent contractor is neither a servant nor an agent ; 7 in the performance of his undertaking he acts on his own behalf. The same considerations which determine the liability of the principal for the contracts of his agent have an important bearing upon his liability for his agent's torts. When the employment is solely for the purpose of creating new legal relations with third persons, the power of the person em- ployed to subject his employer to liability for torts is neces- sarily narrow. A tort arises upon the breach of an existing legal duty, as upon an invasion of the right of another to his property, his personal liberty and security, and his reputa- tion. Except in the ca'se of deceit and other wrongs involv- ing fraud, and originating in a false representation, the wrong consists, not in inducing another to act to his injury, but in acting to his injury upon him, and arises only in the performance of what has been described roughly as manual or mechanical acts. It follows that, when the employment is merely for the creation of new legal relations, a tort for which the employer can be held liable must, in nearly every case, be one which arises in a false representation. The prin- cipal is liable for the agent's fraud, because he has employed the agent to represent him in dealing with third persons, and must be held to answer for the manner in which the agent conducts himself toward third persons with whom he deals. But he is answerable only provided the false representation by means of which the fraud is committed is one which, as against the person dealing with the agent and induced there- by to act to his injury, must be deemed to have been author- ized. He is liable only when the representation is made in an authorized transaction, or in a transaction in which the agent . 2 Kent, Com. (12th Ed.) 260, note 1. 3) SERVANT AND AGENT DISTINGUISHED. 9 had apparent authority to engage, and the third person had not notice that either transaction or representation was un- authorized. 8 In the rare cases in which the principal may be liable for a tort not arising in a false representation, as where an attorney having authority, as an incident to the conduct of his client's suit, to cause an arrest or a levy to be made, does so when the circumstances do not justify him, the rule governing the liability of the principal does not differ in effect from that governing the liability of the master, although it rests, it seems, rather upon the fact that the principal has given the agent the right to represent him in doing the act than upon any consideration of the retention of direction and control.' Same Servant and Agent Defined. The terms "servant" and "agent" are frequently used in- terchangeably, 10 but a distinction may conveniently, and it is believed properly, be drawn between them, based upon the consideration's which have been set forth. 11 A servant is a B Post, p. 275. Collett v. Foster, 2 H. & Is 7 . 356; post, p. 281. 10 "There is yet a fourth species of servants, if they may be so called, being rather in a superior, a ministerial capacity, such as stewards, factors, and bailiffs, whom, however, the law con- siders as servants pro tempore with regard to such of their acts as affect their master's or employer's property." 1 Blackst. Com. 427. Cf. Perkins, Prof. Book, 184, 185. 11 "The great and fundamental distinction between a servant and an agent is that the former is principally employed to do an act for the employer, not resulting in a contract between the mas- ter and a third person, while the main office of an agent is to make such a contract." Dwight, Pers. & P. P. 323. "When dealing with the operation of contract we had to note that although one man cannot by contract with another confer rights or impose liabilities upon a third, yet that one man might represent another, as being employed by him, for the purpose of bringing him into legal relations with a third. Employment for this purpose is called 'agency.' " Anson, Contracts, 329. See, also, Id. 332; Wright, Prin. & Ag. 2. "As between the principal and his agent, agency is a special kind 10 INTRODUCTORY. (Ch. 1 person employed by another, called the master, to render to him, subject to his direction and control, personal service in the performance of acts which are not of a nature to create new legal relations between the employer and third persons. An agent is a person authorized by another, called the prin- cipal, to act on his behalf and represent him in bringing him into legal relations with third persons. Of course, one and the same person may be employed in both capacities. For example, a servant may be directed by his master to make a sale, and to use the master's wagon in going to the place of sale ; and on the way he may, by care- less driving, injure a third person ; and in making the sale he may give a warranty which he was not authorized to give. Here the liability of the employer for the injury results from the relation t of master and servant; 12 while his liability for the warranty, if he is liable, results from the relation of prin- cipal and agent. 1 * JBasis of Law of Agency. It is often said that the law of agency is founded on the maxim, "qui facit per alium facit per se" he who acts through another acts in person. But the principle which the maxim expresses is hardly sufficient to explain the identification of constituent and representative, by no means complete, but often apparently resting upon no logical ground, which per- vades the law of principal and agent and of master and serv- ant. The maxim has been recognized in English law from of contract. But It differs from other kinds of contract In that its legal consequences are not exhausted by performance. Its object Is not merely the doing of specified things, but the creation of new and active legal relations between the principal and third persons." Pollock, Contr. (3d Ed.) 49. See, also, Klngan & Co. v. Silvers, 13 Ind. App. 80, 37 N. B. 413. 12 Singer Mfg. Co. v. Rahn, 132 IT. S. 518, 10 Sup. Ct. 175, 33 L. Ed. 440; Wright, Prin. & Ag. 2; Dwight, Pers. & P. P. 323; post, p. 269 et seq. n Post, p. 207. 3) SERVANT AND AGENT DISTINGUISHED. 11 the earliest times. 14 It is, indeed, as has already been said, good sense to hold a man responsible for acts which he has caused to be done and for their natural consequences. This, however, falls short of the identification of constituent and representative, which holds the master responsible for con- sequences which are not the natural results of acts command- ed, and which may even have been done in violation of ex- press command; which treats an undisclosed principal as a party to a contract although the other party believed that he was contracting with the agent personally; and which en- ables a person by ratification to make his own a trespass or a contract in which he had no part. 18 In short, throughout the law of agency we are continually met with the notion that the constituent and representative are one and the same person, and that the rights and liabilities of the constituent are not other than they would be were he actually present and acting in person. In other words, we are met by the legal fiction of identity of principal and agent. "Such a formula, of course, is only derivative. The fiction is merely a convenient way of expressing rules which were arrived at on other grounds. * * * But when such a formula is adopted it soon acquires an independent standing of its own," 19 and tends to give rise to new applications beyond the rules which.it sought to formulate. The view has been advanced that the basis of this fiction, so far as it is not to be explained by the logical principle, "qui facit per alium facit per se," is a survival or outgrowth of the early law of master and servant, which in turn was based upon the primitive conception of the family, whereby the head of the family was held responsible for the acts of its members, which included slaves, and at a later day serv- ants ; 1T and that the law of agency "is the resultant of a i*O. W. Holmes, Jr., 4 Harv. L. Rev. 347, citing Fitzherbert'a Abridgment, Annuitie, pi. 51 (H. 33 Ed. 1), and other authorities. 104 Harv. L. Rev. 348. "4 Harv. L. Rev. 351. " O. W. Holmes, Jr., Agency, 4 Harv. L. Rev. 345; 5 Harv. I* Rev. 1. 12 INTRODUCTORY. (Ch. 1 conflict at every point between logic and good sense the one striving to work fiction out to consistent results, the other restraining and at last overcoming that effort when the re- sults became too manifestly unjust." 18 Others deny to this fiction so great an efficacy, at all events within the sphere of torts, and find the explanation of the master's liability for the uncommanded torts of his servant in the greater ability of the master to pay damages ; 19 or his employment of an instrumentality which in the nature of things may result in violation of another's rights and responsibility within reasonable limits for the instrumentality employed ; 20 or, again, in the principle of social duty, that every man in the management of his own affairs shall so con- duct himself as not to injure another. 81 Classes of Agents. Agents are sometimes divided into classes based upon the different nature and extent of their authority or upon other points which make the particular classification convenient. 22 Thus agents are classed as universal, general, and special ; 23 mercantile and nonmercantile ; 24 del credere and not del credere; 20 professional and nonprofessional; 26 gratuitous and paid. 27 The distinctions founded upon these differences, so far as they are material, will be discussed hereafter. Certain classes of agents have acquired specific names based upon the nature of their duties. Among these may be mentioned factors or commission merchants, 28 whose busi- ness it is to receive and sell goods upon commission; bro- i4 Harv. L. Rev. 346. i 2 Pollock & M. Hist. Eng. Law, 530. 20 7 Harv. L. Rev. 383. 22 Evans, Prin. & Ag. 2. 21 Post, p. 274. 23 Post, p. 190. ** Under the English Factors' Act (52 & 53 Viet. c. 45), "mercan- tile agents," as therein defined, have peculiar powers with respect to the disposition of goods. Post, p. 322, note 33. 25 Post, p. 437. 27 Post, p. 410. 20 Post, p. 179. 28 Post, p. 222. SERVANT AND AGENT DISTINGUISHED. 13 kers," whose business it is to make bargains for others or to bring persons together to bargain; auctioneers, 30 whose business it is to sell property at public sale; attorneys at law, 31 whose business it is to act for others in litigation or other legal proceedings; bank cashiers, 32 who are the chief executive officers of banks, and through whom the financial operations of banks are transacted ; and shipmasters," who are agents for many purposes during the voyage. Partners. The law of partnership is closely connected with the law of agency, for a partner virtually embraces the character of a principal and of an agent. Indeed, it is often difficult, upon particular facts, to determine whether the resulting relation is one of partnership or of mere agency. 84 It is impossible, however, to lay down rules of practical value for the deter- mination of these questions without entering far into the field of partnership, and for their determination the reader is referred to the books which treat of that branch of the law. Scope of Book. The principal questions in the law of master and servant, as distinguished from the law of principal and agent, relate to the liability of the master for the torts of his servant to stran- gers and to fellow servants, and his liability to his serv- ants for his own torts, and involve such matters as the dis- tinction between a servant and an independent contractor, the temporary transfer of service, compulsory employment, the fellow servant rule and vice principal doctrine, and the servant's assumption of risks. Many of the rules here appli- cable have, little or no application to questions of agency in which the relation of master and servant is not involved. It is therefore possible to a great extent to treat of the law of princioal and agent without entering upon these ques- Fost, p. 224. ti Post, p. 227. Post, p. 221. Post, p. 225. Post, p. 220. George, Partn. 8. 14 INTRODUCTORY. (Ch. 1 tions, and it is convenient to do so here, because the body of the law relating to master and servant, both in relation to agency and other matters, is so large as to demand a fuller treatment than it would be possible to give to it if included in the present volume. The reader is referred to treatises upon master and servant, torts, and negligence " for a considera- tion of the topics excluded from the present treatment. Outline of Treatment. Growing out of the formation of the relation of principal and agent, and out of the execution or attempted execution of the authority conferred, mutual rights and obligations arise, or may arise, between three sets of persons : (i) Be- tween the principal and the agent ; (2) between the principal and third persons with whom the agent deals; and (3) be- tween the agent and such third persons. In the order of treatment adopted, however, the discussion of the rights and obligations between the principal and the agent will follow that of the rights and obligations of the sec- ond and third sets of persons. But before proceeding to a consideration of the results of the relation it will be necessary to consider the manner in which it may be formed and ter- minated, and some other matters, which can more conven- iently be dealt with in that connection. In the Hornbook Series: Jaggard, Torts; Hale, Torts; Bar- rows, Negligence. 4-6) CREATION OF RELATION APPOINTMENT. 16 CHAPTER H. CREATION OF RELATION OF PRINCIPAL AND AGENT- APPOINTMENT. 4. Creation of Relation. 6. Estoppel. 6. Agency by Appointment. 7. Form of Appointment. 8. Appointment to Execute Deed. 9. Agency by Estoppel. 10. Agency from Necessity. CREATION OF RELATION. 4. The relation of principal and agent may be created (1) By appointment; (2) By ratification. ESTOPPEL. Except under the peculiar circumstances, when an agency is sometimes said to be created by operation of law or of necessity, 1 the relation of principal and agent is founded up- on agreement or mutual assent. 2 The assent of the principal may be given before performance of the agent's act; that 4-5. * Post, p. 39. 2 Pole v. Leask, 33 L. J. Ch. 155, 161; Marwick v. Harding- ham, 15 Ch. D. 349; Graves v. Horton, 38 Minn. 66, 35 N. W. 568: McGoldrick v. Willits, 52 N. Y. 612, 617; Green v. Hinkley, 52 Iowa, 633, 3 N. W. 688; First Nat. Bank v. Free, 67 Iowa, 11, 24 N. W. 566. Where L. by letter made an offer to B., and referred him to M. as L.'s agent, but failed to instruct M., and B. communicated his acceptance to M., who declined to act for want of instructions, 16 CREATION OF RELATION APPOINTMENT. (Ch. 2 is, by appointment of the agent. 8 Or it may be given after performance; that is, by ratification. 4 Mutual assent is not essential, it is true, to create a so-called agency by estoppel, 8 but in that case the relation of principal and agent does not actually exist, although as against a third person who has been led to deal with the supposed agent in the belief that it exists the principal is estopped to deny its existence. AGENCY BY APPOINTMENT. G. The appointment of an agent may be express or implied. It may be effected (a) by a contract of employment, or (b) by request of the principal for performance of an act, followed, by the entrance by the agent npon its performance. The agreement which forms the basis of the relation of principal and agent is commonly called a contract of agency. 1 It must be borne in mind, however, that the legal consequen- ces of the relation are twofold. On the one hand it results from the relation that the act of the agent within the scope of the agency is, as against third persons, the act of the principal. On the other hand, from the relation result, as between principal and agent, certain mutual obligations, 2 as the duty on the part of the principal to compensate and in- L. was not bound by the intended acceptance. Barr v. Lapsley, 1 Wheat. (U. S.) 151, 4 L. Ed. 58. "An agency is created authority Is actually conferred very much as a contract is made, i. e., by an agreement between the prin- cipal and agent that such a relation shall exist. The minds of the parties must meet in establishing the agency. The principal must intend that the agent shall act for him, and the agent must in- tend to accept the authority and act on it, and the intention of the parties must find expression either in words or conduct be- tween them." Central Trust Co. v. Bridges, 6 C. C. A. 539, 57 Fed. 753, 764, per Taft, J. Post, 56. 4 Post, p. 36. B Post, p. 34. 86. i Evans, Ag. 2; Mechem, Ag. 3. See definitions of Agency, ante. p. 3, note. 2 Post, pp. 395-476. AGENCY BT APPOINTMENT. 17 demnify the agent, and the duty on the part of the agent to obey instructions, to exercise due care, and to account. So far as concerns the liability of the principal to third persons, it is wholly immaterial whether the agreement between prin- cipal and agent has the character of a contract or falls short of contract. It is not even necessary, indeed, that the agent have capacity to contract. 8 The principal is bound by the act of the agent simply because he has authorized it. On the other hand, the mutual obligations of principal and agent rest largely, if not wholly, upon contract, express or implied. Thus, though a principal may be bound by the act of an agent who is devoid of contractual capacity, he could not, because of the absence of a valid contract, maintain an action against the agent for failure to obey instructions, nor could the agent maintain an action to recover compensation. The appointment of an agent may be effected by a con- tract whereby the principal promises to employ and com- pensate the agent and the agent promises to act as such, or it may be effected by the mere request or permission of the principal followed by the agent's entrance upon performance of the act requested.* In the first case the relation of prin- cipal and agent is at once created. The principal may, in- deed, before performance by the agent, revoke the authority and terminate the relation, 6 or the agent may terminate it by renouncing the authority, 6 subject in either case to the right of the other to recover damages for breach of the con- tract of employment; but until revocation or renunciation any act of the agent within the scope of the agency is bind- ing upon the principal and the mutual obligations of principal and agent subsist. The agreement, to be a contract and mu- tually binding, must, of course, be founded upon considera- tion, although without consideration it would still be oper- ative as a request. In the second case, where no contract is entered into in advance, but the agent acts in pursuance of Post, p. 105. 5 post, p. 136. Anson, Contr. 332, 333. Post, p. 136. TIFF.P.& A.-2 18 CREATION OF RELATION APPOINTMENT. (Gh. 2 request or permission, the relation of principal and agent does not arise until the agent has entered upon performance. The request may take the form of an offer to compensate the agent if he will perform an act ; 7 or it may be a simple re- quest without offer of compensation, but from which the law, if there are no circumstances to negative the implication, will imply an offer of reasonable compensation. 8 In either case, if the agent enters upon performance of the act, he thereby signifies his acceptance of the offer, and if he be competent to contract a contract of agency is formed; but, whether he be competent or not, the act performed is bind- ing upon the principal. Gratuitous Agency. An executory agreement of employment, which contem- plates gratuitous services on the part of the agent, is without consideration and nudum pactum. 9 No obligation arises un- der it, up to the moment it is acted upon. 10 Of course, con- sideration for the agent's promise is material only so far as it affects the mutual obligations of principal and agent, since want of consideration cannot affect the liability of the prin- cipal towards third persons for acts which he has author- ized. 11 Once acted upon, the authority to that extent is ir- T Roberts v. Ogilby, 9 Price, 269. Van Arman v. Byington, 38 111. 443. Of. Hall v. Finch, 29 Wis. 278, 9 Am. Rep. 559; Hertzog v. Hertzog, 29 Pa. 465. Post, p. 442. Thome v. Deas, 4 Johns. (N. Y.) 84; Wilkinson v. Coverdale, 1 Esp. 75. Of. Elsee v. Gateward, 5 T. R. 173; Balfe v. West, 13 C. B. 466; Benden v. Manning, 2 N. H. 289. 10 "The law on this point is somewhat obscure. Perhaps it may best be explained by saying that, where a man undertakes to act as agent or do any other service for another gratuitously, the con- tractual liability does not arise till he has entered upon the work and so affected the position of his employer; and that up to that moment there is nothing but a request to him to do the work im- porting a promise to indemnify him for losses which may be in- curred if he do it." Anson, Contr. 333. 11 Haluptzok v. Railway Co., 55 Minn. 446, 57 N. W. 144, 26 L. R. A. 739 (master and servant); Huff cut, Ag. 28. 6) AGENCY BY APPOINTMENT. 19 revocable, and the act performed is binding upon the prin- cipal. The rule is accordingly laid down that a gratuitous agent is not liable for nonfeasance, but is liable for misfeas- ance; in other words, that until he has entered upon the work he is under no obligation, but that if he has entered up- on it, and so affected the position of his employer, he be- comes liable for negligence in performance. 18 Thus, one who has gratuitously undertaken to procure insurance for another incurs no liability by failure to insure, but if he proceeds to carry his undertaking into effect by getting a policy, and does it so negligently that the other cannot re- cover upon the policy, he is liable to an action. 18 How far the measure of the skill and care which the gratuitous agent who enters upon performance owes to his principal is affected by the fact that the agency is gratuitous will be considered later. 1 * i* Wilkinson v. Coverdale, 1 Esp. 75; Walker v. Smith, 1 Wash. O. 0. (U. S.) 152, Fed. Cas. No. 17,086; Williams v. Higgins, 30 Md. 404; Passano v. Acosta, 4 La. 26, 23 Am. Dec. 470; Spencer v. Towles, 18 Mich. 9; Isham v. Post, 141 N. Y. 100, 35 N. E. 1084, 23 L. R. A. 90, 38 Am. St Rep. 766. is in Thome v. Deas, 4 Johns. (N. Y.) 84, where a part owner of a vessel, at the request of another part owner, gratuitously under- took to get the vessel insured, but neglected to do so, and the vessel was lost, it was held that no action lay. Kent, O. J.: "Will, then, an action lie where one party intrusts the performance of a business to another, who undertakes to do it gratuitously, and wholly omits to do it? If the party who makes this engagement enters upon the execution of the business, and does it amiss, through the want of due care, by which damage ensues to the other party, an action will lie for this misfeasance. But the defendant never entered upon the execution of his undertaking, and the action is brought for nonfeasance. Sir William Jones, in his essay on the Law of Bailments, considers this species of undertaking to be as extensively binding in the English law as the contract of mandatum in the Roman law, and that an action will lie for damage occasioned by the nonperformance of a promise to become a mandatary, though the promise be purely gratuitous. * * * He has not produced a single adjudged case, but only some dicta (and those equivocal) from the Year Books, in support of his opinion." n Post, p. 410. 20 CREATION OF RELATION APPOINTMENT. (Ch. 2 FORM OF APPOINTMENT. T. Unless otherwise provided by statute, authority for any purpose except the execution of a deed may be confer- red upon an agent by deed, by writing, by word of month, or by conduct. APPOINTMENT TO EXECUTE DEED. 8. Authority to execute a deed must be conferred by instru- ment under seal, except where the deed is executed by the agent in the presence of the principal, at his re- quest. In General. Ordinarily no particular form is essential to the appoint- ment of an agent. 1 The consent or authorization of the prin- cipal may be express or implied. It may be expressed in the form of a writing under seal or power of attorney, or of in- formal written instrument, as by letter of instructions, or of mere oral request ; or it may be implied from conduct. 2 Au- thority may be conferred by parol, not only to make ordinary simple contracts, 8 but to execute bills of exchange and prom- 7-8. i Story, Ag. 45 et seq.; Long v. Colburn, 11 Mass. 97, 6 Am. Dec. 160; Farmers' & Mechanics' Bank v. Bank, 16 N. Y. 125, 144, 69 Am. Dec. 678. * Post, p. 32. a Emerson v. Manufacturing Co., 12 Mass. 237, 7 Am. Dec. 66; Shaw v. Nudd, 8 Pick. (Mass.) 9; Small v. Owings, 1 Md. Ch. 363; Wagoner v. Watts, 44 N. J. Law, 126; Kirkliu v. Association, 107 Ga. 313, 33 S. E. 83: Welch v. Hoover, 5 Cranch, C. C. 444, Fed. Gas. No. 17,368; Sheets v. Selden, 2 Wall. (U. S.) 177, 17 L. Ed. 822 (to demand payment). Under an act making signing the memorandum of association of a company equivalent to signing and sealing, an agent could sign although only verbally authorized. Eley v. Positive Government An. Ass. Co., 1 Ex. D. 88. "At common law, where a person authorizes another to sign for him, the signature of the person so signing is the signature of the person authorizing It. Nevertheless there may be cases where the statute requires a personal signature. The common-law rule, 'qui 7-8) APPOINTMENT TO EXECUTE DEED. 21 issory notes * and contracts for the sale of real estate.* So, too, the agent's consent or acceptance of the authority may be express, or it may be implied from his acting thereunder. Appointment to Execute Instrument under Seal. It is an ancient doctrine of the common law that author- ity to execute an instrument under seal must be evidenced by an instrument of equal solemnity. Hence authority to exe- cute a deed must be conferred by power under seal. 8 This rule, however, does not apply to an instrument executed by another in presence of the principal, at his request. 7 Thus, facit per allum faclt per se,' will not be restricted except where a statute renders personal signature necessary." Per Blackburn, J., Reg. v. Justices of Kent, L. R. 8 Q. B. 305. * Anon., 12 Mod. 564; Long v.* Colburn, 11 Mass. 97, 6 Am. Dec. 160. s Heard v. Pilley, 4 Oh. App. Gas. 548; McWhorter v. McMahan, 10 Paige (N. Y.) 386; Long v. Hartwell, 34 N. J. Law, 116; Keim v. O'Reilly. 54 N. J. Eq. 418, 34 Atl. 1073; Baum v. Dubois, 43 Pa. 260; Curtis v. Blair, 26 Miss. 309, 59 Am. Dec. 257; Johnson v. Dodge, 17 111. 433; Hammond v. Hannin, 21 Mich. 374, 4 Am. Rep. 490; Brown v. Eaton, 21 Minn. 409; Riley v. Minor, 29 Mo. 439; Rottman v. Wasson, 5 Kan. 552. Proof of authority must be clear. Proudfoot v. Wightman, 78 111. 553; Bosseau v. O'Brien, 4 Biss. (U. S.) 395, Fed. Gas. No. 1,667. Where a lease need not be under seal, it may be executed by an agent authorized by parol. Lake v. Campbell, 18 111. 106. Berkley v. Hardy, 8 D. & R. 102, 4 B. & C. 355; Banorgee v. Hovey, 5 Mass. 11, 4 Am. Dec. 17; Blood v. Goodrich. 9 Wend. (N. Y.) 68, 24 Am. Dec. 121; Paine v. Tucker, 21 Me. 138, 38 Am. Dec. 255; Heath v. Nutter, 50 Me. 378; Cooper v. Rankin, 5 Bin. (Pa.) 613; Gordon v. Bulkeley, 14 Serg. & R. (Pa.) 331; Perry v. Smith, 29 N. J. Law, 74; Rowe v. Ware, 30 Ga. 278; Overman v. Atkinson, 102- Ga. 750, 29 S. E. 758; Elliott v. Stocks, 67 Ala. 336; Peabody v. Hoard, 46 111. 242; McMurtry v. Brown, 6 Neb. 368. A partner cannot bind his firm by deed unless authorized under seal. Harrison v. Jackson, 7 T. R. 207. ^ Ball v. Dunsterville, 4 T. R. 313; King v. Longnor, 4 B. & Ad. 647; Hudson v. Revett, 5 Bing. 368 (filling blanks); Gardner v. Gardner, 5 Cush. (Mass.) 483, 52 Am. Dec. 740; Mutual Ben. Life Ins. Co. T. Brown, 30 N. J. Eq. 193; Meyer v. King, 29 La. Ann. 22 CREATION OF RELATION APPOINTMENT. (Ch. 2 where the grantor's daughter offered to sign a deed for her mother, who assented with a nod, and her daughter signed her mother's name, "P. G., by M. C. G.," it was held that the deed was well executed. "The name being written by an- other hand," said Shaw, C. J., "in the presence of the grantor, and at her request, is her act. The disposing capacity, the act of mind, which are the essential and efficient ingredi- ents of the deed, are hers, and she merely uses the hand of another, through incapacity or weakness, instead of her own, to do the physical act of making a written sign. Whereas, in executing a deed by attorney, the disposing power, though delegated, is with .the attorney, and the deed takes effect from his act ; and therefore the power is to be strictly exam- ined and construed, and the instrument conferring it is to be proved by evidence of as high a nature as the deed itself." * It does not necessarily follow that a sealed instrument exe- cuted by an agent under parol authority is without effect. If a contract need not be by specialty, it will be valid as a 567; Eggleston v. Wagner, 46 Mich. 610, 10 N. W. 37; Croy v. Busenbark, 72 Ind. 48; Jansen v. McCahill, 22 Oal. 563, 83 Am. Dec. 84. But see Wallace v. McCollough, 1 Rich. Eq. (S. C.) 426; Brown, St. Frauds, 10 et seq. Cf. Inhabitants of South Berwick v. Huntress, 53 Me. 89, 87 Am. Dec. 535, per Kent, J. Where the name of the grantor In a deed was signed by the grantee at the grantor's request, and in his presence, and he ac- knowledged the deed and delivered it, he thereby adopted the sig- nature and made the deed valid. "The validity of the deed cannot rest upon the ground of agency or ratification. If such were the case, the authority or ratification would have to be by instrument under seal. * * * An agent cannot contract with himself. He cannot, as agent for the grantor, execute a deed to himself. But he can prepare a deed running to himself, even to the signing and sealing, and if the grantor then adopts the deed, by personally acknowledging and delivering it, it will be a legal and valid instru- ment. But its validity rests upon the ground of adoption, not agency or ratification." Per Walton, J., Clough v. Clough, 73 Me. 487, 40 Am. Rep. 386. * Gardner v. Gardner, 5 Cush. (Mass.) 483, 52 Am. Dec. 740. 7-8) APPOINTMENT TO EXECUTE DEED. 23 simple contract, notwithstanding that a seal was attached. 9 So a conveyance executed by an agent authorized only by parol may have effect in equity as a contract to convey, and support a suit for specific performance. 10 Same Authority to Fill Blanks. It follows logically, from the rule that authority to exe- cute an instrument must be of as high a nature as the in- strument executed, that authority to fill blanks in an instru- ment under seal must be conferred by power under seal. A deed or bond, it is urged, although otherwise executed, if incomplete by reason of the omission of a material part, as the name of the grantee or obligee or the description of the premises conveyed, is a nullity, and cannot become operative until the omitted part has been inserted and the instrument afterwards duly delivered, and it is accordingly held by those courts which have jealously maintained the sanctity of a seal that authority thus to complete a sealed instrument can- Worrall v. Munn, 5 N. Y. 229, 55 Am. Dec. 330; Long v. Hart- well, 34 N. J. Law, 116; Wagoner v. Watts, 44 N. J. Law, 126; Dickerman v. Ashton, 21 Minn. 538; Hammond v. Hannin, 21 Mich. 374, 4 Am. Rep. 490; Ledbetter v. Walker, 31 Ala. 175; Shuetze v. Bailey, 40 Mo. 69; Marshall v. Rugg, 6 Wyo. 270, 44 Pac. 700, 45 Pac. 486, 33 L. R. A. 679; Nichols v. Haines, 39 0. C. A. 235, 98 Fed. 692. Contra, Wheeler v. Nevins, 34 Me. 54; Baker v. Free- man, 35 Me. 485. 10 Morrow v. Higgins, 29 Ala. 448; Groff v. Ramsey, 19 Minn. 44 (Gil. 24); Hersey v. Lambert, 50 Minn. 373, 52 N. W. 963; Watson v. Sherman, 84 111. 263; Jones v. Marks, 47 Cal. 242. Where defendant executed a deed, leaving blanks for the name of the grantee and the price, and gave it to an agent, with instruc- tions when he had sold the land to fill up the blanks and deliver to the purchaser, which the agent did, held that, although the in- strument was inoperative as a deed because incomplete when signed and sealed, it could be enforced by the purchaser by way of specific performance as a contract of sale, it having been in legal effect signed by defendant in his name by his lawfully authorized agent, and the statute of frauds being thus satisfied. Blacknall v. Parish, 69 N. C. 70, 78 Am. Dec. 239. 24 CREATION OF RELATION APPOINTMENT. (Ch. 2 not be conferred by parol. 11 The part filled in must, of course, be material, since if immaterial the instrument is in effect already complete, and an immaterial alteration of an instrument, not being fraudulent, does not invalidate it. 12 The strictness of the rule has, however, been mitigated by in- voking the principle of estoppel, even by courts which might not be disposed to concede that authority to fill blanks may be conferred by parol. Thus it has been held that when a grantor signs and seals a deed, leaving unfilled blanks, and gives it to an agent with authority to fill the blanks and deliver it, if the agent fills the blanks as authorized, and de- livers it to an innocent grantee without knowledge, the gran- tor is estopped to deny that the deed as delivered was his deed. 13 From this position it is an easy step to that of hold- ing that the principal is estopped although the agent fills in the blanks otherwise than as authorized, if he delivers to an innocent grantee or obligee without notice from the face of the instrument or otherwise of the breach of orders. 1 * 11 Hibble white v. McMorine, 6 M. & W. 200 (overruling Texira v. Evans, cit. 1 Anst. 228); United States v. Nelson, 2 Brock. (U. S.) 64, Fed. Cas. No. 15,862; Burns v. Lynde, 6 Allen (Mass.) 305; Graham v. Holt, 25 N. C. 300, 40 Am. Dec. 408; Davenport v. Sleight, 19 N. C. 381, 31 Am. Dec. 420; Preston v. Hull, 23 Grat. (Va.) 600, 14 Am. Rep. 153; Ingram v. Little, 14 Ga. 173, 58 Am. Dec. 549; Williams v. Crutcher, 6 How. (Miss.) 71; State v. Boring, 15 Ohio, 507; Adamson v. Hartman, 40 Ark. 58; Upton v. Archer, 41 Cal. 85, 10 Am. Rep. 206. 12 Vose v. Dolan, 108 Mass. 155, 11 Am. Rep. 331. is Phelps v. Sullivan, 140 Mass. 36, 2 N. E. 121, 54 Am. Rep. 442. See, also, Campbell v. Smith, 71 N. Y. 26, 27 Am. Rep. 5. i* Where an administrator's bond executed in blank by a surety Is intrusted to the principal for his use, to fill it up and deliver it, the possibility of his being required by the probate judge to insert a penal sum larger than the surety directed, and of his doing so, is so obvious that the surety must be held to take the risk of his principal's conduct, and Is bound by the instrument as delivered, although delivered in disobedience of orders, if the obligee had no notice, from the face of the bond or otherwise, of the breach of orders. White v. Duggan, 140 Mass. 18, 2 N. E. 110, 7-8) APPOINTMENT TO EXECUTE DEED. 25 Many courts, however, have so far recognized an excep- tion to the rule requiring authority to execute sealed instru- ments to be under seal as to declare that parol authority is sufficient to authorize the filling of a blank. 15 Thus, in a Min- 54 Am. Rep. 437. It is to be noticed that subsequently in Phelps v. Sullivan, 140 Mass. 36, 2 X. E. 121, 54 Am. Rep. 442, the court said: "Whether, if the agent violates the instructions in filling blanks, the grantor would not in like manner be bound, we do not discuss." is State v. Young, 23 Minn. 551; Inhabitants of South Berwick v. Huntress, 53 Me. 89, 87 Am. Dec. 535; Bridgeport Bank v. Railroad Co., 30 Conn. 274; Wiley v. Moor, 17 Serg. & R. (Pa.) 438, 17 Am. Dec. 696; Duncan v. Hodges, 4 McCord (S. C.) 239, 17 Am. Dec. 734; State v. Pepper, 31 Ind. 76; Swartz v. Ballou, 47 Iowa, 188, 29 Am. Rep. 470; Van Etta v. Eveusou, 28 Wis. 33, 9 Am. Rep. 486; Schintz v. McManamy, 33 Wis. 299; Field v. Stagg, 52 Mo. 534, 14 Am. Rep. 435; Garland v. Wells, 15 Neb. 298, 18 N. W. 132; Cribben v. Deal, 21 Or. 211, 27 Pac. 1046, 28 Am. St. Rep. 746; Palacios v. Brasher, 18 Colo. 593, 34 Pac. 251, 36 Am. St Rep. 305. "Although it was at one time doubted whether a parol authority was adequate to authorize an alteration or condition to a sealed instrument, the better opinion at this day is that the power is suf- ficient." Drury v. Foster, 2 Wall. (U. S.) 24, 17 L. Ed. 780, per Nelson, J. In Allen v. Withrow, 110 U. S. 119, 3 Sup. Ct. 517, 28 L. Ed. 90, Field, J., after quoting with approval the above dictum, observed: "But there are two conditions essential to make a deed thus executed in blank operate as a conveyance. * * * The blank must be filled by the party authorized to fill it, and this must be done before or at the time of the delivery of the deed to the grantee named." In Drury v. Foster, supra, a married woman ex- ecuted and acknowledged a mortgage on her land, with the name of the mortgagee and the amount in blank, and intrusted it to her husband to secure a loan for a few hundred dollars. He borrowed $12,800 of plaintiff, filling in his name and the amount, plaintiff being ignorant that the items were inserted before execution, and the wife being Ignorant of the amount borrowed and receiving no benefit. It was held, in an action to foreclose, that these facts furnished her a defense. "By the laws of Minnesota," said the court, "an acknowledgment of the execution of a deed before the proper officers, privately and apart from her husband, by a feme covert, is an essential prerequisite to the conveyance of her real estate. * * * And she is disabled from executing or acknowledg- 26 CREATION OF RELATION APPOINTMENT. (Cfal. 2 nesota case, 16 Mitchell, J., said: "Whatever may formerly have been the rule, * * * we think the better opinion, both on principle and authority, is that parol authority is adequate and sufficient to authorize an addition to, or altera- tion of, even a sealed instrument. At the present day, the dis- tinction between sealed and unsealed instruments is arbitrary, meaningless, and unsustained by reason. The courts have, for nearly a century, been gradually doing away with the for- mer distinctions between these two classes of instruments, and if they have not yet wholly disappeared it simply proves the difficulty of disturbing a rule established by long usage, even if the reason for the rule has wholly ceased to exist. ing a deed by procuration, as she cannot make a power of attor- ney. * * * We agree if she was competent to convey her real estate by signing and acknowledging the deed in blank, and de- livering the same to an agent, with an express or implied authority to fill up the blank and perfect the conveyance, that its validity should not well be controverted. * * * But there are two in- superable objections to this view in the present case: First, Mrs. Foster was disabled in law from delegating a person, either in writing or parol, to fill up the blanks and deliver the mortgage; and, second, there could be no acknowledgment of the deed, within the requisitions of the statute, until the blanks were filled and the instrument complete. Till then there was no deed to be acknowl- edged. The act of the feme covert and of the officers were nullities." Where a wife, with her husband, signed a note running to plain- tiff, and delivered to her husband a mortgage blank as to descrip- tion, which he represented was to cover his land, and he inserted the description of her land, and plaintiff, without notice of the fraud, advanced the money thereon, the wife was bound by the acts of her husband. Nelson v. McDonald, 80 Wis. 605, 50 N. W. 893, 27 Am. St. Rep. 71. 16 state v. Young, 23 Minn. 551. "Considering that the assumed difference [between bonds and sim- ple contracts] rests on a merely technical rule of the common law, we do not think that the rule should be extended beyond its neces- sary limits, viz., that a sealed instrument cannot be executed by another, so far as its distinguishing characteristic as a sealed instrument is in question, unless by an authority under seal." In- habitants of South Berwick v. Huntress, 53 Me. 89, 87 Am. Dec. 535, per Kent, J. 7-8) APPOINTMENT TO EXECUTE DEED. 27 We therefore hold that parol authority is sufficient to author- ize the filling of a blank in a sealed instrument, and that such authority may be given in any way in which it might be given in case of an unsealed instrument." It was also held that the authority might be implied as well as express. In this view it can make no difference that the grantee or obligee have knowledge that the blanks have been filled by the hand of the agent, provided, at least, they have been filled in accordance with the authority conferred ; " nor will the principal be heard to assert, as against an innocent gran- tee without notice that the instrument has been completed by the hand of the agent, that the agent has violated his in- structions. 18 IT in State v. Young, 23 Minn. 551, it was held that the sureties were bound upon a county treasurer's bond executed by them while It contained a blank for the penal sum. The instrument was de- livered by the treasurer to the county auditor, that it might be presented by him to the board of county commissioners for their approval and acceptance, and the amount of the penalty was filled in by him by direction of the board, and after approval by the county attorney the instrument was accepted by the board as the official bond of the treasurer. It was urged that authority to the board to insert the amount could not be implied, because the sure- ties did not in fact know of the existence of the blank. Mitchell, J., said: "The board had a right to presume that the sureties knew * * * there was an apparent implied authority to the board, upon which they had a right to act, and, having thus acted, the sureties cannot now be heard to say that they did not know of the existence of the blank. In other words, they are now estopped from denying the existence of the apparent and presumptive state of facts which they, by their conduct, have authorized the board to believe and act upon; and now the apparent authority with which they have clothed the board must be held to be the real authority." is Nelson v. McDonald, 80 Wis. 605, 50 N. W. 893, 27 Am. St. Rep. 71; Butler v. United States, 21 Wall. (TJ. S.) 272, 22 L. Ed. 614; Swartz v. Ballou, 47 Iowa, 188, 29 Am. Rep. 470. 28 CREATION OF RELATION APPOINTMENT. (Ch. 2 Appointment to Execute Writings not under Seal Statute of Frauds. At common law all contracts were comprised under the heads either of specialties or of parol contracts, nor was there recognized any such third class as contracts in writ- ing. 19 All contracts merely written, and not specialties, were parol contracts, and authority to execute them might, as we have seen, 20 be conferred without writing. Statutes, in- deed, often require particular classes of contracts to be in writing; but, even where this is the case, unless the statute expressly or by implication provides otherwise authority to execute such contracts may generally, as at common law, be conferred by word of mouth. 21 The provisions in the statute of frauds 2a in respect to the authority of agents to execute the writings thereby required are of two sorts. Under the first and third sections, which relate to the creation, transfer, and surrender of estates or interests in land, the writings required, if executed by agents, must be signed by "agents thereunto lawfully authorized by writing." 2S In the United States, as well as in England to- day, 24 the creation, assignment, and surrender of estates or interests in land, with the common exception of leases for a term not exceeding one year, are by statute required to be by deed, and it is therefore necessary that agents should be iRann v. Hughes, 7 T. R. 350, n.; Pollock, Contr. (3d Ed.) 186. 20 Ante, p. 20. 21 Ely v. Positive Government L. Ass. Co., 1 Ex. D. 88. 2229 Car. II. c. 3. 23 Where the statute requires that the agent must be authorized In writing, it has been held that the statute is not satisfied by a signature by another, in presence of the principal, at his verbal re- quest. Wallace v. McCullough, 1 Rich. Eq. (S. C.) 426. Of. Bramel v. Byron (Ky.) 43 S. W. 695; Billington v. Com., 79 Ky. 400; Dick- Bon's Adm'r v. Luman, 93 Ky. 614, 20 S. W. 1038. But the weight of authority appears to be opposed to this view. Gardner v. Gardner, 5 Gush. (Mass.) 483, 52 Am. Dec. 740, and cases cited ante, p. 21, note. See Browne, Stat. Frauds (5th Ed.) $ 12b. a* 8 & 9 Viet. 106. 7-8) APPOINTMENT TO EXECUTE DEED. 29 appointed under seal." On the other hand, under the fourth section of the statute of frauds, which relates to special prom- ises of executors and administrators to answer out of their own estate, special promises to answer for the debt, default, or miscarriage of others, agreements made upon considera- tion of marriage, contracts or sales of lands and interests in land, and agreements not to be performed within one year, and which requires the agreement, or some memorandum or note thereof, to be in writing, the writing may be signed by the party to be charged, "or some other person thereunto by him lawfully authorized." So, too, under the seventeenth section, relating to contracts for the sale of goods, wares, and merchandises for the price of 10 or over, the note or memorandum which is one of the means by which the stat- ute may be satisfied may be signed by an agent "thereunto lawfully authorized." Under the fourth and seventeenth sec- tions in England and in America, in those states where the substance of these sections has been re-enacted, it is held that the manner in which the agent may be "lawfully authorized" is left to the rules of the common law, and hence that the agent need not be authorized by writing, and that any form of ratification is sufficient. 2 " In some states, however, and especially with reference to contracts for the sale of land, it is enacted that the authority must be in writing. 27 Ante, p. 21. 2 McLean y. Dunn, 4 Bing. 722; Emmerson v. Heelis, 2 Taunt 38; Soames v. Spencer, 1 Dowl. & R. 32; Hawkins v. Chace, 19 Pick. (Mass.) 502, 505; Batturs v. Sellers, 5 Har. & J. (Md.) 117, 9 Am. Dec. 492; Yerby v. Grigsby, 9 Leigh (Va.) 387; Conaway v. Sweeney, 24 W. Va. 643; Roehl v. Haumesser, 114 Ind. 311, 15 N. E. 345; Wiener v. Whipple, 53 Wis. 298, 302, 10 N. W. 433. 40 Am. Rep. 775. But see Simpson v. Com., 89 Ky. 412, 12 S. W. 630. 27 Ohappell v. McKnight, 108 111. 570; Gerhart v. Peck. 42 Mo. App. 644; Hall v. Wallace, 88 Oal. 434, 26 Pac. 360; Oastner v. Richardson, 18 Colo. 496, 33 Pac. 163. Where the owner authorized an agent in writing to sell land, and he made a sale on terms more favorable to the purchaser, and 30 CREATION OP RELATION APPOINTMENT. (Ch. 2 It is to be observed that Contracts for the employment of agents, if by the terms of the contract the employment is to continue for more than one year, or if performance within the year is impossible, are governed by the fourth section of the statute of frauds, and the agreement, or some memorandum or note thereof, must be in writing. 28 Appointment by Corporation. It was formerly declared to be a rule, though not without exceptions, that a corporation can act only under its common seal, 29 and hence that the appointment of an agent to act for a corporation must be by instrument under the corporate seal. In England a distinction has become established be- tween trading and nontrading corporations, and the rule at the present day appears to be that the appointment of an agent by a nontrading corporation must be under the com- mon seal, except in cases where the application of the rule would cause very great inconvenience, or tend to defeat the the owner orally agreed to the change, the contract of sale was not enforceable, since the agent was not authorized in writing to make it. Kozel v. Dearlove, 144 111. 23, 32 N. E. 542, 36 Am. St. Rep. 416. 28 Bracegirdle v. Heald, 1 B. & Aid. 722; Snelling v. Hunting- field, 1 C., M. & R. 20; Williams v. Bemis, 108 Mass. 91, 11 Am. Rep. 318. Otherwise if the agreement be for performance of services until the happening of a contingency which may happen within the year. Updike v. Ten Broeck, 32 N. J. Law, 105; Kent v. Kent, 62 N. Y. 560, 20 Am. Rep. 502. An agreement to work for a company "for a term of five years, or so long as A. shall continue to be agent for the company." Roberts v. Rockbottom Co., 7 Mete. (Mass.) 46. An agreement to employ a person so long as he may be disabled from an injury. East Tennessee, V. & G. R. Co. v. Staub, 7 Lea (Tenn.) 397. Concerning agreements not to be performed within one year, see Browne, Stat. Frauds, 272 et seq.; Clark, Contr. 108 et seq. 2 East London Water W. Co. v. Bailey, 4 Bing. 283; 1 Bl. Com. 475; Story, Ag. 52, 53. 7-8) APPOINTMENT TO EXECUTE DEED. 31 very object for which the corporation was created, 30 but that a trading corporation may appoint an agent by parol for any purpose within the scope of the objects of its incorporation. 31 In the United States the early rule has been entirely repu- diated, and it is held that a corporation may contract 32 and may confer authority upon agents for the performance of any act within the scope of its corporate powers in the same man- ner as an individual may do, and that the use of the corporate seal is not necessary unless the contrary be expressly provid- ed by its charter or by some statute. 83 Nor is it necessary that an appointment to execute a deed be under seal. Au- thority to authorize the conveyance of the company's prop- erty is usually vested in the board of directors or other gov- erning body, and may be conferred by mere vote or resolu- tion of the board. 8 * o Church v. Imperial Gaslight Co., 6 Ad. & E. 846; Mayor of Ludlow v. Charlton, 6 M. & W. 815. si South of Ireland Colliery Co. v. Waddle, L. R. 4 C. P. 617, affirming L. R. 3 C. P. 463; Henderson v. Australian Steam Navi- gation Co., 5 El. & Bl. 409; Wright, Prin. & Ag. 24-30; Bowstead, Ag. art. 24. 32 Bank of Columbia v. Patterson, 7 Cranch (U. S.) 299, 3 L. Ed. 851; Bank of United States v. Dandridge, 12 Wheat (U. S.) 64, 6 L. Ed. 552. 83 Bank of United States v. Dandridge, 12 Wheat (U. S.) 64, 6 L. Ed. 552; City of Detroit v. Jackson, 1 Doug. (Mich.) 106; Peter- son v. City of New York, 17 N. Y. 449; Sherman v. Fitch, 98 Mass. 59; Santa Clara Min. Ass'n v. Meredith, 49 Md. 389, 33 Am. Rep. 264; Warren v. Insurance Co., 16 Me. 439, 33 Am. Dec. 674; Ross v. City of Madison, 1 Ind. 281, 48 Am. Dec. 361; Rockford, R. I. & St L. R. Co. v. Wilcox, 66 111. 417; Southgate v. Railroad, 61 Mo. 89; Smiley v. City of Chattanooga, 6 Heisk. (Tenn.) 604; Crowley v. Mining Co., 55 Cal. 273; Morawetz, Corp. 338, 504. "Burrill v. Bank, 2 Mete. (Mass.) 163, 35 Am. Dec. 395; Sav- ings Bank v. Davis, 8 Conn. 191; Inhabitants of Xobleboro v. Clark. 68 Me. 87, 28 Am. Rep. 22; Hopkins v. Turnpike Co., 4 Humph. (Tenn.) 403. 32 CREATION OF RELATION APPOINTMENT. (Ch. 2 Implied Appointment. The appointment of an agent may be implied as well as express ; that is, it may be evidenced by conduct as well as by words. Authority to act as agent will be implied when- ever the conduct of the principal is such as to manifest his intention to confer it. 85 The so-called implication is of course nothing more than a logical inference from facts, and must be distinguished from an estoppel. 86 Authority will so Pole v. Leask, 33 L. J. N 7 . S. Ch. 155, 161; Farmers' & Me- chanics' Bank v. Bank, 16 N. Y. 125, 145, 69 Am. Dec. 678; Eagle Bank v. Smith, 5 Conn. 71, 13 Am. Dec. 37; Robinson v. Green, 6 Har. (Del.) 115; Kent v. Tyson, 20 N. H. 123; Header v. Page, 39 Vt. 306; Matteson v. Blackmer, 46 Mich. 393, 9 N. W. 445; Co- lumbia Mill Co. v. Bank, 52 Minn. 224, 53 N. W. 1061; Gibson v. Hardware Co., 94 Ala. 346, 10 South. 304. "No one can become the agent of another person except by the will of that other person. His will may be manifested in writing or orally, or simply by placing another in a situation in which, according to ordinary rules of law, or perhaps it would be more correct to say according to the ordinary usages of mankind, that other is under- stood to represent and act for the person who has so placed him." Pole v. Leask, supra, per Lord Cranworth. Proof that one has acted for a considerable time as agent is prima facie proof of agency, since such conduct would naturally come to the knowledge of the principal, and the absence of dissent justifies the inference that it was authorized. Neibles v. Railroad Co., 37 Minn. 151, 33 N. W. 322; Rockford, R. I. & St. L. R. Co. v. Wil- cox, 66 111. 417; Singer Mfg. Co. v. Holdfodt, 86 111. 455, 29 Am. Rep. 43; Reynolds v. Collins, 78 Ala. 94; Anderson v. Supreme Council, 135 N. Y. 107, 31 N. B. 1092. ss "And because one dealing with an agent may show actual authority in him that is, such authority as the principal in fact intended to vest in the agent, although such intention is to be shown by acts and conduct, rather than by express words without show- ing that he (the person dealing with the agent) knew when he dealt with him of the acts and conduct from which the intention is to be implied, it was competent for defendant to show the course and manner of conducting business in the office of plaintiff. * * * Such manner of conducting the business in the office might have been proved as would have justified the jury in finding that the officers must have known of the custom of the bookkeeper and the cashier 7-8) APPOINTMENT TO EXECUTE DEED. 33 not be conclusively presumed unless the evidence is incon- sistent with any other inference. Thus where an agent re- peatedly performs acts not expressly authorized, which the principal adopts without question, his conduct readily gives rise to the inference that he desires the agent to perform other acts of the same kind, and may hence be evidence of intention to vest the agent with authority to perform them. The weight of such evidence depends upon the circumstances of each case, and the nature of the relations between the principal and agent, and its effect will, of course, be overcome by any clear expression of a contrary intention. 87 But where there has been a long course of dealing between agent and principal, during which the agent's authority has never been questioned, the acquiescence of the principal is strong, if not conclusive, evidence of authority to perform other acts similar to those adopted. 38 in regard to the checks; and had that been found, and that it was acquiesced in by plaintiff, the intention to vest authority might have been implied. For the sake of convenience, we must make a distinction between implied authority that is, such as the prin- cipal in fact intends the agent to have, though the intention be implied from the acts and conduct of the principal and apparent authority that is, such as, though not actually intended by the principal, he permits the agent to appear to have. The rule as to apparent authority rests essentially on the doctrine of estoppel." Columbia Mill Co. v. Bank, 52 Minn. 224, 53 N. W. 1061, per Gil- fillan, C. J. 37 Recognition of authority in a single instance may be so com- prehensive as to be sufficient. Wilcox v. Railroad Co., 24 Minn. 269. Cf. Green v. Hinkley, 52 Iowa, 633, 3 N. W. 688; Graves v. Horton, 38 Minn. 66. 35 N. W. 568. ss Farmers' & Mechanics' Bank v. Bank, 16 N. Y. 125, 69 Am. Dec. 678; Olcott v. Railroad Co., 27 N. Y. 546, 560, 84 Am. Dec. 298; Johnson v. Stone, 40 N. H. 197, 201, 75 Am. Dec. 706; Gulick v. Grover, 33 N. J. Law, 463, 467, 97 Am. Dec. 728; Fisher v. Campbell, 9 Port. (Ala.) 210; Odiorne v. Maxcy, 15 Mass. 39; Walsh v. Pierce, 12 Vt. 130; Wheeler v. Benton, 67 Minn. 293, 69 N. W. 927. TIFF.P.& A. 3 34 CREATION OF RELATION APPOINTMENT. (Ch.. 2 AGENCY BY ESTOPFEI* 9* Where a person, by words or conduct, represents or permits it to be represented that another person is his agent, he will be estopped to deny the agency, as against third persons who have dealt, on the faith of snch represen- tation, with the person so held out as agent, even if no agency existed in fact.* It is a general rule that where a person, by words or con- duct, causes another to believe in the existence of a certain state of facts, and to act upon that belief, he will be estopped, as against the other, to allege a different state of facts. Hence, while a person cannot become the agent of an- other without his consent, the other, if he has represented that an agency exists, may be estopped to deny its exist- ence. 2 The representation may be by words or conduct. To raise an estoppel against the person sought to be charged as principal, it is not necessary that the representation be made with the actual intention that it be acted upon by the other; it is enough if, whatever the real intention, the rep- resentation be so made that the other, acting as a reasonable man, will have cause to believe, and does believe, that it is meant to be acted upon, and does act in reliance upon it. 3 59. i Cf . Bowstead, Dig. Ag. art 8. 2 Pickard v. Sears, 6 Ad. E. 469; Bronson's Ex'r v. Chappell, 12 Wall. (U. S.) 681, 20 L. Ed. 436; Kirk v. Hamilton, 102 U. S. 68, 26 L. Ed. 79. Where a principal knows that a stranger is dealing with his agent under the belief that all statements of the agent are warranted by the principal, and allows the stranger to expend money in that belief, he will not be allowed to set up the want of authority. Remsden v. Dyson, L. R. 1 H. L. 129. a Freeman v. Cook, 2 Ex. 654; Reynall v. Lewis, 15 M. & W. 617; Carr v. London & N. W. Ry. Co., L. R. 10 C. P. 307, 317; Brad- Ish v. Belknap, 41 Vt. 172; Page v. Methfessel, 71 Hun, 442, 25 N. Y. Supp. 11; Sax v. Drake, 69 Iowa, 760, 28 N. W. 423; Gibson v. Hardware Co., 94 Ala. 346, 10 South. 304; Johnson v. Hurley, 115 Mo. 513, 22 S. W. 492. 9) AGENCY BY ESTOPPEL. 35 The principal may even be estopped where the representation of authority is due to his own failure to observe reasonable care. 4 The other party must act in reliance upon the ap- parent authority and in good faith. 5 This apparent agency, which to this extent is treated as a real agency, has been termed an "agency by estoppel." 6 An agency by estoppel may arise, not only where no agency at all exists, but where an agent has acted in excess of his authority ; for if the prin- cipal has represented that his agent has authority to perform a particular act, he will be equally estopped to deny the ex- istence of the particular authority. Independently of estop- pel, however, the principal may be bound by the contracts and representations of his agent within the scope of the au- thority usually confided to an agent employed in the capacity in which the agent is employed, provided the person dealing 4 Martin v. Webb, 110 U. S. 7, 3 Sup. Ct. 428, 28 L. Ed. 49; Columbia Mill Co. v. Bank, 52 Minn. 224, 53 X. W. 1061; Quinn v. Dresbach, 75 Cal. 159, 16 Pac. 762, 7 Am. St Rep. 138; Holt v. Schneider, 57 Neb. 523, 77 N. W. 1086; Witcher v. Gibson, 15- Colo. App. 163, 61 Pac. 192. Payment to a person found in a merchant's counting house, and appearing to be intrusted with the business there, is good, though he be not in the merchant's employ. "The debtor has a right to suppose that the tradesman has the control of his own premises, and that he will not allow persons to come there and intermeddle In his business without his authority." Per Lord Teuterden, Bar- rett v. Deere, Moo. & M. 200. A principal is not liable- for acts of his agent outside the scope of the agency, unless, with knowledge of such acts, he has given others reasonable cause to believe that the agent had authority to do such acts. Mt. Morris Bank v. Gorham, 169 Mass. 519, 48 N. E. 841. o Crane v. Gruenewald, 120 N. Y. 274, 24 N. E. 456, 17 Am. St. Rep. 643; Clark v. Dillman, 108 Mich. 625, 66 N. W. 570; First Nat. Bank v. Bank, 56 Neb. 149, 76 X. W. 430. The person relying on the apparent authority must use reason- able diligence to ascertain the facts. Ladd v. Town of Grand Isle, 67 Vt. 172, 31 Atl. 34. Pole v. Leask, 33 L. J. N. S. Ch. 155, 162; Anson, Contr. 335. 36 CREATION OP RELATION APPOINTMENT. (Ctt. 2 with the agent has not notice that he is exceeding his au- thority. 1 In most cases of agency by estoppel the representation is based upon the conduct of the alleged principal in holding out another as his agent. And frequently the same evidence which establishes a representation of authority by conduct as the basis of an estoppel is sufficient to establish an agency by implied appointment. Thus, as has been shown, 8 the re- peated adoption by the principal of the unauthorized acts of an agent is evidence of authority to the agent to perform other similar acts, and it is open to a person who has dealt with an agent to prove his authority by such evidence, al- though he was not aware of the prior course of dealing be- tween principal and agent when he so dealt. If, however, the acts previously adopted by the principal were done in dealings with the person seeking to charge him, so as to amount to a representation of authority made to him, or were so notorious as to amount to a public representation of authority, and he has dealt with the agent in reliance upon such representation, it is immaterial that the principal may be able to overcome the implication of actual authority, since an agency by estoppel has been established. 9 Same Illustrations. Most frequently an agency by estoppel is based upon a recognition by the principal of the agent's authority in prior dealings. 10 If a man allows his servant habitually to buy from a tradesman on credit, his conduct is an implied rep- T Post, p. 180. a Ante, p. 38. o Columbia Mill Co. v. Bank, 52 Minn. 224, 53 N. W. 1061; Brad- isb v. Belknap, 41 Vt 172. 10 Trueman v. Loder, 11 Ad. & B. 589; Dodsley v. Varley, 4 P. & D. 448; Summers v. Solomon, 7 El. & B. 879; Farmers' & Mechanics' Bank v. Bank, 16 N. Y. 125, 145, 69 Am. Dec. 678; Tier v. Lampson, 35 Vt. 179, 82 Am. Dec. 634; Pursley v. Morrison, 7 Ind. 356, 63 Am. Dec. 424; Columbia Mill Co. v. Bank, 52 Minn. 224, 53 N. W. 1061; Quinn v. Dresbach, 75 Cal. 159, 12 Pac. 762, 7 Am. St. Rep. 138. 9) AGENCY BY ESTOPPEL. 37 reservation of authority to pledge his credit in similar cases. "If a tradesman has dealt with the wife upon credit of the husband, and the husband has paid him without demurrer in respect to such dealings, the tradesman has the right to as- sume, in the absence of notice to the contrary, that the au- thority of the wife which the husband has recognized con- tinues. The husband's quiescence is in such cases tanta- mount to acquiescence, and forbids his denying an autnority which his own conduct has invited the tradesman to as- sume." " Or if a merchant is aware that his cashier is in the habit of indorsing and collecting checks without authority in dealing with the bank, and does not notify the bank that the cashier is acting without authority, he will not be allowed to deny the authority. 12 And, generally, conduct which has the appearance of holding out another as agent for any pur- pose is a sufficient representation of authority to create an estoppel within the scope of the agency represented to ex- ist, 18 as where one permits or acquiesces in the use of his name by another in carrying on business, 14 or places another upon his premises in apparent charge of the business ordi- narily there conducted, 18 or in apparent charge of the busi- ness which it might reasonably be inferred would be con- 11 Debenham v. Mellon, 5 Q. B. D. 394. 12 Columbia Mill Co. v. Bank, 52 Minn. 224, 53 N. W. 1061. i Martin v. Webb, 110 U. S. 7, 3 Sup. Ct. 428, 28 L. Ed. 49; Hooe v. Oxley, 1 Wash. (Va.) 19, 1 Am. Dec. 425; Summer ville v. Railroad Co., 62 Mo. 391; Thompson v. Clay, 60 Mich. 627, 27 N. W. 699; Hardin v. Insurance Co., 90 Va. 413, 18 S. E. 911; Hill v. Wand, 47 Kan. 340, 27 Pac. 988, 27 Am. St. Rep. 288; Webster v. Wray, 17 Neb. 579, 24 N. W. 207; Griggs v. Selden, 58 Vt 501, 5 All. 504. "Gilbraith v. Lineberger, 69 N. C. 145; St Louis & M. Packet Co. v. Parker, 59 111. 23 (permitting another to advertise as agent). Cf. Pilot v. Craze. 52 J. P. 311. is Barrett v. Deere, Moo. & M. 200; Summers v. Solomon, 7 El. & B. 879; Kent v. Tyson, 20 N. H. 121; Pennsylvania R. Co. v. Atha (D. C.) 22 Fed. 920; Thurber v. Anderson, 88 111. 167; Goss v. Helbing, 77 Gal. 190, 19 Pac. 277. 38 CREATION OF RELATION APPOINTMENT. (Ch. 2 ducted on the premises, 16 or stands by and silently suffers another in his presence to perform an act or make a con- tract in his name. 17 Where another has once been held out as agent,- the principal will be estopped as against one who has dealt in reliance upon the apparent authority, notwith- standing a revocation of authority of which the latter had no notice. 18 As has been pointed out, 19 the principal is bound when his agent acts within the scope of the usual authority of an agent employed to do the business confided to the agent, notwithstanding undisclosed limitations upon such authority. In such case also it is said, somewhat misleadingly, that the act of the agent is within the scope of his "apparent" author- ity ; but the elements of a technical estoppel may or may not exist, and the liability of the principal arises independently of their existence. In some of the cases which have been cit- ed 20 under the head of estoppel, the liability of the principal might have been made to rest either upon estoppel or upon agency. The liability of, the principal for the acts of his agent within the scope of his apparent authority, in this other sense in which the term is used) will be discussed later. 21 Johnson v. Investment Co., 46 Neb. 480, 64 N. W. 1100; White V. Leighton, 15 Neb. 424, 19 N. W. 478. IT Pickard v. Sears, 6 Ad. & E. 469; James v. Russell, 92 N. C. 194; Vicksburg & M. R. Co. v. Ragsdale, 54 Miss. 200. Such acquiescence might also be sufficient evidence of implied authority or of ratification. James v. Russell, supra. is Trueman v. Loder, 11 Ad. & E. 589; Hatch v. Coddington, 95 U. S. 48, 24 L. Ed. 339; Southern Life Ins. Oo. v. McCain, 96 U. S. 84, 24 L. Ed. 653; Johnson v. Christian, 128 U. S. 374, 9 Sup. Ct 87, 32 L. Ed. 412: Bodine v. Killeen, 53 N. Y. 93; Snell v. Stone, 23 Or. 327, 31 Pac. 663; post, p. 138. " Ante, p. 7. 20 see White v. Leighton, 15 Neb. 424, 10 N. W. 478. *i Post, p. 183. 10) AGENCY FROM NECESSITY. 39 AGENCY FROM NECESSITY. 1O. In certain legal relations, under circumstances of neces- sity peculiar to the particular relation, the lair con- fers upon one party thereto power to make contracts which are binding npon the other, without his au- thority, and in some cases against his will. Snch is the power of a wife, and in some jurisdictions of a child, in case of nonsnpport, to pledge the credit of the husband or father for necessaries, and the power of a railway servant in some jurisdictions, in case of accident and emergency, to employ a surgeon on behalf of the rail-way company for an injured em- ploye. In snch cases it is frequently said that the law creates an agency from necessity. In General. The term "agency from necessity" is sometimes used to describe relations which, accurately speaking, are not refer- able to the law of agency. Such is the relation between hus- band and wife, considered in the next paragraph, by which, only under particular circumstances, the wife has the power to impose an obligation upon her husband, even against his will, in favor of a third person. The term "agency from ne- cessity," as applied to such a relation, is inaccurate, because the foundation of the obligation is not to be sought in any principfe of agency, and it is misleading, because necessity alone is never the foundation of agency. It is true that the ordinary powers of an agent are sometimes enlarged by the occurrence of an emergency which justifies action that would otherwise be a departure from or in excess of the au- thority conferred; but such extraordinary authority is to be implied from the conduct of the principal in creating an agency in which such an emergency may arise, and is hence derived from the will of the principal. 1 In cases where a so-called agency arises, independently of agreement, by operation of law, the relation may be described as agency \ 10. i Post, p. 41, 40 CREATION OF RELATION APPOINTMENT. (Ch.. 2 quasi ex contractu. 2 In other words, the relation is not one of agency, which rests essentially upon agreement, but the obligation of the so-called principal is enforced as if an agreement actually existed. Thus, in an action against a husband to recover for necessaries furnished to his wife un- der the circumstances mentioned in the next paragraph, the form of action is assumpsit, and the husband's request, al- though alleged, need not be proved.* Agency of Wife. A husband is bound to maintain his wife and to supply her with necessaries suitable to her situation and his own condition in life, and if he fails in this duty the law gives her the right to pledge his credit for the purpose of supplying herself. 4 This right to contract debts on his credit is strict- ly limited to the conditions which create it, and the husband cannot be charged at the suit of one who has assumed to deal with the wife under such circumstances without proof that the husband failed to provide suitable support, and that the articles furnished were necessaries. But, if these facts are proved, the husband's liability is established notwith- standing that he may have forbidden his wife to pledge his credit, or forbidden the other party to deal with her. The husband's obligation is thus one of quasi contract, and is quite distinct from that which arises when he has expressly or by implication conferred authority upon his wife. 6 It is frequently said that under such circumstances the law creates an agency from necessity, 8 or a compulsory agency ; T but it * Anson, Contr. 335. * Benjamin v. Dockham, 134 Mass. 418. * Johnson v. Sumner, 3 H. & N. 261; Mayhew v. Thayer, 8 Gray (Mass.) 172; Prescott v. Webster, 175 Mass. 316, 56 N. E. 577; Woodward v. Barnes, 43 Vt. 330; Pierpont v. Wilson, 49 Conn. 450; Keller v. Phillips, 39 N. Y. 351; Cromwell v. Benjamin, 41 Barb. (N. Y.) 558; Watkins v. De Armond, 89 Ind. 553. Ante, p. 16. * Johnson v. Sumner, 3 H. & N. 261; Easland v. Burchell, 3 Q B. D. 432, 436; Woodward v. Barnes, 43 Vt 330; East v. King, 77 Miss. 738, 27 South. 608. T Benjamin v. Dockham, 134 Mass. 418. 10) AGENCY PEOM NECESSITY. 41 is apparent that the real foundation of liability is the dutx of support, and the treatment of the subject in detail belongs rather to the law of husband and wife than of agency. 8 Agency of Child. It is very generally held that a father is under no legal obligation to support his minor child, and where this rule prevails the child has no right to pledge his father's credit, even for necessaries, without express or implied authority. 9 But in some states a contrary rule prevails, and where the father fails in his duty of support the child has a right, upon his father's credit, to supply himself with necessaries. 10 The same considerations applicable to the so-called agency from necessity between husband and wife apply also to this rela- tion. Agency of Shipmaster. The master of a ship is invested with certain extraordinary powers, to be exercised only in cases of extreme emergency. He may, for example, where it is necessary for the prosecu- tion of the voyage, borrow money on the credit of the ship- See Keener, Quasi Contr. 22; Bergh v. Warner, 47 Minn. 250, 252, 50 X. W. 77, 28 Am. St. Rep. 362. It is also his duty to bury his wife, and if he neglects it he is liable for reasonable funeral expenses incurred by another. Cun- ningham v. Reardon, 98 Mass. 538, 96 Am. Dec. 670; Gleason v. Warner, 78 Minn. 405, 81 N. W. 206. A husband is liable for necessaries supplied to his wife while he Is insane. Read v. Legard, 6 Ex. 636. Or while she is unconscious. Cunningham v. Reardon, supra, per Hoar, J. Mortimer v. Wright, 6 M. & W. 482; Skelton v. Springett, 11 C. B. 452; Gordon v. Potter, 17 Vt. 348; Kelley v. Davis, 49 N. H. 187. 6 Am. Rep. 499; Van Valkinburgh v. Watson, 13 Johns. (N. Y.) 480, 7 Am. Dec. 395; Freeman v. Robiuson, 38 N. J. Law. 383, 20 Am. Rep. 399; McMillen v. Lee, 78 111. 443; Rogers v. Turner, 59 Mo. 116; Carney v. Barrett, 4 Or. 171. loGilley v. Gilley, 79 Me. 292, 9 Atl. 623, 1 Am. St. Rep. 307; Cromwell v. Benjamin, 41 Barb. (N. Y.) 558; Stanton v. Willson, 3 Day (Conn.) 37, 3 Am. Dec. 255; Watkins \. De Armoud, 89 553; Dennis v. Clark, 2 Gush. (Mass.) 347, 352, 48 Am. Dec. 671. 42 CREATION OF RELATION APPOINTMENT. (Ch. 2 owner, 11 or hypothecate the ship or cargo, 12 or sell part of the cargo, 13 and he may, in case of absolute necessity, sell both ship and cargo. 14 To justify such action the necessity must be established, and it must appear that it was imprac- ticable to communicate with the respective owners. Ordi- narily the authority of the master over the cargo is limited to transportation and preservation. "But he may," says Story, "under circumstances of great emergency, acquire a superin- duced authority to dispose of it, from the very nature and ne- cessity of the case. * * * The character of agent and su- percargo is forced upon him, not by the immediate act and appointment of the owner, but by the general policy of the law." 1B In view of the likelihood of the occurrence of emergencies in the course of a voyage, when communication is impossible, it would seem not unreasonable to imply from the conduct of the owners, even of the cargo, in committing their property to the care of the shipmaster, authority to act as the necessities of the case may require with regard to the interest of all concerned, and thus to rest the authority of the agent upon the implied appointment of the principal. 16 But, 11 Rocker v. Busher, 1 Stark. 27; Johns v. Simmons, 2 Q. B. 425; Arthur v. Barton, 6 M. & W. 138; Beldon v. Campbell, 6 Ex. 886; McCready v. Thorn, 51 N. Y. 454; Stearns v. Doe, 12 Gray (Mass.) 482, 74 Am. Dec. 608. 12 The Gratitudine, 3 Rob. Adm. 240; The Hamburgh, Br. & Lush. 253; Kleinwork v. Casa Marrittima Genoa, 2 App. Gas. 156; The Packet, 3 Mason (U. S.) 255, Fed. Gas. No. 10,654; Pratt v. Reed, 19 How. (U. S.) 359, 361, 15 L. Ed. 660; United Ins. Co. v. Scott, 1 Johns. (N. Y.) 106. is The Gratitudine, 3 Rob. Adm. 240; Australian Steam Nav. Co. v. Morse. L. R. 4 P. C. 222; Hunter v. Parker, 7 M. & W. 322; The Australia, Swab. 480; Jordan v. Insurance Co., 1 Story (U. S.) 342, Fed. Cas. No. 7,524; Pope v. Nickerson, 3 Story (U. S.) 465, Fed. Oas. No. 11,274; Gordon v. Insurance Co., 2 Pick. (Mass.) 249; Pike v. Balch, 38 Me. 302, 61 Am. Dec. 248. See Abbott, Ship. 367, 368. i Story, Ag. 118. is Story, Ag. 118. 18 "The character of agent of the owners of the cargo is imposed upon the master by the necessity of the case, and by that alone. In the circumstances supposed something must be done, and there 10) AGENCY FROM NECESSITY. 48 whatever the source from which the extraordinary authority of the shipmaster is derived, it is peculiar to the character of his office, and affords no precedent in ordinary cases of agency. 17 Agency of Railway Servant to Employ Surgeon. An anomalous doctrine has in recent years become estab- lished in some jurisdictions, by which railway conductors, station agents, and other railway servants are deemed to be vested with authority in cases of accident to employ, on be- half of the railway company, surgeons and physicians, when their services are necessary to prevent resulting loss of life or great bodily harm to injured employes. 18 This au- thority is held to be independent of express or implied ap- pointment, and to be conferred by law, by reason of the pressing necessity, upon the highest railway official present Is nobody present who has authority to decide what is to be done. The master is invested by presumption of law with authority to give directions on this ground that the owners have no means of ex- pressing their wishes. But when such means exist, when com- munication can be made to the owners, and they can give their own orders, the character of agent is not imposed upon the master, be- cause the necessity does not arise." The Hamburgh, Br. & Luch. 253. IT Hawtayne v. Bourne, 7 M. & W. 595. is Terre Haute & I. R. Co. v. McMurray, 98 Ind. 358, 49 Am. Rep. 752; Evansville & R. R. Co. v. Freeland, 4 Ind. ^pp. 207, 30 N. B. 803; Toledo, St. L. & K. C. R. Co. v. Mylott, 6 Ind. App. 438, 33 N. E. 135 (lodging and care); Arkansas S. R. Co. v. Lough- ridge, 65 Ark. 907, 45 S. W. 907. See, also, Cincinnati, I., St. L. & C. R. Co. v. Davis, 126 Ind. 99, 25 N. E. 878, 9 L. R. A. 503, 44 Am. & Eng. R. Gas. 461, note (collecting cases); Atlantic & P. R, Co. v. Reisner. 18 Kan. 458; Atchison & N. R. Co. v. Reecher, 24 Kan. 228; Bigham v. Railway Co., 79 Iowa, 534, 44 N. W. 805. Contra: Marquette & O. R. Co. v. Taft, 28 Mich. 289 (divided court); Tucker v. Railway Co., 54 Mo. 177; Brown v. Railway Co., 67 Mo. 122; Mayberry v. Railroad Co., 75 Mo. 492. See, also, Stephenson v. Railroad Co., 2 Duer (N. Y.) 341; Cooper v. Railroad Co., 6 Hun (N. Y.) 276; Sevier v. Railroad Co., 92 Ala. 258, 9 South. 405. 44k CREATION OF RELATION APPOINTMENT. (Ch. 2 when the necessity arises. The authority is limited to the necessity, and terminates when the emergency has passed. 19 The reason given for the rule is the absence and consequent inability to act of some one of the company's agents author- ized to make such contracts for the company, 20 but the rule presupposes the existence of a duty resting upon the com- pany to care for injured employes under such circumstan- ces. 21 The foundation of such a duty must be sought in public policy, in view of the frequent occurrence of railway accidents at places where no one who is under any obliga- tion to care for the injured employe, unless it be the em- ployes of the company, is likely to be present. "We think it is their [the company's] duty," said Judge Cooley, 22 "to have some officer or agent, at all times, competent to exercise a discretionary authority in such cases, and that, on grounds of public policy, they should not be suffered to do other- wise." This duty to care for an injured employe is analogous to that of the husband to supply his wife with necessaries, and iTerre Haute & I. R. Co. v. Brown, 107 Ind. 336, 8 N. E. 218; Louisville, N. A. & 0. R. Co. v. Smith, 121 Ind. 353, 22 N. E. 775, 6 L. R. A. 320; St. Louis, A. & T. Ry. Co. v. Hoover, 53 Ark. 377, 13 S. W. 1092; Sevier v. Railroad Co., 92 Ala. 258, 9 South. 405. 20 A general manager has, as incidental to his employment, au- thority to bind the company in such cases. Walker v. Great West- ern Ry. Co., L. R. 2 Ex. 228. His ratification of the assumed agency of a subordinate in such cases binds the company. Toledo, W. & W. R. Co. v. Rodrigues, 47 111. 188, 95 Am. Dec. 484; In- dianapolis & St. L. R. Co. v. Morris, 67 111. 295; Cairo & St L. R. Co. v. Mahoney, 82 111. 73, 25 Am. Rep. 299. The authority of the company's "police inspector" to care for injured passengers under the evidence held a question for the jury. Langan v. Great Western Ry. Co., 32 L. T. N. S. 173 (criticis- ing Cox v. Ry. Co., 3 Ex. 268). See, also, Hanscom v. Railway Co., 53 Minn. 119, 54 N. W. 944, 20 L. R. A. 695. 21 The duty does not extend to the care of passengers. Union Pac. Ry. Co. v. Beatty, 35 Kan. 268, 10 Pac. 845, 57 Am, Rep. 160. Or trespassers. Adams v. Railway Co., 125 N. C. 565, 34 S. E. 642. 22 Dissenting, in Marquette & O. R. Co. v. Taft, 28 Mich. 289. 10) AGENCY FROM NECESSITY. 45 logically the so-called agency, resting upon a quasi con- tractual obligation, would be imposed upon the company not- withstanding its express prohibition to its agents to per- form the duty. Indeed, if the duty rests upon the company, it is difficult to escape from the conclusion that it would be liable to a surgeon or physician for services rendered to an injured employe, provided the necessity were established, even without the intervention of the so-called agent. Wheth- er the doctrine is to be extended to other dangerous employ- ments is apparently still an open question. 28 *s Chaplin v. Freeland, 7 Ind. App. 676, 34 N. B. 1007; Holmes v. McAllister, 123 Mich. 493, 82 N. W. 220, 48 L. R. A. 396. 46 CREATION OF RELATION RATIFICATION. (Ch. 3 CHAPTER HI. CREATION OF RELATION OF PRINCIPAL AND AGENT (CON- TINUED) RATIFICATION. 11. Agency by Ratification. 12. What Acts may be Ratified. 13. Ratification of Forgery. 14. Conditions of Performance of Act. 15. Who may Ratify. 16. How an Act may be Ratified. 17. Knowledge of Facts. 18. Effect of Ratification. AGENCY BY RATIFICATION. 11. The relation of principal and agent is created by ratifica- tion when one person adopts an act done by another person, assuming to act on his behalf, but without authority or in excess of authority, with the same force and effect (subject to the exceptions hereafter stated) as if the relation had been created by appoint- ment. An act done by one person on behalf of another, even though in the other's name, is not his act, unless done with his assent. Under the doctrine of ratification, however, the assent may be given after as well as before the act, the person on whose behalf the act was done having the right to adopt it as his own, with its benefits and bur- dens, if he sees fit. Ratification, it is said, relates back, and is equivalent to previous authority. Omnis ratihabitio retro trahitur et mandate aequiparatur. 1 This is, of course, a statement, and not an explanation, of the doctrine of ratifi- cation, which, observes Judge Holmes, "like the rest of the 11. Co. Litt. 207a. Cf. Y. B. 30 Ed. 1 (Rolls' Series) 126; ton de Leg. f, 171b. As to the origin of the maxim, see Story, Ag. I 239; 5 Harv. Law Rev. 11; Wambaugh, Cas. Ag. 986. 11) AGENCY BY RATIFICATION. 47 law of agency reposes on a fiction." 2 It is not confined to the relation of principal and agent, for one may ratify the act of one who has assumed to act as his servant, and thus be- come liable for a trespass, or render lawful ab initio an act which, but for the ratification of the person able to justify it, would be a trespass. 8 The creation of an agency by rati- fication has been likened to the formation of a contract by acceptance of an offer of an act for a promise,* but it may be doubted whether the analogy is not misleading, and it is better to disregard the language of contract, and to say sim- ply that the proposed or quasi principal has an election to treat the act as his own or not. 6 It must be borne in mind that the doctrine of ratification applies equally to acts of strangers who have acted without any authority whatever and to acts of agents who in the performance of particular acts have exceeded their authority. 2 5 Harv. Law Rev. 14. Lewis v. Read, 13 M. & W. 834; Bird v. Brown, 4 Ex. 786, per Rolfe, B.; Dempsey v. Chambers, 154 Mass. 330, 28 N. E. 279, 13 L. R. A. 219, 26 Am. St. Rep. 249; Nims v. Boys' School, 160 Mass. 177, 35 N. E. 776, 22 L. R. A. 364, 39 Am. St Rep. 467; Jaggard, Torts, 46. 4 Anson, Contr. 333. sDrakeley v. Gregg, 8 Wall. (U. S.) 242, 267, 19 L. Ed. 409; Metcalf v. Williams, 144 Mass. 452, 11 N. E. 700; Shoninger v. Peabody, 57 Conn. 42, 17 Atl. 278, 14 Am. St. Rep. 88; Story, Ag. { 248. "It was nothing to do with estoppel, but the desire to reduce the law to general principles has led some courts to cut it down to that point." O. W. Holmes, Jr., 5 Harv. Law Rev. 19. Where a contract is ratified, no new consideration is required. Drakeley v. Gregg, supra; Grant v. Beard, 50 N. H. 129; Pearsoll v. Chapin. 44 Pa. 9; Lynch v. Smyth, 25 Colo. 103, 54 Pac. 634. 48 CREATION OF RELATION RATIFICATION. (Ch. 3 WHAT ACTS MAY BE RATIFIED. 12. Every act, lawful or unlawful, done by one person on behalf of another, without prior authority, which is of such a nature that if done pursuant to prior au- thority it would in law be his act, is capable of rat- ification by the person on whose behalf it is done. 1 RATIFICATION OF FORGERY. 13 Whether a forged instrument may be ratified by the per- son whose name is forged is a question upon which the authorities differ. As a rule every act, lawful or unlawful, which is done on behalf of another without his authority, may be ratified, and when ratified is deemed to be his act, with all the burdens and benefits which would have resulted had he previously au- thorized it. Inasmuch as a man is liable for a tort, as well as upon a contract, if he has authorized it, he is liable if he ratifies it. 2 On the other hand, it may be that an act would be destitute of legal effect, or void, although performed by an authorized agent, and such an act can, of course, de- rive no force from ratification. Thus certain acts may not be done by an agent, and these, since they may not be delegated, may not be ratified. 8 Again, certain classes of contracts, termed illegal contracts, the law prohibits, and 12-13. i This section must be read in connection with section 14 (Conditions of Performance of Act) and section 18 (Effect of Ratification). 2 Hillberry v. Hatton, 2 H. & 0. 822; Eastern Counties Ry. Co. v. Brown, 6 Ex. 314; Dempsey v. Chambers, 154 Mass. 330, 28 N. E. 279, 13 L. R. A. 219, 26 Am. St. Rep. 249. Accepting goods wrongfully seized with knowledge of facts held ratification of assault committed while making seizure. Avakian v. Noble, 121 Cal. 216, 53 Pac. 559. Accepting proceeds of wrongful sale of goods stored In prin- cipal's warehouse rendered him liable for conversion. Cresou v. Ward, 66 Ark. 209, 49 S. W. 827. Post, p. 58. 12-13) WHAT ACTS MAT BE RATIFIED. 49 pronounces void, 4 and these, since they would be desti- tute of legal effect by whomsoever entered into, are not the less so if made by an agent who derives his author- ity from ratification. 5 Thus, in a jurisdiction where a stat- ute prohibited contracts for the sale of intoxicating liq- uor, such a contract would be void, whether made by the seller or by an agent, however his authority might be con- ferred. So where a statute declares void contracts made in behalf of municipal bodies in violation of provisions regu- lating the manner of letting, ratification is unavailing to val- idate a contract attempted so to be made. 8 Acts which are void cannot be ratified, but acts which are voidable may be. 7 It follows that a contract void for illegality cannot be ratified, although at the time of ratification the act creating the ille- gality has been repealed. 8 So, too, it would seem, in the case * Post, p. 90. e United States v. Grossmayer, 9 Wall. (U. S.) 72, 19 L. Ed. 627; Harrison v McHenry, 9 Ga. 164, 52 Am. Dec. 435; Decuir v. Le- jeune, 15 La. Ann. 569; Spence v. Cotton Mills, 115 N. C. 210, 20 S. E. 372. Where a statute prohibited any officer of any corporation from being interested in any contract for furnishing supplies to it, an ordinance for supply of water to a municipality by a company of which a majority of the councilmen were directors was void, and could not be ratified by a council none of whose members was a member of the company. Borough of Milford v. Water Co., 124 Pa. 610, 17 Atl. 185, 3 L. R. A. 122. Zottman v. City of San Francisco, 20 Cal. 96, 81 Am. Dec. 96; Jefferson County Sup'rs v. Arrighi, 54 Miss. 668. 7 State v. Butties' Ex'r, 3 Ohio St. 309; State v. Torinus, 26 Minn. 1, 49 N. W. 259, 37 Am. Rep. 395; State v. Shaw, 28 Iowa, 67; City of Findlay v. Pertz, 13 C. C. A. 559, 66 Fed. 427. * A contract with a corporation, which was void because not in writing, or sealed or signed by the corporate officers, as required by statute, could not be ratified, though the statute had been repealed. Spence v. Cotton Mills, 115 N. C. 210, 20 S. E. 372. Conversely, it would seem that a contract which was legal when made by the assumed agent might be ratified notwithstanding a change in the law making such contracts illegal. But see Huffcut, Ag. 43. TIFF.P.& A. 4 60 CRKATION OP RELATION RATIFICATION. (Ch. 3 of a contract made by an assumed agent in one jurisdiction and ratified in another, the -legality of the contract, and con- sequently its capability of ratification, depend upon the law of the former jurisdiction; but the decisions are conflicting. 9 To the general rule that whatever acts may be author- ized may be ratified with like effect, certain exceptions, grow- ing out of the peculiar nature of ratification, must be noted. In cases involving the rights of strangers which have accrued between the act and the ratification, and in some cases in- volving the liabilities of third persons with whom the quasi agent has dealt, a strict application of the doctrine of relation would lead to unjust consequences, and in such cases ratifi- cation is denied the full effect of prior authority. These ex- ceptions will be dealt with in treating of the effect of ratifica- tion. 10 Ratification of Forgery. Whether a forged instrument is capable of being ratified by the person whose name is forged, so as to render him liable upon it, is a question upon which the courts are di- vided. 11 The arguments against ratification are twofold the first founded upon the circumstance that the forger does not assume to act as agent ; the second founded upon public policy. Dord v. Bonnaffee, 6 La. Ann. 563, 54 Am. Dec. 573; Golson v. Ebert, 52 Mo. 260 (statute of frauds). "In case of a contract made in a foreign country, by an agent without authority, which the principal at home afterwards ratifies, the contract is considered as made in that foreign country, because the ratification relates back tempore et loco, and is equivalent to an original authority." Eustis, C. J., Dord v. Bonnaffee, supra; W barton, Ag. 83. Contra, Shuenfeldt v. Junkermann (0. C.) 20 Fed. 357. 10 Post, p. 75. 11 Against ratification: Brook v. Hook, L. R. 6 Ex. 89; McHugh T. Schuylkill Co., 67 Pa. 391, 5 Am. Rep. 445; Shisler v. Vandike, 92 Pa. 449, 37 Am. Rep. 702; Henry Christian Building & Loan Ass'n v. Walton, 181 Pa. 201, 37 AtJ. 261, 59 Am. St. Rep. 636; Workman v. Wright, 33 Ohio St. 405, 31 Am. Rep. 546; Henry v. 12-13) RATIFICATION OP FORGERY. 61 As we shall see, 1 * it is a rule that an act, to be capable of ratification, must be done professedly on behalf of the quasi principal, by one who assumes to act as his agent, while in the case of forgery the forger does not profess to sign for the other, but, in effect, represents the signature to have been made by the person whose signature it pur- ports to be. 18 In answer to this objection it is suggest- ed that although, as a rule, a man may not ratify an act un- less it purports to have been' done on his behalf by one who Heeb, 114 Ind. 275, 16 N. E. 606, 5 Am. St. Rep. 613; Owsley y. Phillips, 78 Ky. 517, 39 Am. Rep. 258; Kelchner v. Morris, 75 Mo. App. 588. In favor of ratification: Greenfield Bank v. Crafts, 4 Allen (Mass.) 447; Wellington v. Jackson, 121 Mass. 157; Casco Bank v. Keene, 53 Me. 103; Howard r. Duncan, 3 Lans. 175; Livings v. Wiler, 32 111. 387; Hefner v. Vandolah, 62 111. 483, 14 Am. Rep. 106; Mechem, Ag. 116; Wharton, Ag. 71. See, also, Mackenzie v. British Linen Co., 6 App. Cas. 82, per Lord Blackburn. The act of one who obtained payment by falsely representing himself as agent of the creditor might be ratified, though the act was a crime. Scott v. New Brunswick Bank, 23 Can. Sup. Ct. 277. A fraudulent alteration of a promissory note cannot be ratified BO as to create liability in favor of the holder who made the altera- tion. Wilson v. Hayes, 40 Minn. 531, 42 N. W. 467, 4 L, R. A. 196, 12 Am. St Rep. 754. 12 Post, p. 64. i "In all the cases cited for the plaintiff, the act ratified was an act pretended to have been done for or under the authority of the party sought to be charged; and such would have been the case here, if Jones had pretended to have had the authority of the defendant to put his name to the note, and that he had signed the note for the defendant accordingly, and had thus Induced the de- fendant to take it. In that case, although there had been no pre- vious authority, it would have been competent to the defendant to ratify the act. * * * But here Jones had forged the name of the defendant to the note, and pretended that the signature was the defendant's signature; and there is no instance to be found in the books of such an act being held to have been ratified by a subsequent recognition or statement." Brook v. Hook, 6 Ex. 89, per Kelly, 0. B. 52 CREATION OF RELATION RATIFICATION. (Ch. 3 assumes to act as his agent, the principle upon which the rule rests is simply that a man may not ratify an act which did not purport to be his act or done on his behalf. Ordinarily, where one man acts for another, he must act for him pro- fessedly, or else the act will purport to be his own act, and not the act of him for whom he is secretly acting. But, from the very nature of forgery, the act upon its face pur- ports to be the act of the person whose name is forged, and this, it seems, is a sufficient basis for his adoption of the act. Thus, if a clerk, without authority, but in the honest belief that he had authority, should sign his employer's name to a check, and issue it, without disclosing the fact that the signa- ture was not made by his employer, it can hardly be doubted that the employer could ratify it, although the assumption of agency did not appear. It is submitted that the mere undis- closed intent of the person who makes the signature, al- though it may make him guilty of forgery, is not a difference which should distinguish the case of forgery from the case last supposed, or which should preclude the person whose signature is forged from ratifying it, unless, indeed, he is precluded on the ground of public policy. 14 i* "As to this objection, It Is clear that It cannot be maintained upon the ground of the form of the signatures merely. This form of signature, though not the more usual manner of signing by an agent, does not prevent the person whose name is placed on the note from being legally holden, upon proof that the signature was previously authorized, or subsequently adopted. Various similar cases will be found, where the party has been charged, where the name of the principal appears upon the note accompanied with no indications of the fact of its having been signed by another hand. * * * Wherever such signature by the hand of another was duly authorized, and also where a note was thus executed under an honest belief by the party signing the name that he was thus authorized, we apprehend that there can be no doubt that it would be competent, in the case first stated, to maintain an action upon the same, upon proof of the previous authority thus to sign the name, or in the latter upon proving that the signature, although at the time unauthorized, was subsequently adopted and ratified by the party whose name appears as promisor. * * The only 12-13) RATIFICATION OF FORGERY. 63 The argument from public policy is based upon the view that ratification of forgery, if it be sanctioned, has a tend- ency to stifle prosecution for the criminal offense. This tendency cannot be denied, 16 but it may well be doubted whether this consideration should prevail to defeat the or- dinary operation of ratification, at least where the ratifica- tion is not upon the understanding that the guilty party shall not be prosecuted. 18 Of course, ratification could under no circumstances afford a defense to the forgery against an in- dictment. 17 question upon this part of the case is whether a signature made by an unauthorized person under such circumstances as to show that the party placing the name on the note was thereby commit- ting the crime of forgery can be adopted and ratified. * * * As to the person whose name is so signed, It is difficult to perceive any sound reason for the proposed distinction. * * * In the first case, the actor has no authority any more than in the last. The con- tract receives its whole validity from the ratification. It may be ratified where there was no pretense of agency. In the other case, the individual who presents the note thus signed passes the same as a note signed by the promisor, either by his own hand, or written by some one by his authority. It was clearly competent. If duly authorized, thus to sign the note. It is, it seems to us, equally competent for the party, he knowing all the circumstances as to the signature and intending to adopt the note, to ratify the same, and thus confirm what was originally an unauthorized and Illegal act." Greenfield Bank T. Crafts, 4 Allen (Mass.) 447, per Dewey, J. 16 "it Is impossible In such a case to attribute any motive to the ratifying party but that of concealing the crime and suppressing the prosecution." Henry v. Heeb, 114 Ind. 275, 16 N. K 600, 5 Am. St. Rep. 613. i "It is, however, urged that public policy forbids sanctioning a ratification of a forged instrument, as it may have a tendency to stifle a prosecution for the criminal offense. It would seem, how- ever, that this must stand upon the general principles applicable to other contracts, and Is only to be defeated where the agreement was upon the understanding that if the signature was adopted the guilty party was not to be prosecuted on the criminal offense." Green- field Bank v. Crafts, 4 Allen (Mass.) 447. IT "i wish to guard against being supposed to say that If a 64 CREATION OP RELATION RATIFICATION. (Cfa. 3 Ratification is not to be confounded with estoppel. There is universal agreement that, where a person whose signature has been forged expressly or impliedly represents that it is genuine, he is estopped, as against one who has changed his position for the worse, as by giving value for a negotiable instrument, in reliance upon the representation, from deny- ing its genuineness. 18 CONDITIONS OF PERFORMANCE OF ACT. 14. In order to be capable of ratification, an act must be done by one who assumes to act on behalf of an ex- isting principal, who must be named or otherwise described. Assumption of Agency. No act performed by one man can be adopted by another as his own unless it was done professedly on his behalf. In other words, an act, to be capable of ratification, must, as a rule, 1 be done by one who assumes openly to act as agent. 2 document with an unauthorized "signature was uttered under such circumstances of intent to defraud that it amounted to the crime of forgery it is in the power of the person v whose name was forged to ratify it, so as to make it a defense for the forger against a criminal charge. I do not think he could. But if the person whose name was without authority used chooses to ratify the act, even though known to be a crime, he makes himself civilly responsible, just as if he had originally authorized it." McKenzie v. British Linen Co., 6 App. Cas. 82, per Lord Blackburn. is McKenzie v. British Linen Co., 6 App. Cas. 82; Forsyth v. Day, 46 Me. 176; Grout v. De Wolf, 1 R. I. 393; Woodruff v. Munroe, 33 Md. 146; Rudd v. Matthews, 79 Ky. 479, 42 Am. Rep. 231. 14. i An exception exists in case of ratification of forgery hi Jurisdictions where such ratification Is sustained. Ante, 48. 2 Wilson v. Tumman, 6 M. & G. 236; Watson v. Swann, 11 C. B. N. S. 756; Lyell v. Kennedy, 18 Q. B. D. 796; Hamlin v. Sears, 82 N. Y. 327; Grund v. Van Vleck, 69 111. 479; Roby v. Cossitt, 78 111. 638; Ironwood Store Co. v. Harrison, 75 Mich. 197, 42 N. W. 808; Mitchell v. Association, 48 Minn. 278, 51 N. W. 608; Commer* clal & Agricultural Bank v. Jones, 18 Tex. 811, 825; RawHngs v. Neal, 126 X. C. 271, 35 S. E. 597. 14) CONDITIONS OF PERFORMANCE OF ACT. 55 In Wilson v. Tumman, 8 Tindal, C. J., said: "That an act done, for another, by a person not assuming to act for him- self, but for such other person, though without any precedent authority whatever, becomes the act of the principal, if sub- sequently ratified by him, is the known and well-established rule of law. In that case the principal is bound by the act, whether it be for his detriment or his advantage, and whether it be founded on a tort or a contract, to the same extent as by, and with all the consequences which follow from, the same act done by his previous authority. Such was the precise dis- tinction taken in the Year Book, 7 Hen. 4, fo. 35,* that if the bailiff took the heriot, claiming property in it himself, the subsequent agreement of the lord would not amount to a ratification of his authority, as bailiff at the time; but if he took it, at the time, as bailiff of the lord, the subsequent rati- fication by the lord made him bailiff at the time." According- ly, if A. enters into a contract with C., openly assuming to act as the agent of B., B. may ratify it; but, if A. enters into a contract in his own name with C., A. cannot confer the benefit of it upon B., or divest himself of his liability towards C., by procuring a ratification from B. 8 It follows that a contract cannot be ratified by an undisclosed principal. 6 Nor can a contract entered into by A. as agent for D. be ratified byB. T 6 M. & G. 236. * Y. B. 7 H. IV, 34, pi. 1. B Watson v. Swann, 11 0. B. N. S. 756; Fellows v. Commissioners, 86 Barb. (N. Y.) 655; Western Pub. House v. District Tp., 84 Iowa, 101, 50 N. W. 551; McDonald v. McCoy, 121 Cal. 55, 53 Pac. 421. Keighley v. Durant [1901] A. C. 240, reversing Durant v. Rob- erts [1900] 1 Q. B. 629; Fradley v. Hyland (C. Q) 37 Fed. 49, 52, 2 L. R. A. 749. f Where A. entered into an agreement professedly on behalf of B.'s wife and C., B. could not ratify so as to give him a right to sue on it jointly with his wife and C. Sanderson v. Griffith, 5 B. & O. 909. "Where a contract is signed by one who professes to be signing 'as agent,' but who has no principal existing at the time, and* the 56 CREATION OF RELATION RATIFICATION. (Ch. 3 Existence of Principal. The act must be performed on behalf of a quasi principal who is in existence. 8 The most frequent application of this rule arises where the promoters of a proposed corporation enter into a contract on its behalf, intending that the contract shall take effect as its contract after its incorporaion. In such case there can be no ratification. 8 The subsequently formed corporation may, indeed, make itself liable by enter- ing into a new contract upon the same terms as the old, 10 or it may make itself liable by accepting the benefits of per- formance under circumstances which give rise to an implied contract would be altogether inoperative unless binding upon the person who signed it, he is bound thereby; and a stranger cannot, by a subsequent ratification, relieve him from that responsibility." Kelner v. Baxter, L. R. 2 C. P. 174, per Earle, C. J.; Richardson v. Payne, 114 Mass. 429. s "When ratification Is admitted the original contract is imputed by a fiction of law to the person ratifying, and the fiction is not allowed to be extended beyond the bounds of possibility. Perhaps there is no solid reason for the rule, but it is an established one." Pollock, Contr. (3d Ed.) 118, note c. "Putting out of view the cases of assignees of bankrupts and administrators, there is no case in which a person can by subse- quent ratification make himself liable as principal, so as to discharge the agent, where the principal was not in existence at the time of the original contract." Scott v. Lord Ebury, L. R. 2 0. P. 255, 267, per Willes, J. Kelner v. Baxter, L. R. 2 C. P. 174; Scott v. Lord Ebury, L. R. 2 C. P. 255; Re Empress Engineering Co., 16 Ch. D. 125; Re Northumberland Ave. Hotel Co., L. R. 33 Oh. D. 16; Stainsby v. Boat Co., 3 Daly (N. Y.) 98; Abbott v. Hapgood, 150 Mass. 248, 22 N. E. 907, 5 L. R. A. 586, 15 Am. St. Rep. 193. Contra: Oakes v. Water Co., 143 N. Y. 430, 38 N. E. 461, 26 L. R. A. 544. Where a corporation organized pursuant to statute, but before its articles were filed as thereby required, entered into a contract, its subsequent recognition of the contract was a ratification, although the statute declared that a corporation so organized should not commence business before such articles were filed. Whitney v. Wyman, 101 U. S. 393, 25 L. Ed. 1050. 10 Howard v. Patent Ivory Co., 38 Ch. D. 156. g 14) CONDITIONS OF PERFORMANCE OF ACT. 57 promise to pay therefor; 11 but such liability does not rest upon ratification and does not relate back. 12 An exception, or an apparent exception, to the rule is recognized in the case of contracts made on behalf of estates of deceased or bankrupt persons, where the title of the administrator or as- signee in bankruptcy for the protection of the estate vests by relation, and the administrator or assignee, though not yet appointed, existing, as it is said, in contemplation of law, may, when subsequently appointed, ratify the contract. 18 Designation of Principal. Although the act must be done professedly on behalf of a principal who exists, he need not be named or even known to the agent. It is enough if he be capable of being ascertained and be described. 14 Thus, a policy of insurance effected on a vessel on behalf of all persons interested may be ratified by any person who in fact was interested. 15 So, a contract made on behalf of the heirs of A. or the administrator of A.'s estate, though the heirs or administrator be unknown to the person assuming to act on their behalf, may be ratified by them. 1 * " Low v. Railroad, 45 N. H. 370; Bell's Gap R. Co. v. Cristy, 79 Pa. 54, 21 Am. Rep. 39; McArthur v. Printing Co., 48 Minn. 319, 51 N. W. 216, 31 Am. St. Rep. 653; Paxton Cattle Co. v. Bank, 21 Neb. 621, 33 N. W. 271, 59 Am. Rep. 852. 12 Hence, though a contract made on behalf of a contemplated corporation was within the statute of frauds because by its terms not to be performed within one year, a new contract implied from acceptance of performance by the corporation was not within the statute. McArthur v. Printing Co., 48 Minn. 319, 51 N. W. 216, 31 Am. St Rep. 653. is Foster v. Bates, 12 M. & W. 226. i* Watson v. Swann. 11 0. B. N. S. 756. Hagedorn v. Oliverson, 2 M. & S. 485. i Foster v. Bates, 1 D. & L. 400, 12 M. & W. 226; Lyell y. Kennedy, 14 App. Cas. 437. 58 CREATION OF RELATION- RATIFICATION. (Oh. 3 WHO MAY RATIFY. 15. Any person who would have been competent to author- ize an act, performed in his behalf, when it was per- formed, and who would still be competent to authorize it, may ratify it. A person may ratify any act which he would have been competent to authorize, provided he be still competent. 1 Thus, a corporation may ratify an act within its corporate powers. 2 An agent, even, may ratify an unauthorized act done on behalf of his principal by another, if his powers are such that he might have authorized it. 8 Within this principle, an unauthorized act done on behalf of a corporation may be ratified by its proper offices, provided the act be within the scope of the corporate powers.* But since ratification of an 15. i Armitage v. Widoe, 36 Mich. 124; Marsh v. Fulton Co., 10 Wall. (U. S.) 676, 19 L. Ed. 1040. As to the exceptional rule prevailing In marine insurance, that a person on whose behalf insurance is effected may ratify after knowledge of loss, though he would not then be able to make such a contract, see post, p. 83, note 24. 2 Fleckner v. Bank, 8 Wheat. (U. S.) 363, 5 L. Ed. 631; Despatch Line of Packets v. Manufacturing Co., 12 N. H. 205, 37 Am. Dec. 203; Kelsey v. Bank, 69 Pa. 426; Irvine v. Union Bank, 2 App. Gas. 366; Morawetz, Corp. 618. The state may ratify: State v. Butties' Ex'r, 3 Ohio St 309; State v. Shaw, 28 Iowa, 67; State v. Torinui 26 Minn. 1, 49 N. W. 259, 37 Am. Rep. 395. Where an agent of a state exceeds his authority In selling and delivering property of his principal, and taking a note for the price, the legislature may by statute, in the absence of constitutional pro- hibition, ratify the transaction, and enforce payment of the note. State v. Torinus, supra. A municipal corporation which is without authority to issue bonds cannot validate them by ratification. Calhoun v. Millard, 121 N. Y. 69, 24 N. E. 27, 8 L. R. A. 248. 3 Mound City Mut. Life Ins. Co. v. Huth, 49 Ala. 530; Palmer v. Cheney, 35 Iowa, 281; Iron wood Store Co. v. Harrison, 75 Mich. 197, 42 N. W. 808; Whitehead v. Wells, 29 Ark. 99. -Fleckner v. Bank, 8 Wheat. 338, 5 L. Ed. 631; Sherman v. Fitch, 15) WHO MAY RATIFY. 59 act can have no greater effect than previous authority to do the act, a person who is incompetent cannot ratify. 6 Nor if he was incompetent when the act was done, so that his appointment of an agent would have been void, can he ratify it upon subsequently becoming competent. 6 Thus, in ju- risdictions where the appointment of an agent by an infant is void 7 he cannot ratify upon coming of age, 8 although in jurisdictions where the appointment is merely voidable he may ratify. 9 Whether an insane person may ratify an un- authorized act after removal of his disability depends upon whether the appointment of an agent by an insane person is voidable or void. 10 It is said that the principal may not ratify a contract un- less he have present ability to perform it ; for example, that a principal may not ratify a contract for the sale of land if he has already conveyed the land to a stranger. 11 Undoubted- 98 Mass. 59; Lyndeborough Glass Co. v. Glass Co., Ill Mass. 315; Kelesy v. Bank, 69 Pa. 426. 6 Doe v. Roberts, 16 M. & W. 778; Armitage v. Widoe, 36 Mich. 124; Trueblood T. Trueblood, 8 Ind. 195, 65 Am. Dec. 756; Macfar- land v. Heim, 127 Mo. 327, 29 S. W. 1030, 48 Am. St. Rep. 629 (married woman). See, also, Brady v. Mayor, 16 How. Prac. (N. Y.) 432. 8 The execution by a husband of a lien on crops belonging to his wife without her joining, being void, she cannot ratify on be- coming discovert. Rawlings v. Neal, 126 N. O. 271, 35 S. E. 597. i Post, p. 94. Trueblood v. Trueblood, 8 Ind. 195, 65 Am. Dec. 756. Coursolle v. Weyerhauser, 69 Minn. 328, 72 N. W. 697. 10 Post, p. 98. 11 "It follows, also, from the general doctrine, that a ratification Is equivalent to a previous authority, that a ratification can only be made when the principal possesses at the time the power to do the act ratified. He must be able, at the time, to make the contract to which, by his ratification, he gives validity. The ratification is the first proceeding by which he becomes a party to the transac- tion, and he cannot acquire or confer the rights resulting from the transaction, unless in a position to enter directly upon a similar transaction himself. Thus, if an individual, pretending to be the agent of another, should enter into a contract for the sale of land 60 CREATION OF RELATION RATIFICATION. (Ch. 3 ly he cannot by ratifying defeat the rights of his grantee. 12 But it seems that he may nevertheless, if he sees fit, ratify the contract, thereby making himself liable to the other par- ty for the result of nonperformance, and to the agent, as in other cases of ratification ; in other words, that he may rati- fy, but that the retrospective effect of the ratification will be limited by the rights which have intervened. 1 * HOW AN ACT MAY BE RATIFIED. 16. An act may be ratified by any words or conduct showing an intention npon the part of the person ratifying to adopt the act in whole or in part as his own; except that, if authority to do an act must be conferred by particular form, ratification must ordinarily be by like form. of his assumed principal, it would be Impossible for the latter to ratify the contract if, between its date and the attempted ratifica- tion, he had disposed of the property. He could not defeat the intermediate sale made by himself, and impart validity to the sale made by the pretended agent, for his power over the property or to contract for its sale would be gone." McCrachen v. City of San Francisco, 16 Oal. 591, per Field, 0. J. 12 Post, p. 75. is "The ratification operates upon the act ratified precisely as though authority to do the act had been previously given, except where the rights of third parties have intervened between the act and the ratification. The retroactive effect of the ratification is subject to this qualification: The intervening rights of third per- sons cannot be defeated by the ratification. In other words, it is essential that the party ratifying should be able not merely to do the act ratified at the time the act was done, but also at the time the ratification was made. * * * The question, therefore, in this case is whether any rights of third parties did thus intervene be- tween the act of substitution by Hoinans and its adoption and ratifi- cation by Tullis, which defeated the retroactive efficacy of the ratifi- cation." Cook v. Tullis, 18 Wall. (U. S.) 332, 21 L. Ed, 933, per Field, J. 16-17) HOW AN ACT MAT BE RATIFIED. 61 KNOWLEDGE OF FACTS. 17. Ratification is not binding upon the person ratifying unless made with knowledge of all the material facts, or unless made -with the intention to ratify whatever the facts may be. In General. Ratification is, as we have seen, 1 the exercise of a right of election on the part of the quasi principal to adopt as his own an act done on his behalf. It is therefore an assent to accept the benefits and burdens of the act. It follows that the ratification must be of the act as a whole, or in toto, with all its burdens, or not at all. 2 This principle is illustrated by the rule that any conduct of the principal, with knowledge of the facts, in recognition of the transaction, is a ratifica- tion. 8 Since ratification rests upon assent * it is ordinarily necessary, as will be shown later, that the person ratifying have knowledge of the facts, for otherwise the assent is only apparent, and not real, and the ratification will not be bind- ing upon him unless he intended to ratify whatever the facts might turn out to be. The assent of the principal may be shown by words or by conduct; or, in other words, it may be express B or implied. 6 No formalities are requisite. The only exception to this rule is that, where an act is one which could have been authorized only by observance of a particu- f 16-17. i Ante, p. 47. 2 Hovll v. Pack, 7 East, 164; Brlstow v. Whltmore, 9 H. L. Cas. 891; Galnes v. Miller, 111 U. S. 395, 4 Sup. Ct 426, 28 L. Ed. 466; Teague v. Maddox, 150 U. S. 128, 14 Sup. Ct 46, 37 L. Ed. 1025; Brigham v. Palmer, 3 Allen (Mass.) 450; Shoninger v. Peabody, 57 Conn. 42, 17 Atl. 278. 14 Am. St Rep. 88; Billings v. Mason, 80 Me. 496, 15 Atl. 59; Southern Exp. Co. v. Palmer, 48 Ga. 85; Eberts v. Selover, 44 Mich. 519, 7 N. W. 225, 38 Am. Rep. 278; Nye v. Swan, 49 Minn. 431, 52 N. W. 39; Wells v. Hickox, 1 Kan. App. 485, 40 Pac. 821; Key v. Insurance Co., 1Q7 Iowa, 446, 78 N. W. 68. Post, p. 65. Post, p. 62. * Post, p. 62. Post, p. 65. 62 CREATION OF RELATION RATIFICATION. (Oh. 3 lar form, that form must be observed to effect a ratification. 7 Although a ratification once made is irrevocable, 8 the mere fact that the principal at first refuses to recognize an unau- thorized act does not prevent him from afterwards ratify- ing, 9 provided the other party has not acted upon the re- fusal. 10 Express Ratification. Any form of words which expresses the assent of the prin- cipal to adopt an act done in his behalf is sufficient evidence of ratification. 11 Except in the cases mentioned in the next i Post, p. 63. Where notes of a town could not be issued by Its treasurer unless authorized by a town meeting held pursuant to notice, specifying its object, their unauthorized issue by him could not be ratified except by vote of a town meeting held pursuant to such notice. Town of Bloomfield v. Bank, 121 U. S. 135, 7 Sup. Ct. 865, 30 L. Ed. 923; School Dist. No. 6 v. Insurance Co., 62 Me. 330. Post, p. 76. Soames v. Spencer, 1 D. & R. 32; Woodward v. Harlow, 28 Vt 338. 10 Wilkinson v. Harwell, 13 Ala. 660. See Fiske v. Holmes, 41 Me. 441. 11 Where an agent, without authority, signed a distress warrant, and the principal, on being informed, said that he should leave the matter in his agent's hands, this was sufficient evidence of ratifica- tion. Haselar v. Lemogue, 5 C. B. N. S. 530. Where an agent entered into an unauthorized agreement, and the principal wrote that he did not know what the agent had agreed to, but that, of course, he must support him in all that he had done, the evidence of ratification was sufficient. Fitzmaurlce v. Bagley, 6 El. & B. 868. See, also, Merrill v. Parker, 112 Mass. 250; Goss v. Ste- vens, 32 Minn. 472, 21 N. W. 549; Henry Hess & Co. v. Baar, 14 Misc. Rep. 286, 35 N. Y. Supp. 687; Brown v. Wilson, 45 S. C. 519, 23 S. E. 630, 55 Am. St. Rep. 779; Fenn v. Dickey, 178 Pa. 258, 35 Atl. 1108; Chauche v. Pare, 21 C. C. A. 329, 75 Fed. 283; Blakley v. Cochran, 117 Mich. 394, 75 N. W. 940. Giving as a reason for repudiating a contract, unauthorized in sev- eral particulars, that it is unauthorized in a particular in which it is authorized, is not a ratification. Brown v. Henry, 172 Mass. 559, 52 N. E. 1073. 16-17) HOW AN ACT MAT BE RATIFIED. 63 succeeding paragraphs, it is immaterial whether the words are spoken or written, or whether they are under seal. Same Ratification of Deed. As we have seen, at common law an agent can be appoint- ed to execute an instrument under seal only by instrument of like character. 12 Ratification cannot stand upon a higher ground than original authority, and if the act must be under seal the ratification also must be under seal. 1 * Such a ratifi- cation may be effected by an instrument in terms ratifying the deed, or by a power of attorney prospective in terms, au- thorizing the deed, but dated back to a period anterior to the execution of the deed it is intended to ratify. 14 As in case of appointment, 15 if it was not essential that the in- strument ratified should be under seal, the seal, though at- tached, being superfluous, may be disregarded, and a parol ratification is sufficient. 16 An exception to the rule is gen- 12 Ante, p. 21. is Spofford v. Hobbs, 29 Me. 148, 48 Am. Dec. 521; Heath v. Nut- ter, 50 Me. 378; Despatch Line of Packets v. Manufacturing Co., 12 N. H. 205, 37 Am. Dec. 203; Blood v. Goodrich, 12 Wend. (N. Y.) 525, 27 Am. Dec. 152; Grove v. Hodges, 55 Pa. 504; Pollard v. Gibbs, 55 Ga. 45; Zimpelman v. Keating, 72 Tex. 318, 12 S. W. 177. See Oxford v. Crowe (1893) 3 Ch. 535. "If the principal adopt the sale and receive the purchase money with full knowledge of the facts, It would be a ratification by estop- pel." Zimpelman v. Keating, per Collard, 0., supra. Cf. Grove v. Hodges, supra. Where a wife executed a deed in blank as to the name of the grantee, the date and the consideration, and delivered it to her hus- band, who filled the blanks and delivered it to defendant as grantee, ard she knowingly used the consideration, she thereby ratified the conveyance. Reed v. Morton, 24 Neb. 760, 40 N. W. 282, 1 L. R. A. 73G, 8 Am. St Rep. 247. As to authority to fill blanks, ante, p. 22. i* Miliikin v. Coombs, 1 Greenl. (Me.) 343, 10 Am. Dec. 70; Riggan v. Grain, 86 Ky. 249, 5 S. W. 561. See, also, Rice v. McLarren, 42 Me. 157. Contra: Moore v. Lockett, 2 Bibb (Ky.) 67, 4 Am. Dec. 683. n Ante, p. 22. Worrall v. Munn, 5 N. Y. 229, 238. 55 Am. Dec. 330; State v. 04 CREATION OF RELATION RATIFICATION. (Ch. 3 erally recognized in cases of partnership, where it is held that one partner may ratify by parol a deed executed by an- other in the name of the firm. 17 In Massachusetts the court has extended the doctrine of parol ratification to all classes of cases. 18 Same Writwig not Under Seal Statute of Frauds. At common law all contracts which are not specialties may be ratified, as they may be authorized, by parol. 18 Unless the authority of an agent to execute a simple contract is re- quired by statute to be in writing, ratification may be by any form of parol. Even under the statute of frauds, as has been pointed out, 20 the requirement that the agreement or note or memorandum, if signed by some person other than the party to be charged, must be signed by some person "thereunto by him lawfully authorized" is satisfied by any form of appointment or ratification sufficient by the rules of the common law. 21 But, where a statute enacts that the au- thority must be in writing, the ratification must be in like form. 22 Railroad Co., 8 S. C. 129; Adams v. Power, 52 Miss. 828; Hammond v. Hannin, 21 Mich. 374, 4 Am. Rep. 490; Lynch v. Smyth, 25 Colo. 103, 54 Pac. 634. Contra: Pollard v. Gibbs, 55 Ga. 45. " Cady v. Shepherd, 11 Pick. (Mass.) 400, 22 Am. Dec. 379; Skin- ner v. Dayton, 19 Johns. (N. Y.) 513, 10 Am. Dec. 286; Peine v. Weber, 47 111. 45. is Mclntyre v. Park, 11 Gray (Mass.) 102; Holbrook v. Chamberlin. 116 Mass. 155, 17 Am. Rep. 146. i Ante, p. 20. 20 Ante, p. 28. 21 McLean v. Dunn, 4 Birig. 722; Soames v. Spencer, 1 D. & R. 32; Ehrraanntraut v. Robinson, 52 Minn. 333, 54 N. W. 188; Keim v. O'Reilly, 54 N. J. Eq. 418, 34 Atl. 1073. 22 McDowell v. Simpson, 3 Watts (Pa.) 129, 27 Am. Dec. 338; Goss v. Stevens, 32 Minn. 472, 21 N. W. 549; Kozel v. Dearlove, 144 111. 23, 32 N. E. 542, 36 Am. St. Rep. 416; Hawkins v. McGroarty, 110 Mo. 550, 19 S. W. 830; Long v. Poth, 16 Misc. Rep. 85, 37 N. Y. Supp. 670. Contra: Hammond v. Hannin, 21 Mich. 374, 4 Am. Rep. 490. 16-17) HOW AN ACT MAT BE RATIFIED. 6D Implied Ratification. Since intention may be manifested by conduct as well as by words, ratification will be implied from any conduct showing an intention to adopt the act. Any act done in recognition of the transaction, in whole or in part, if done with knowl- edge of all the material facts, is evidence, and is ordinarily conclusive evidence, of ratification. If an act be done in rec- ognition without full knowledge, its weight, as showing a ratification, will depend upon whether, in view of all the cir- cumstances, it may reasonably be inferred that the principal intended to adopt the act at all events, but the burden is upon the person seeking to establish ratification under such circumstances." The acts from which a ratification may be implied are as various as the subject-matters of agency.** Same Accepting Benefits. A principal who, with knowledge, accepts the benefit of a transaction, is deemed to have ratified it. 25 Thus, where the agent without authority makes a sale or a purchase the prin- cipal, by accepting the proceeds of the sale, 26 or by accepting Post, p. 73. ** For illustrations, see succeeding paragraphs. Entering into negotiations without reservation with the agent for settlement on the basis that he is accountable for the price ratifies an unauthorized sale. Sanders v. Peck, 30 C. C. A. 530, 87 Fed. 61. 25 Clarke v. Perrier, 2 Freem. 48; Conwal v. Wilson, 1 Ves. 509: Cushman v. Loker, 2 Mass. 106; Low v. Railroad Co., 46 N. H. 284; Dunn v. Railroad Co., 43 Conn. 434; Codwise v. Hacker, 1 Caine-s (N. Y.) 526; Palmerton v. Huxford, 4 Denio (N. Y.) 166; Wheeler & Wilson Mfg. Co. v. Aughey, 144 Pa. 398, 22 Atl. 667, 27 Am. St. Rep. 638; Hauss v. Niblack, 80 Ind. 407; Bacon v. Johnson, 56 Mich. 182, 22 N. W. 276; Reid v. Hibbard, 6 Wis. 175; Rich v. Bank, 7 Neb. 201, 29 Am. Rep. 382; Snow v. Grace, 29 Ark. 131; Watersoii v. Rogers, 21 Kan. 529. z Hunter v. Parker, 7 M. & W. 322; Brewer v. Sparrow, 7 B. & C. 310; The Bonita v. The Charlotte, Lush. 252; Lindroth v. Litch- field (C. C.) 27 Fed. 894; Lyman v. University, 28 Vt 560; Tilleny v. Wolverton, 54 Minn. 75, 55 N. W. 822; Town of Ansonia v. Cooper. 64 Conn. 536, 30 Atl. 760; Deering & Co. v. Bank, 81 Iowa, 222, 46 N. W. 1117; Smith v. Barnard, 148 N. Y. 420, 42 N. E. 1054. TIFF.P.& A. 6 66 CREATION OF RELATION RATIFICATION. (Ch. 3 the property, 27 is held to ratify the sale or the purchase. So, where the principal knowingly accepts rent under an unau- thorized lease, 28 or the proceeds of an unauthorized loan, 29 or of a compromise, 30 or effects a settlement with an agent for embezzlement of the proceeds of an unauthorized sale. 31 The act must, however, be inconsistent with the existence of an intention not to adopt, and hence conduct which would have been within the principal's right in case he repudiated the transaction will not amount to ratification. 82 And if the principal is ignorant of material facts, as where he accepts moneys from an agent without knowledge that they are the 27 Cornwall v. Wilson, 1 Ves. 510; Waitham v. Wakefleld, 1 Camp. 120; Hastings v. Bangor House, 18 Me. 436; Moss v. Mining Co., 5 Hill, 337; Ketchum v. Verdell, 42 Ga. 534; Jones v. Atkinson, 68 Ala. 167; Williams v. Lumber Co., 118 N. C. 928, 24 S. E. 800; Mc- Kinstry v. Bank, 57 Kan. 279, 46 Pac. 302; Ehrmanntraut v. Robinson, 52 Minn. 333, 54 N. W. 188 (entry and use of land under an unau- thorized lease); Hall v. White, 123 Pa. 95, 16 Atl. 521 (taking posses- sion of land under unauthorized contract for purchase); Chambers v. Haney, 45 La. Ann. 447, 12 South. 621 (selling land received under unauthorized exchange); Wright v. Vinyard Church, 72 Minn. 78, 74 N. W. 1015 (retaining and using after notice of repudiation). zs Reynolds v. Davison, 34 Md. 662; Burkhard v. Mitchell, 16 Colo. 376, 26 Pac. 657. ,20 Maddux v. Bevan, 39 Md. 485; Perkins v. Boothby, 71 Me. 91; Taylor v. Ass'n, 68 Ala. 229; Willis v. Sanitation Co., 53 Minn. 370, 55 N. W. 550. so Strasser v. Conklin, 54 Wis. 102, 11 N. W. 254; Keeler v. Salis- bury, 33 N. Y. 648; Higginbotham v. May, 90 Va. 233, 17 S. E. 941 ; Orvis v. Wells, Fargo & Co., 19 C. C. A. 382, 73 Fed. 110 (accepting payment under award or ratification of an unauthorized submission to arbitration); City of Findlay v. Pertz, 20 C. C. A. 662, 74 Fed. 681; National Imp. & Const Co. v. Maiken, 103 Iowa, 118. 72 N. W. 431. si Ogden v. Marchand, 29 La. Ann. 61. Accepting from the agent security against loss which might result from an unauthorized act was not ratification. Lazard v. Transportation Co., 78 Md. 1, 26 Atl. 897. 82 White v. Sanders, 32 Me. 188. The owner of a building did not become liable for improvements made under an unauthorized contract with his agent, because he aft- 16-17) HOW AN ACT MAY BE RATIFIED. 67 proceeds of an unauthorized sale, intention to ratify cannot be implied.** Same Bringing Suit. Bringing an action, based upon the unauthorized transac- tion, whether against the person with whom the agent dealt, or the agent himself, is ordinarily conclusive evidence of rati- fication. 84 Thus, where the principal sues the other party erwards used them, where they were of such a character that they could not be removed. Mills v. Berla (Tex. Civ. App.) 23 S. W. 910. Where defendant's superintendent, contrary to orders, bought goods, and, colluding with the seller, caused them to be intermingled with other goods from the same seller, some of which had been paid for, and it could not be ascertained whether the goods in question had been paid for, retaining and selling them was not a ratification. Schutz v. Jordan (C. C.) 32 Fed. 55. Retaining a salesman after knowledge of his unauthorized act Is not evidence of ratification. Deacon v. Greenfield, 141 Pa. 467, 21 Atl. 650. A mere effort on the part of the principal, after knowledge of the unauthorized act, to avoid loss thereby, will not amount to ratifica- tion, so as to relieve the agent from liability. Triggs v. Jones, 4G Minn. 277, 48 N. W. 1113; post, p. 87. Thacher v. Pray, 113 Mass. 291, 18 Am. Rep. 480. See, also, McGlassen v. Tyrroll (Ariz.) 44 Pac. 1088; Chicago Edison Co. v. Fay, 164 111. 323, 45 N. E. 534. Where defendant authorized an agent for a certain sum to obtain a release of plaintiff's interest in land, and the agent agreed as part of the consideration for obtaining it that defendant should assume a debt of plaintiff, and defendant, in ignorance of the unauthorized agreement, sold the land, his failure, after being informed of it, to restore the property, was not a ratification. Martin v. Hickman, 64 Ark. 217, 41 S. W. 852. After commencement of an action of replevin for cattle claimed by defendants under a sale by plaintiff's agent, which plaintiff claimed was unauthorized, but before trial, plaintiff learned that it had re- ceived the benefit of a portion of the proceeds of sale. Held, that Its failure then to return or tender such portion was a ratification which defeated recovery. Johnston v. Investment Co., 49 Neb. 68, N. W. 383. See, also, Farmers' & Merchants' Bank v. Bank, 49 Neb. 379, 68 N. W. 488. Smith v. Morse, 9 Wall. (U. S.) 82, 19 L. Ed. 597; Merrill v. Wil- 68 CREATION OF RELATION RATIFICATION. (Ch. 3 to a contract made in his behalf, 35 or brings an action to enforce security taken in his name, 86 or sues the agent for an accounting of the proceeds of an unauthorized transaction, 37 he thereby elects to take the benefit of the transaction, and adopts it in toto. Same Acquiescence Silence. While an unauthorized act cannot take effect as the act of the principal unless it be ratified, and hence need not be re- scinded, it is evident that his failure to express dissent upon being informed of a transaction may reasonably give ground for inferring assent. If, for example, an agent should make an unauthorized sale of his principal's property, and the principal, after being informed, should remain silent, know- ing that the purchaser was dealing with the property as his son, 66 Mich. 232, 33 N. W. 716; Connert v. City of Chicago, 114 111. 233, 29 N. E. 280; Tingley v. Boom Co., 5 Wash. 644, 32 Pac. 737, 33 Pac. 1055 (pleading an unauthorized contract as a defense held a ratification). In an action for conversion of notes collusively transferred to de- fendant by plaintiff's agent, it appeared that under the contract of agency all notes were to be taken in plaintiff's name, but that the agent had taken them in his own. Held, that by bringing the suit plaintiff ratified the agent's act, and might recover for the conversion. Warder, Bushnell & Glessner Co. v. Cuthbert, 99 Iowa, 681, 68 N. W. 917. 35 "When the plaintiffs were informed of the terms of the contract made by their agent for the sale of the piano to the defendant, they had an election to repudiate the arrangement. * * * But, know- Ing the terms of sale, they elected to sue in assumpsit on the contract for the agreed price, and thereby they affirmed the contract, and ratified the act of the agent, precisely as if it had been expressly ap- proved upon being reported to them by the agent or the defendant." Shoninger v. Peabody, 57 Conn. 42, 17 Atl. 278, 14 Am. St. Rep. 88, per Loomls, J.; Benson v. Liggett, 78 Ind. 452; Curnane v. Scheidel, 70 Conn. 13, 38 Atl. 875; D. M. Osborn Co. v. Jordan, 52 Neb. 465, 72 N. W. 479; Edgar v. Joseph Breck & Sons Corp., 172 Mass. 581, 52 N. E. 1083. se Partridge v. White, 59 Me. 564. T Lyell T. Kennedy, 14 App. Cas. 437; Frank v. Jenkins, 22 Ohio St. 597. 16-17) HOW AN ACT MAT BE RATIFIED. 69 own, the principal's silence would speak his assent as clearly as words. 88 And, notwithstanding that the principal may not have knowledge that third persons are acting upon the assumption that the agent's act was authorized, it is evident that he will under most circumstances, as a reasonable man, upon being informed of an assumption of authority, express his dissent if he does not intend to adopt the transaction, and that his mere silence is evidence of ratification. Such evidence is, of course, not so strong in the case of an act done by a mere stranger who has volunteered to -act in an- other's behalf as in the case of an agent who has exceeded his authority. 89 Where, however, the relation of principal and agent already exists, the rule is established that failure to repudiate within a reasonable time after being informed of an act done in excess of authority is conclusive evidence of ratification. 40 What time is reasonable must depend upon the facts of each case, and the particular circumstances tend- ing to excuse or explain the principal's silence or to im- pose the duty of prompt disavowal, but the circumstances may be such as to require immediate repudiation. 41 The 8Hall v. Harper, 17 111. 82; Swartwout v. Evans, 37 111. 442; Alexander v. Jones, 64 Iowa. 207, 19 N. W. 913; Baldwin Fertilizer Co. v. Thompson, 106 Ga. 480, 32 S. B. 591. Post, p. 71. o Prince v. Clark, 2 D. & R. 266; Law v. Cross, 1 Black (U. S.) 533, 17 L. Ed. 185; Union Gold Min. Co. v. Bank, 96 U. S. 640. 24 L. Ed. 648; Norris r. Cook, 1 Curt. (U. S.) 464, Fed. Cas. No. 10,305; Abbe v. Rood, 6 McLean (U. S.) 106, Fed. Cas. No. 6; Brigham v. Peters, 1 Gray (Mass.) 139; Johnson v. Wingate, 29 Me. 404; Curry v. Hale, 15 W. Va. 875; Bray v. Gunn, 53 Ga. 144; Mobile & M. Ry. Co. v. Jay, 65 Ala. 113; Clay v. Spratt, 7 Bush (Ky.) 334; Booth v. Wiley, 102 111. 84; Cooper v. Mulder, 74 Mich. 374, 41 N. W. 1084; Cooper v. Schwartz, 40 Wis. 54; Saveland v. Green, Id. 431; Union Gold Min. Co. v. Bank, 2 Colo. 565; E. Bement & Sons v. Armstrong (Tenn. Ch. App.) 39 S. W. 899; Smith v. Holbrook, 99 Ga. 256, 25 S. E. 627; Hartlove v. William Fait Co., 89 Md. 254, 43 Atl. 62. 41 The Australia, Swab. 480; Law v. Cross, 1 Black (U. S.) 533, 17 L. Ed. 185; Foster v. Rockwell, 104 Mass. 167; Hazard v. Spears, 43 N. Y. 469; Kelsey v. Bank, 69 Pa. 426. 70 CREA11ON OF RELATION RATIFICATION. (Ch. 3 rule is sometimes placed upon the ground of equitable es- toppel, 42 and clearly the principle of estoppel is applicable where third persons have acted to their prejudice in reliance upon the apparent assent; but the rule is broader than that of equitable estoppel, and rests upon the presumed intention of the principal, irrespective of whether or not the other party has actually been prejudiced or misled by the delay. 48 Same Act Done by Stranger. When the unauthorized act is not the act of an agent in excess of his authority, but is the act of a stranger, silence on the part of the quasi principal is logically entitled to less weight. "Where an agency actually exists," says Story, "the mere acquiescence of the principal may give rise to the presumption of an intentional ratification of the act. The presumption is far less strong, and the mere fact of acquies- cence may be deemed far less cogent, where no relation of agency exists at the time between the parties. However, if there are peculiar relations of a different sort between the parties, such as that of father and son, the presumption of a ratification will become more vehement, and the duty of disavowal on the part of the principal more urgent, when 42 Smith v. Fletcher, 75 Minn. 189, 77 N. W. 800. See Kent v. Mining Co., 78 N. Y. 159. *8 Cases cited supra, notes 90, 91. In Bigg v. Stone, 3 Sm. & Gif. 592, where a son, who usually acted ns agent for his father, without authority sold his interest in land, the court said: "It is clearly established that the father had full notice of the agreement, if not immediately or on the same day, yet certainly within five days after the agreement was signed. It can- not he considered that any express act on his part, such as signature of the agreement by himself or any other solemnity by him after he became privy to the act done by his son on his behalf, was essen- tially necessary. Subject to his right to a reasonable opportunity to ' express his dissent, every additional day and hour of silence after he becanie privy to the contract operates as a tacit acquiescence, and raises the presumption of assent." Philadelphia, W. & B. R. Co. v. Cowell, 28 Pa. 329, 70 Am. Dec. 128; Lynch v. Smyth, 25 Colo. 103, 54 Pac. 634. 16-17) HOW AN ACT MAY BE RATIFIED. 71 the facts are brought to his knowledge." 44 Some courts have, indeed, declared that where no agency exists the quasi principal is under no duty to repudiate, and no inference of ratification is to be drawn from his silence. 48 This objec- tion, however, should go only to the weight and not to the competency of the evidence, and in such cases, as well as in those where a prior relation has existed, the question is whether, under all the circumstances, the inference of rati- fication may reasonably be drawn from the principal's si- lence. 4 * "If those circumstances are such that the inaction 4* Story, Ag. 256. 45 Ward v. Williams, 26 111. 447, 79 Am. Dec. 385. "Should a stranger, without authority, assume to act as the agent of another, it would be intolerable if such other would be bound to compensate the interloper for his services unless he gave the latter *notice of his dissent within a reasonable time thereafter.' The law imposes no such obligation upon business men In respect to those who. without authority, interfere In their affairs." Kelly v. Phelps, 57 Wis. 425, 15 N. W. 385, per Lyon, J.; 1 Livermore, Ag. 50. * Philadelphia, W. & B. R. Co. v. Cowell, 28 Pa. 329, 70 Am. Dec. 128; Heyn v. O'Hagen, 60 Mich. 150, 26 N. W. 861; Saveland v. Green, 40 Wis. 431. See, also, Ladd v. Hildebrant, 27 Wis. 135. 9 Am. Rep. 445; Harrod v. McDaniels, 126 Mass. 413; Myers v. Insur- ance Co., 32 Hun (N. Y.) 321; Merrltt v. Bissell, 155 N. T. 396, 50 N. E. 280; Dugan v. Lyman (N. J. Sup.) 23 Atl. 657. "If mental assent may be inferred from circumstances, silence may indicate it as well as words or deeds. To say that silence is no evidence of It, is to say that there can be no implied ratification of an unauthorized act, or, at least, to tie up the possibility of ratifica- tion to the accident of prior relations. Neither reason nor authority justifies such a conclusion. A man who sees what has been done In his name and for his benefit, even by an intermeddler, has the same power to ratify and confirm It that he would have to make a similar contract for himself; and, If the power to ratify be conceded to him. the fact of ratification must be provable by the ordinary means. * * The prior relations of the parties lend great Importance to the fact of silence, but It Is a mistake to make the competency of the fact dependent on those relations. * * * It Is one thing to Bay that the law will not Imply a ratification from silence, and a very different thing to say that silence is a circumstance from which, with others, a Jury may not imply It." Philadelphia, W. & B. R. Co. v. Cowell, 28 Pa. 329, 70 Am. Dec. 128. 72 CREATION OF RELATION RATIFICATION. (Cb. 3 or silence of the party sought to be charged as principal would be likely to cause injury to the person giving credit to, and relying upon, such assumed agency, or to induce him to believe such agency did in fact exist, and to act upon such belief to his detriment, then such silence or inaction may be considered as a ratification of the agency." * 7 Knovl<-'lge of Facts. Since ratification rests upon assent, to be binding it must, as a ,ule, be made with full knowledge of all the facts neces- sary to an intelligent exercise of the right of election. "No doctrine is better settled on principle or authority than this, that the ratification of the act of an agent previously unau- thorized must, in order to bind the principal, be with full knowledge of the material facts. If the material facts are eilher suppressed or unknown, the ratification is invalid, be- cause founded on mistake or fraud." * 8 Hence, if the prin- cipal has ratified upon insufficient knowledge, he may, as a rule, after he is informed of the facts, disaffirm. Knowledge of the facts, however, is sufficient; knowledge of their legal effect is not requisite.* 8 47 Heyn v. O'Hagen, 60 Mich. 150, 26 N. W. 861, per Morse, J. <8 Owings v. Hull, 9 Pet. (U. S.) 607, 9 L. Ed. 246, per Story, J. See, also, Lewis v. Read, 13 M. & W. 834; Freeman v. Kosher, 13 Q. B. 780; The Bonita v. The Charlotte, Lush. 252; Gunn v. Roberts, L. R. 9 C. P. 331; Bell v. Cunningham, 3 Pet. (U. S.) 69, 7 L. Ed. 606; Bennecke v. Insurance Co., 105 U. S. 355, 26 L. Ed. 990; Bosseau v. O'Brien, 4 Biss. (U. S.) 395, Fed. Gas. No. 1,667; Combs v. Scott, 12 Allen (Mass.) 493; Seymour v. Wyckoff, 10 N. Y. 213; Baldwin v. Burrows, 47 N. Y. 199; Craighead v. Peterson, 72 N. Y. 279, 28 Am. Rep. 150; Bannon v. Warfleld, 42 Md. 22; Hardeman v. Ford, 12 Ga. 205; Manning v. Gasharie, 27 Ind. 399; International Bank v. Ferris, 118 111. 465, 8 N. E. 825; TEtna Ins. Co. v. Iron Co., 21 Wis. 458; Holm v. Bennett, 43 Neb. 808, 62 N. W. 194; Bohart v. Oberne, 36 Kan. 284, 13 Pac. 388; Miller v. Board, 44 Cal. 166; Cram v. Sickel, 51 Neb. 828, 71 N. W. 724, 66 Am. St. Rep. 478; Hunt v. Agri- cultural Works, 69 Minn. 539, 72 N. W. 813. 48 Kelley v. H. Railroad Co., 141 Mass. 496, 6 N. E. 745; Hyatt v. Clark, 118 N. Y. 563, 23 N. E. 891; Hillborry v. Hatton, 6 El. & B. 868. Hut see Dugan v. Lyman (N. J. Sup.) 23 Atl. 657. 16-17) KNOWLEDGE OF FACTS. 73 Nevertheless, it is within the power of the principal, if he sees fit, to ratify without full knowledge. "The intention to adopt the act at all events is the same as adopting with knowledge." 80 If he deliberately ratifies upon such knowl- edge as he possesses, without caring for more, intentionally assuming the risk of the facts, he has the right to do so, and a ratification made under such circumstances is binding. 51 But, since the principal is under no obligation to ratify an unauthorized act, it is for the person who relies upon a ratifi- cation to show that all material facts were made known to the principal, or else that the circumstances were such as to manifest an intention on his part to ratify at all events. 62 Nor does mere negligence or omission to make inquiries nec- essarily manifest an intention to ratify, or necessarily pre- clude the principal from disaffirming upon subsequently learning the facts. 68 Yet while failure to make full inquiry does not charge the principal, as matter of law, with knowl- edge of what an inquiry would have disclosed, it may be o Freeman v. Kosher, 13 Q. B. 780, Patterson, J. i Lewis v. Read, 13 M. & W. 834; Phosphate of Lime Co. v. Green, L. R. 7 C. P. 43; Kelley v. Railroad Co., 141 Mass. 496, 6 N. E. 745; Ehrmanntraut v. Robinson, 52 Minn. 333, 54 N. W. 188. 62 Combs v. Scott, 12 Allen (Mass.) 493; Wheeler v. Sleigh Co. (C. C.) 39 Fed. 347; Moore v. Ensley, 112 Ala. 228, 20 South. 744. 03 Combs v. Scott, 12 Allen (Mass.) 493. It was held error to charge, on the question of ratification, that if there was a material mistake It made no difference how it arose, or whether the principal might have ascertained the contrary to be truo. "unless it arose from the negligence of the principal." Bigelow, C. J., said: "We do not mean to say that a person can be willfully ignorant, or purposely shut bis eyes to means of information withiu his possession and control, and thereby escape the consequences of a ratification of unauthorized acts into which he has deliberately entered; but our opinion is that ratification of an antecedent act of an agent, which was unauthorized, cannot be held valid and binding, where the person sought to be charged has misapprehended or mistaken material facts, although he may have wholly omitted to make inquiries of other persons concerning them, and his ignorance and misapprehension might have been enlightened and corrected by 74 CREATION OF RBLATIQN RATIFICATION. (Oh. 8 strong evidence of an intention to adopt at all events. 54 Thus, where the principal accepts the benefits of an unau- thorized contract without any attempt to ascertain its terms, the inference is strong, and may be conclusive, that he in- tended to take the risk and adopt the contract upon such knowledge as he had. 85 But if the contract was such as the agent was authorized to make, and the principal had no reason to suppose that the agent had departed from his instructions, the fact that the principal accepted the benefits without inquiry would be no evidence of intention to adopt a the use of diligence on his part to ascertain them. The mistake at the trial consisted in the assumption that any such diligence was re- quired of the defendants." Murray v. Lumber Co., 143 Mass. 250, 9 N. E. 634. Ratification of the unauthorized execution of a note does not ratify stipulations therein to pay attorney's fees and waive exemptions, un- less with knowledge of such stipulations. Brown v. Bamberger, 110 Ala. 342, 20 South. 114. The principal is not chargeable with information which his means of knowledge disclosed, if not willfully ignorant. Shepard & Morse Lumber Co. v. Eldridge, 171 Mass. 516, 51 N. E. 9, 41 L. R. A. 617, 68 Am. St. Rep. 446. But see Eadie v. Ashbaugh, 44 Iowa, 519. 64 "With respect to those who do not think proper to seek informa- tion, the fact that they did not choose to inquire is strong evidence that they were satisfied to adopt the acts of the directors at all events and under whatever circumstances." Phosphate of Lime Co. v. Green, L. R. 7 C. P. 43, Willes, J. See Pope v. J. K. Armsby Co., Ill Cal. 159, 43 Pac. 589. The principal cannot escape liability by purposely closing his eyes. Lynch v. Smyth, 25 Colo. 103, 54 Pac. 634. so Meehan v. Forrester, 52 N. Y. 277; The Henrietta (D. C.) 91 Fed. 675; Busch v. Wilcox, 82 Mich. 336, 47 N. W. 328, 21 Am. St. Rep. 563; State Bank v. Kelly, 109 Iowa, 544, 80 N. W. 520; Glor v. Kelly, 49 App. Div. 617, 63 N. Y. Supp. 339. Where a principal, knowing that an unauthorized lease had been made in his behalf, entered into possession and enjoyed the use of the premises without knowing or ascertaining the terms of the lease, he must be held to have intended to ratify the lease, whatever it might be. Ehrmanntraut v. Robinson, 52 Minn. 333, 54 N. W. 188. 18) EFFECT OF RATIFICATION. 75 contract into which the agent had, without informing his principal, introduced unauthorized terms." EFFECT OF RATIFICATION. 18. The effect of ratification is by relation to invest the per- son on -whose behalf the act ratified was done, the per- son who did the act, and third persons with the same rights and duties as if the act had been done with the previous authority of the person ratifying. EXCEPTIONS: (1) INTERVENING RIGHTS OF STRAN- GERS. Where rights of strangers have become vested between the time of performance of the act and its ratification, ratification is not effective to divest such rights. (2) ACT CREATING RIGHT AGAINST THIRD PERSON. In some cases, where the act is such that it would if authorized create a right in favor of the principal to have some act performed by a third person, so that in justice he is entitled to know whether the act is authorized before being bound to perform, ratifica- tion is not effective to charge such third person by relation with the duty which would have been im- posed upon him had the act been authorized. (3) CONTRACT OTHER PARTY. Where the act ratified is a contract (a) Some courts hold (it seems erroneously) that ratifi- cation is ineffective to bind the other party to per- formance unless he subsequently assents; (h) Some courts hold (it seems correctly) that ratifica- tion is not effective to bind the other party to per- formance if he has withdrawn his assent before ratification. Roberts v. Rumloy, 58 Iowa, 301, 12 N. W. 323. Where a principal authorized an agent to sell stock, expressly re- serving the right to a dividend, and the agent sold, agreeing that the dividend should go with the stock, and the owner received the exact amount for which he had authorized the stock to be sold, without knowledge of the agreement, retaining the proceeds was not a ratifi- cation. Wheeler v. Sleigh Co. (C. C.) 39 Fed. 347. See, also, Long T. Poth, 1G Misc. Rep. 85, 37 N. Y. Supp. 670. 76 CREATION OF RELATION RATIFICATION. (Ch. 3 (4) LIABILITY OF AGENT. In some cases ratification is not effective to relieve the agent from liability to the principal for performance of an unauthorized act. Ratification Irrevocable. An election to ratify once made is irrevocable. 1 If the principal adopts the act for a moment he is bound. 2 This statement is, of course, subject to the qualification that the ratification must be made with knowledge of the facts, or else must be made with the intention to ratify whatever the facts may be; for otherwise the principal may disavow the ratification upon being informed of the facts. 8 Doctrine of Relation. By the doctrine of relation, the principal, the agent, and the person with whom the agent dealt are, upon ratifica- tion, as a rule, invested with the same rights and duties as if the act ratified had been authorized. "Omnis ratihabitio retro trahitur et mandate sequiparatur." Yet while it is the rule that ratification relates back and is equivalent to previ- ous authority, there are many cases in which ratification is in fact far from being equivalent to previous authority, and in which a strict application of the doctrine of relation would lead to absurd and unjust results. To apply the doc- trine in such cases would be to adhere to a legal fiction at the expense of facts and plain justice, and the law accord- ingly recognizes many exceptions to the rule. 4 These ex- ceptions may properly be dealt with in treating of the effect of ratification, for the question is not what acts are capable of ratification, but, rather, what are the limitations upon the doctrine of relation in its effect upon the rights and duties of the different persons concerned, when ratification actually takes place. 5 18. i Smith v. Cologan, 2 T. R. 188. note; Jones v. Atkinson, 68 Ala. 167; Brock v. Jones, 16 Tex. 463; Sanders v. Peck, 30 C. C. A. 530, 87 Fed. 61. As to ratification after disapproval, ante, p. 62. a Smith v. Cologan, 2 Term R. 188, note. Ante, p. 61. 9 Harv. Law Rev. 60; 5 Harv. Law Rev. 19. Post, p. 77. 18) EFFECT OF RATIFICATION. 77 Effect of Ratification Intervening Rights of Strangers. An obvious limitation upon the doctrine of relation is that it cannot be allowed to defeat rights of strangers which have accrued between the act and the ratification.* Thus the prin- cipal cannot, by ratifying an unauthorized contract of sale, defeat an intermediate sale of the property made by him- self, 7 or defeat intervening liens acquired by attachment or judgment upon the property. 8 So, where an unauthorized notice of stoppage in transitu was given, and afterwards the transitus was terminated by demand for the goods made by the assignees in bankruptcy of the consignee upon and refusal of the carrier to deliver the goods, which the car- rier delivered to the consignor's assumed agents, it was held that the consignor's subsequent ratification of what had been done on his behalf was inoperative to defeat the right of property in the goods, which upon termination of the transitus had become vested in the assignees in bank- ruptcy. "In some cases," said Rolfe, B., "where an act which, if authorized, would amount to a trespass, has been done in the name and on behalf of another, but without Lord Audley v. Pollard, Cro. Eliz. 561; Donnelly v. Popham, 1 Taunt. 1; Bird v. Brown, 4 Ex. 786; Lyell v. Kennedy, 18 Q. B. D. 796; Cook v. Tullis, 16 Wall. (U. S.) 332, 21 L. Ed. 933; McCracken v. City of San Francisco, 16 Cal. 624; Wood v. McCain, 7 Ala. 800. 42 Am. Dec. 612; Pollock v. Cohen, 32 Ohio SL 514; McMahan v. McMahan, 13 Pa. 376, 53 Am. Dec. 481; Stoddart's Case, 4 Ct Cl. (U. S.) 511; Clendenning v. Hawk, 10 N. D. 90, 86 N. W. 114; Gra- ham v. Williams, 114 Ga. 716, 40 S. E. 790. T Parmelee v. Simpson, 5 Wall. (TJ. S.) 81, 18 L. Ed. 542; Mc- Cracken v. City of San Francisco, 16 Cal. 624; McDonald v. McCoy. 121 Cal. 55. 53 Pac. 421. Wood v. McCain, 7 Ala. 806, 42 Am. Dec. 612; Taylor v. Robin- son, 14 Cal. 396; Pollock v. Cohen, 32 Ohio St 514; Norton v. Bank. 102 Ala. 420, 14 South. 872; Simon v. Association, 54 Ark. 58, 14 S. W. 1101. Where an agent to collect an account takes a deed of land there- for without authority, and after recording, but before ratification, the land is attached by another creditor, his rights are not defeated by the ratification. Kempner v. Rosenthal. 81 Tex. 12, 16 S. W. 639. 78 CREATION OF RELATION RATIFICATION. (Ch. 3 previous authority, the subsequent ratification may enable the party on whose behalf the act was done to take ad- vantage of it, and treat it as having been done by his di- rection. But this doctrine must be taken with the qualifica- tion that the act of ratification must take place at a time, and under circumstances, when the ratifying party might have lawfully done the act which he ratifies. * * * The stoppage could only be made during the transitus. During that period the defendants, without authority from Illins [the consignor], made the stoppage. After the transitus was ended, but not before, Illins ratified what the defendants had done. From that time the stoppage was the act of Il- lins, but it was then too late for him to stop. The goods had already become the property of the plaintiffs, free from all right of stoppage." 9 li does not follow, however, that the ratification, although its effect is thus partially defeated by the intervention of su- perior rights, is totally inoperative. Thus, in the last case, the stoppage by ratification became the act of the consignor, and he might consequently have been held liable for the conversion. Nor upon principle is there any reason why one who sees fit to ratify an unauthorized contract of sale, al- though he has in the meantime conveyed the property to a stranger, cannot be held to respond in damages to the other party to the contract, or can avoid the obligation to indem- nify and compensate the agent. 10 Same Between Principal and Third Party. The transaction ratified may be a mere act or it may be a contract. In both cases the doctrine of relation applies with- out exception, so far as concerns the binding force of the ratification upon the principal. In its effect upon the obliga- tions of the other party, however, the doctrine of relation is not universally applicable. 11 Bird v. Brown, 4 Ex. 786. o See Lyell v. Kennedy, 14 App. Cas. 437. 11 Story, Ag. 245. 18) EFFECT OF RATIFICATION. 79 (a) Acts Other Than Contracts. Where an unauthorized act is of such a nature that it would, if authorized, create a right in favor of the principal to have some act performed by a third person, the performance of which, in the absence of authority on the part of the assumed agent, would be unnecessary, it is manifestly unjust to give to ratification the effect of previous authority, so as to subject the third person, if he fails to perform, to the consequences which would have resulted from nonperformance had the act of the assumed agent been authorized; 12 for the third person, being ig- norant whether the act will be ratified, is obliged to perform at his own risk, and will be without protection if the prin- cipal disavows the act. The courts have frequently recog- nized an exception to the doctrine of relation in such cases, although the exception is not clearly defined or universally recognized. 18 Thus, it has been held that an unauthorized 12 "On the other hand, if the act done by such person would, if authorized, create a right to have some act or duty performed by a third person, so as to subject him to damages or losses, for the non- performance of that act or duty, or would defeat a right or an estate already vested in the latter, there the subsequent ratification or adoption of the unauthorized act by the principal will not give valid- ity to it, so as to bind the third person to the consequences." Story. Ag. 246. See 5 Harv. Law Rev. 19; 9 Harv. Law Rev. 60; Wright, Prin. & Ag. 49. ia Mr. Wharton suggests the uncertain test of "moral" certainty. **In all cases in which it is morally sure the principal will ratify, other parties are bound to treat the intervener the negotiorum gestor as an agent. In cases where the ratification of the principal may be regarded as doubtful, the intervener may be treated as a mere Interloper." Wharton, Ag. 80. This distinction is approved in Far- mers' Loan & Trust Co. v. Railroad Co. (C. C.) 83 Fed. 870, in which case the facts were as follows: Under a provision in a rail- road mortgage that, on default in payment of any installment of Interest, continuing for 60 days, the holders of one- third in amount of the bonds secured might declare the principal due, by an instru- ment executed by them "or their attorneys in fact thereto duly au- thorized," and delivered to the trustee, such a declaration of ma- turity was signed 'by a person as attorney in fact of his wife and two brothers, who were bondholders. He had no written authority, 80 CREATION OF RELATION RATIFICATION. (Gil. 3 notice to quit does not become binding upon a tenant by ratification, 14 at least if he fails to act upon it. 15 "A rati- fication given afterwards will not do in his case," said Lord Ellenborough in Right v. Cuthell, 16 "because the tenant was entitled to such notice as he could act upon with certainty at the time it was given ; and he was not bound to submit him- self to the hazard whether the third coexecutor chose to ratify the act of his companions or not." And Lawrence, J., said in the same case: "The rule of law, that omnis ratihabitio retro trahitur, etc., seems only applicable to cases where the conduct of the parties on whom it is to operate, not being referable to any agreement, cannot in the mean- time depend on whether there be a subsequent ratification." So, it seems, an unauthorized demand, though ratified, will not support an action, for the other party has a right to know whether he may safely pay or deliver to the person making demand. 17 On the other hand, it has been held that the bringing of an action may be subsequently ratified but an instrument ratifying his act was executed by the persons for whom he acted after the filing of a bill of foreclosure by the trustees. Held, that such ratification rendered effective the act of the attorney as against the mortgagor and a second mortgagee. Lurton, J., after referring to Mr. Wharton's distinction, said: "Applying this to the defendants, they must be regarded as bound by the ratification, which in view of the relationship borne by D. Willis James to those he assumed to represent, and the obvious interest they have in rati- fying what he did, can be no surprise to them." See Johnson v. Johnson (C. C.) 31 Fed. 700, 702. i* Right v. Cuthell, 5 East, 491; Doe v. Walters, 10 B. & C. 626; Doe v. Goldwin, 2 Q. B. 143; Brahn v. Forge Co., 38 N. J. Law, 74; Pickard v. Perley, 45 N. H. 188, 86 Am. Dec. 153. Contra: Roe v. Pierce, 2 Camp. 96; Goodtitle v. Woodward, 3 B. & Aid. 689. IB in cases which would otherwise fall within this exception, if the third person recognizes the assumed authority, clearly the reason for denying full effect to a subsequent ratification fails. ie 5 East, 491. if Solomons v. Dawes, 1 Esp. 83; Coore v. Galloway, 1 Esp. 115: Coles v. Bell, 1 Camp. 478, note; Story, Ag. 247. But it has been held that bringing suit founded on an unauthorized 18) EFFECT OF RATIFICATION. 81 by the party on whose behalf it is brought, 18 although some courts, with what appears to be the better reason, have held that the principal cannot, by ratification, take away from the defendant a defense which he had at the com- mencement of the action. 19 (b) Contracts. The effect of ratification of a contract is to invest the principal with all the obligations of an original demand is a ratification, and that the demand is sufficient unless the authority to make it was brought in question by the party sought to be charged at the time. Ham v. Boody, 20 N. H. 411, 51 Am. Dec. 235; Payne v. Smith, 12 N. H. 34; Town of Grafton v. Follans- bee, 16 N. H. 450, 41 Am. Dec. 736. Notice of dishonor of a bill or note by a stranger, though ratified, does not bind a drawer or In- dorser. Stewart v. Kennett, 2 Camp. 177; Chanoine v. Fowler, 3 Wend. (N. Y.) 173. is Ancona v. Marks, 7 H. & N. 686; Marr v. Plummer, 3 Greenl. (Me.) 73; Persons v. McKibben, 5 Ind. 261, 61 Am. Dec. 85. See. also, Farmers' Loan & Trust Co. v. Railroad Co. (C. C.) 83 Fed. 870. Where the bolder of a bill indorsed it, and delivered it to a so- licitor, who at his request brought suit on it in the name of Ancona. It was held that his ratification after suit begun entitled him to maintain the action. Ancona v. Marks, supra. i Wittenbrock v. Bellmer, 57 Cal. 12; Dlngley v. McDonald, 124 Cal. 682, 57 Pac. 574. Where an agent without authority paid plaintiff a debt due him from defendant out of moneys of defendant, but defendant repudi- ated the payment, and plaintiff sued on the debt, a ratification, after suit brought, could not operate retroactively, so as to defeat the ac- tion. Fiske v. Holmes, 41 Me. 441. Code Prac. Ky. 550, providing that, In the absence of the plain- tiff, the affidavit required by the statute for a writ of attachment may be made by his agent or attorney, intends an existing rela- tion at the time the affidavit is filed, and ratification subsequent to Issuance of the writ will not sustain it. Johnson v. Johnson (C. C.) 81 Fed. 700. Ratification of unauthorized signing of plaintiff's name to an at- tachment bond does not relate back so as to sustain the attachment. Grove v. Harvey, 12 Rob. (La.) 221. Contra: Dove v. Martin, 23 Miss. 588; Bank of Augusta v. Courey, 28 Miss. 667; Mandel v. Peet, j.8 Ark. 236. TIFF.P.& A. 6 &i CREATION OF RELATION RATIFICATION. (Ch. 3 party to it. 20 The third party may enforce the contract, and has all the incidental rights that he would possess had the person actually dealing with him been the principal himself. If, for example, the agent induced the third party to sell by means of false representations, the seller has the same right to rescind or to affirm, and otherwise to hold the principal answerable for the fraud, that he would have possessed against the principal acting in person. 21 By a reasonable application of the doctrine of ratification it should follow that, upon the election of the principal to adopt a contract made on his behalf, the third party becomes bound for its performance. The authorities are not agreed, however, 'upon this proposition, and some cases have held that since mutual assent is essential to a contract it cannot rest with the party ratifying to bind the other party to an executory contract, and that he can be bound only by some act signifying his present consent to be bound. 22 "The prin- cipal in such case may," said Dixon, C. J., in the leading case maintaining the negative of the proposition, 28 "by his subsequent assent, bind himself; but if the contract be ex- ecutory, he cannot bind the other party. The latter may, if he choose, avail himself of such assent against the prin- ao Fleckner v. Bank of United States, 8 Wheat. (U. S.) 338, 5 L. Ed. 631; Bronson v. Chappell, 12 Wall. (U. S.) 681, 20 L. Ed. 436; Starks v. Sikes, 8 Gray (Mass.) 609, 69 Am. Dec. 270; Lawrence v. Taylor, 5 Hill (N. Y.) 107; Hankins v. Baker, 46 N. Y. 666; United States Express Co. v. Rawson, 106 Ind. 215, 6 N. B. 337. 21 Elwell v. Chamberlin, 31 N. Y. 611; Smith v. Tracy, 36 N. Y. 79; Fairchild v. McMahon, 139 N. Y. 290, 34 N. E. 779, 36 Am. St. Eep. 701; Lane v. Black, 21 W. Va. 619; post, pp. 229, 275 et seq. 22 Dodge v. Hopkins, 14 Wis. 630; Atlee v. Bartholomew, 69 Wis. 43, 33 N. W. 110, 5 Am. St Rep. 103. Of. Townsend v. Corning, 23 Wend. (N. Y.) 435. This doctrine is supported by Mr. Mechem in his work on Agency (section 179), and in 24 Am. Law Rev. 580. It is adversely criticised in Atlee v. Bartholomew, 5 Am. St. Rep. 113, note (s. c. 69 Wis. 43, 83 N. W. 110); 25 Am. Law Rev. 74; 9 Harv. Law Rev. 60. as Dodge v. Hopkins, 14 Wis. 630. 18) EFFECT OF RATIFICATION. 83 cipal, which, if he does, the contract, by virtue of such mutual ratification, becomes mutually obligatory." The fallacy of this reasoning, it is submitted, lies in applying to the anom- alous doctrine of ratification the test of mutual assent. Un- doubtedly, a contract which requires ratification, like other contracts, must rest on mutual assent. But in the case un- der consideration the assent of the other party is given in advance. It is true that until ratification the contract is not binding because of the absence of assent on the part of the assumed principal, but by ratifying the contract he assents to it, and the assent then becomes mutual and the contract by relation mutually binding as of the date it was entered into by the assumed agent. 2 * *< McClintock v. Oil Co., 146 Pa. 144, 23 All. 211, 28 Am. St. Rep. 785; post, p. 85. In Hagedorn v. Oliverson, 13 East, 274, where plaintiff, without authority, procured an insurance upon a ship for the benefit of the owner, who ratified after a loss had occurred and was known, It was held that an action was maintainable on the policy for his benefit. See, also, Routh v. Thompson, 13 East, 274; Finney v. Insurance Co., 5 Mete. (Mass.) 192. 38 Am. Dec. 397; Stillwell v. Staples, 19 N. Y. 401; Williams v. North China Ins. Co., 1 C. P. D. 757. These cases are exceptional, in that they give full effect to th* ratification notwithstanding that the principal would not then be able to make the same contract as that ratified. In Williams v. North China Ins. Co., supra, the rule which they establish with regard to marine Insurance was sustained by Cockburn, C. J., both on the ground of stare decisis, and as a legitimate exception from the general rule, because "where an agent effects an insurance sub- ject to ratification the loss insured against is very likely to happen before ratification, and It must be taken that the Insurance so ef- fected Involves that possibility as the basis of the contract" See, also, Story, Ag. 248; Wharton, Ag. 81. But where a life insurance policy expressly provided that It should not take effect until the advance premium should have been paid during the lifetime of the insured, it was held that an unauthorized payment of the premium during his life could not be ratified by his administrator. Whiting v. Insurance Co., 129 Mass. 240, 37 Am. Rep. 317. Cf. Dibbins v. Dibbins [1896] 2 Ch. 348. 84 CREATION OF RELATION RATIFICATION. (Ch. 3 Same Withdrawal of Other Party before Ratification. A question closely connected with that discussed in the last paragraph is whether the other party to an unauthor- ized contract may withdraw from it before ratification. In jurisdictions where it is held that the assent of the other party to be bound by the contract, even after ratification, is req- uisite, the question is, of course, answered in the affirma- tive. 25 In England, on the other hand, the doctrine of rela- tion has recently been pushed to an extreme limit, and it has been held that ratification by the assumed principal is ef- fective to bind the other party to the contract notwith- standing that he has in the meantime withdrawn his assent. Thus, where an offer was accepted without authority by the managing director of a company on its behalf, and before ratification the other party gave notice that he withdrew his offer, it was held that the subsequent ratification related back to the time of acceptance, and rendered the withdrawal inoperative. Lindley, C. J., said : "I can find no authority in the books to warrant the contention that an offer made, and in fact accepted by a principal through an agent or otherwise, can be withdrawn. The true view, on the con- trary, appears to be that the doctrine as to the retrospective action of ratification is applicable. If we look to Mr. Brice's argument closely, it will be found to turn on this that the acceptance was a nullity, and, unless we are prepared to say that the acceptance of the agent was absolutely a nullity, Mr. Brice's contention cannot be accepted. * * * I see no reason to take this case out of the application of the general principle as to ratification." 2e The effect of this decision is that between the time of the unauthorized con- 2B Ante, p. 82. as Bolton Partners v. Lambert [1889] 41 Ch. D. 295. This case has been adversely criticised. See Wright, Prin. & Ag. 51; Bow- stead, Ag. 41; Campbell, Sale of Goods & Com. Ag. 238; Foy, Spec. Perf. (3d Ed.) 711; Huffcut, Ag. 38; 5 Law Q. Rev. 440; 9 Harv. Law Rev. 60. But it was followed in Re Portuguese Consolidated Copper Mines, 18) EFFECT OF RATIFICATION. 85 tract and its ratification the other party is contingently bound, although the principal is not bound. 27 It seems pos- sible, however, to give effect to the principle as to ratifica- tion without doing violence to the principle requiring con- tracts to be based on mutual assent, by holding that the ratification is not effective to make the contract binding upon the other party if he has in the meantime withdrawn his assent, 28 but that unless it be withdrawn, being an assent to what purports to be a contract and not in form a mere offer, the assent continues, the contract thus becoming bind- ing upon ratification by mutual assent. 2 ' 45 Ch. D. 16, and in Re Tiedemann & Ledermann Frere [1899] 2 Q. B. 66. See, also, Andrews v. Insurance Co., 92 N. Y. 596, 604. But acceptance by an agent, acting without authority, of an option of purchase, which has to be exercised within a limited time, is not made effective by ratification after the time has expired. Dibbins v. Dibbins [1896] 2 Ch. 348. " "It comes to this, that if an offer to purchase Is made to a person who professes to be the agent for a principal, but who bas no authority to accept it, the person making the offer will be in a worse position as regards withdrawing it than if it had been made to the principal; and the acceptance of the unauthorized agent in the meantime will bind the purchaser to his principal, but it will not in any way bind the principal to the purchaser." In re Portuguese Consolidated Copper Mines, 45 Ch. Div. 16, per North, J. 28 This view finds support, even in England, in the earlier case of Walter v. James, L. R. 6 Ex. 124 [1891]. In that case an agent after revocation of his authority, paid money on behalf of his prin- cipal to a creditor, who afterwards returned it to the agent at his request. In an action by the creditor against the principal to re- cover his debt the defendant pleaded payment, but it was held that It was competent for the assumed agent and the third party to cancel the transaction, and that consequently the ratification by plea of pay- ment was too late. But If the third party may withdraw his assent before ratification, with consent of the agent, who obviously has no power to cancel the transaction, it follows that he may withdraw bis assent by communicating his withdrawal to the principal, irre- spective of the agent's consent. 2 A person having entered into a contract with plaintiff, a mar- ried woman, to sell land to her, her husband, assuming to act as her agent, sold the contract to defendant, Indorsing thereon at his 86 CREATION OF RELATION RATIFICATION. (Oh. 3 Same Between Principal and Agent. By the doctrine of relation, ratification invests both prin- cipal and agent, as a rule, with the same rights and duties as if the transaction had been previously authorized. If the principal elects to ratify, he assumes the burdens that are incidental to adoption of the agent's act. Hence the agent may look to the principal for compensation 80 and indem- nity. 81 And by the ratification the principal ordinarily ab- request a memorandum of the terms of sale. On the day for pay- ment defendant indorsed on the contract an assignment by husband and wife, which they executed, but defendant refused to accept the assignment. In an action to recover the price, it was held that sign- ing the assignment was a ratification by plaintiff, and that it became binding without acceptance by defendant. Mitchell, J., said: "The objection of want of mutuality is not good in many cases of dealing with an agent, for if he exceeds his authority, actual and apparent, his principal will not be bound, yet may ratify, and then the other party will be bound from the inception of the agreement. The ag- gregatio mentium of the parties need not commence simultaneously. It must coexist, but there must be a period when the question of contract or no contract rests on the will of one party to accept or reject a proposition made, and this interval may be long or short. The offer, of course, may be revoked or withdrawn at any time prior to acceptance, but after acceptance It is too late." McClintock v. Oil Co., 146 Pa. 144, 23 Atl. 211, 28 Am. St. Kep. 785. For an Me discussion of this vexed question, see "A Problem as to Ratification," by Prof. Wambaugh, 9 Harv. Law Rev. 60. so Wilson v. Dame, 58 N. H. 392; Goss v. Stevens, 32 Minn. 472, 21 N. W. 549; United States Mortg. Co. v. Henderson, 111 Ind. 24, 12 N. E. 88. Where the managing owner of a ship sold her through his agent, and his co-owners ratified the sale, they were jointly liable to the agent for his commission. Keay v. Fenwick, 1 C. P. D. 745. Where a real estate agent departs from his authority in effecting a sale, upon ratification the compensation fixed in the original con- tract of employment controls. Gelatt v. Ridge, 117 Mo. 553, 23 S. W. 882, 38 Am. St. Rep. 683. si Cornwall v. Wilson, 1 Ves. 510. Where an agent defended an action brought against him for breach of a contract entered into by him on behalf of his principal, who rati- fied what had been done, it was held that he must indemnify the 18) EFFECT OF RATIFICATION. 87 solves the agent from all responsibility on account of the unauthorized transaction, whether he was an agent who ex- ceeded or departed from his instructions or a mere volun- teer." The ratification must, of course, be made with knowledge of the material facts ; for othenvise it will not be binding, 88 whether the want of knowledge arose from cqp- cealment or misrepresentation of the agent or from his mere innocent inadvertence. 84 It has been held, however, that an adoption of an agent's unauthorized act in order to make the loss as small as possible is not such a ratification as will relieve the agent; 85 in other words, that in such a case the law will not apply the doctrine of relation for the benefit of an agent who has placed the principal in a position where he is forced to ratify to reduce his loss. And where an agent for collection, who was instructed to femit by express, pur- chased a check drawn on parties in good standing in New York, and forwarded it to his principal, who sent it to New York for collection, but before it was presented the drawers became insolvent, and the check was dishonored, it was held that sending the check for collection was not such a ratifi- cation as to absolve the agent for violating his instructions. 86 And if the principal delays action after knowledge of the agent against the damages and costs recovered against him in the action. Frixione v. Tagliafferro, 10 Moore, P. C. 175. sz Smith v. Cologan, 2 T. R. 188, note; JEtna Ins. Co. v. Sabine, 6 McLean (U. S.) 393, Fed. Cas. No. 97; Pickett v. Pearsons, 17 Vt 470; Hazard v. Spears, *43 N. Y. 485; Hanks v. Drake, 49 Barb. (N. Y.) 186; Green v. Clark, 5 Denio (N. Y.) 497, 502; Bray v. Gunn, 53 Ga. 144; Ward v. Warfield, 3 La. Ann. 468; Clay v. Spratt, 7 Bush (Ky.) 334; Woodward v. Suydam, 11 Ohio, 300; Menkens v. Watson, 27 Mo. 163. Ante, p. 72. See, also, cases cited in last note. * Bank of Owensboro v. Bank, 13 Bush (Ky.) 526, 26 Am. Rep. 211; Vincent v. Rather, 31 Tex. 77, 98 Am. Dec. 516; Story, Ag. 243. Triggs v. Jones, 46 Minn. 277, 284, 48 N. W. 1113. See, also, Walker v. Walker, 5 Heisk. (Tenn.) 425; Wharton, Ag. 67; Mechem, Ag. 173. Walker v. Walker, 5 Heisk. (Tenn.) 425. 88 CREATION OF RELATION RATIFICATION. (Ch. 3 facts at the request of the agent, so that his conduct is an implied ratification, the agent is not necessarily absolved from liability for his breach of duty. 87 Same Between Agent and Third Party. One who contracts as agent of another is deemed to war- rant his authority. ' If the contract be authorized, the prin- cipal, and not the agent, is liable; but, if it turns out that the agent acted without authority, he must respond to the other party in damages. 88 Ratification, being equivalent to previous authority, relieves the agent from all liability to the other party upon an unauthorized contract. 89 If the un- *7 In Triggs v. Jones, 46 Minn. 277, 48 N. W. 1113, plaintiff in- trusted to an agent a deed with instructions to deliver it to C. upon formation of a contemplated corporation and delivery to plaintiff of stock therein. The agent delivered the deed without fulfillment of the conditions, and C. conveyed to an innocent purchaser. The agent informed plaintiff of the delivery, and plaintiff did not at once re- pudiate, but joined in taking steps to form the corporation, which was finally abandoned. In an action to obtain a reconveyance and to recover damages against the agent, it was held that because of the delay in repudiating plaintiff was not entitled to a reconveyance, but that his conduct did not amount to such a ratification as to absolve the agent from liability for breach of instructions. Mitchell, J., said: "Mere passive inaction or silence, which would amount to an implied ratification in favor of third parties, might not amount to that in favor of the agent, so as to absolve him from liability to his principal for loss or damage resulting from the unauthorized, act, especially if such inaction or failure to immediately disaffirm was induced by the assurances or persuasion of the agent himself. Nor In this case does the affirmative action of the plaintiff, after knowl- edge of the delivery of the deed, in taking part in the preliminary steps for the organization of the contemplated stock company, of itself amount to a ratification of the unauthorized act. * * * In- duced, as such action probably was, by the assurances of Jones that the enterprise would still go on, and plaintiff get his stock, it really amounted to nothing more than an effort on plaintiff's part, after knowledge of Jones' deviation from his instructions, to avoid loss thereby, which is not such a ratification as will relieve the agent." as Post, p. 368. 8 Spittle v. Lavender, 2 Brod. & B. 452; Sheffield v. LaDue, 16 Minn. 388 (Gil. 346), 10 Am. Rep. 145; Berger's Appeal, 96 Pa. 443. g 18) EFFECT OF RATIFICATION. 89 authorized act is a tort, ratification is of course powerless to relieve the assumed agent from responsibility, 40 unless the act was one which the principal might lawfully have done, in which case the ratification operates as a justifica- tion. 41 o Hillberry v. Hatton, 2 H. & C. 822; Richardson v. Kimball, 28 Me. 463; Perminter v. Kelly, 18 Ala. 716, 54 Ain. Dec. 177. 41 Whitehead v. Taylor, 10 A. & E. 210; Hull v. Plgersklll, 1 Brod. & B. 282. 90 WHAT ACTS CAN BE DONE BY AGENT. (Ch. 4 CHAPTER IV. WHAT ACTS CAN BE DONE BY AGENT ILLEGALITY CA- PACITY OF PARTIES-JOINT PRINCIPALS AND AGENTS. 19. What Acts can be Done by Agent. 20. Illegality of Object 21. Capacity of Parties Principal. 22. Capacity of Parties Agent Capacity to Act 23. Capacity to Enter into Contract of Agency. 24. Joint Principals. 25. Joint Agents. WHAT ACTS CAN BE DONE BY AGENT. 19. Whatever a person can do in his own right, except an act required 1>y statute to be done in person, he can do by an agent. ILLEGALITY OF OBJECT. 20. A contract of agency which contemplates an illegal ob- ject is void. What Acts can be Done by Agent. At common law, as a rule, whatever a person has power to do in his own right he can do by an agent, with the same force and effect as if he had done it in person. 1 A few acts of a personal nature, it is said, cannot be delegated. Thus a man could not do homage or fealty by attorney. 2 So the exercise of a power, conferred as a personal trust or confidence, may not be delegated ; 8 but this is not prop- erly an exception to the rule, since the exercise of such a power is not something which the possessor may do in 19-20. i Combes' Case, 9 Co. 75a. 2 Combes' Case, 9 Coke, 75a. * Lyon v. Jerome, 26 Wend. (N. Y.) 485, 37 Am. Dec. 271; Newton v. Bronson, 13 N. Y. 587, 67 Am. Dec. 89; post, p. 116. 19-20) ILLEGALITY OF OBJECT. 91 his own right. Whether an act authorized or required by statute may be done by an agent depends upon the construc- tion of the particular statute, in view of the language used and the nature of the act. Thus, where a law for the li- censing of vessels required an oath of ownership by the own- er, an oath by the master, acting as agent, was held to be in- sufficient. 4 And under Lord Tenterden's act, requiring an acknowledgment or promise, in order to take a debt out of the statute of limitations, to be "signed by the party charge- able thereby," it was held that the signature must be per- sonal, on the groun.d that the enactment was one of a series of enactments which made a distinction between a signature by the party and a signature by agent. 5 But, in cases of signatures required by statute, it is generally held that the common-law rule,, qui facit per alium facit per se, will prevail in determining the construction, if there is nothing in the statute to indicate a different intention. 9 It follows that, subject to the exceptions mentioned, an agency can be created for any lawful purpose. It does not follow, of course, as has already been pointed out, 7 that a person can escape from the consequences of an act which he commands or authorizes because it is unlawful, for a man is responsible for torts and crimes whether he acts in his own person or by the instrumentality of another person. Illegality of Object. Certain classes of agreements, either because of the il- legality of the object, or because certain requirements of the law have not been complied with, or for other reasons, are prohibited, and if for any reason an agreement falls with- United States v. Bartlett, Dav. (U. S.) 9, Fed. Cas. No. 14,532. Hyde v. Johnson, 2 Bing. (N. C.) 776; Swift v. Jewsbury, L. R. 9 Q. B. 301. In re Whiteley Partners, Limited, 32 Ch. D. 337; Finnegan v. Lucy, 157 Mass. 439, 32 N. E. 656, See, also, Reg. v. Justices of Kent, L. R. 8 Q. B. 305. i Tost, p. 2C8. 92 WHAT ACTS CAN BE DONE BY AGENT. (Oh. 4 in a prohibited class it is void. Any such agreement, since it would be inoperative and void if entered into by the prin- cipal in person, is, of course, void if entered into by medium of an agent. The power of an agent cannot rise higher than its source. The effect of illegality upon the contract of agency is the same. If the agreement between principal and agent falls within a class of agreements which the law prohibits, either because of the illegality of the object contemplated, or be- cause of failure to comply with some legal requirement, or for any other reason, the agreement is a nullity, and neither party acquires any of the rights incident to the formation of the relation of principal and agent. The principles which determine the illegality of contracts of agency are the same a.s those which apply to other contracts, and do not call for separate treatment. 8 A few examples will serve for il- lustration. The most obvious example of an illegal agency is an em- ployment to commit a crime. "If one binds himself in an obligation to kill a man, burn a house, maintain a suit, or the like, it is void." 9 Even an agreement to commit a civil wrong, though the wrong may not be indictable, is illegal, within the meaning of the term here involved. 10 Among the agencies prohibited by public policy may be named those whose object is to procure administrative action by corrupt means, as by such means to procure government contracts, 11 * Anson, Contr. c. 5; Pollock, Contr. c. 6; Clark, Contr. c. 8 (con- taining a full citation of cases). Shep. Touch. 370. See, also, Shackell v. Rosier, 2 Bing (N. C.) 638; Toplett v. Stockdale, 1 Ry. & M. 337; Gale v. Leckie, 2 Stark. 107; Atkins v. Johnson, 43 Vt. 78, 5 Am. Rep. 260; Arnold v. Clifford, 2 Sumn. (U. S.) 238, Fed. Cas. No. 555; Jewert Pub. Co. v. Butler, 15 Mass. 517, 34 N. E. 1087. 10 Clark, Contr. 378. 11 Providence Tool Co. v. Norris, 2 Wall. (U. S.) 45, 17 L. Ed. 868; Oscanyan v. Arms Co., 103 U. S. 261, 26 L. Ed. 539; Elkhart County Lodge v. Crary, 98 Ind. 238, 49 Am. Rep. 746. {} 19-20) ILLEGALITY OF OBJECT. 93 or pardons ; lf to procure appointment to office ; *' to in- fluence by corrupt means the action of legislatures, or lob- bying contracts; 14 to impair the integrity of elections; 15 to obstruct the course of justice, as by suppressing evidence or obtaining false testimony ; 19 to corrupt agents ; 1T to in- fluence the action of another by underhand means ; 18 to procure a marriage for compensation ; ** to deal in fu- tures ; 20 and, in general, to do any act which is contrary to decency and morality. The subject of illegality will be re- ferred to again in connection with the mutual rights and duties of principal and agent. 21 Hatzfield v. Gulden, 7 Watts (Pa.) 152, 31 Am. Dec. 750; Kribben v. Haycraft, 26 Mo. 396. Such agreements are not illegal where no corrupt means are to be used. Chadwick v. Knox, 31 N. H. 226, 64 Am. Dec. 329; Moyer v. Cantieny, 41 Minn. 242, 42 N. W. 1060. is Meguire v. Corwine, 101 U. S. 108, 25 L. Ed. 899; Providence Togl Co. v. Norris, 2 Wall. (U. S.) 45, 17 L. Ed. 868; Gray v. Hook. 4 N. Y. 449; Clark, Contr. 416. Such 'agreements are illegal because of their tendency to introduce corrupt methods. Providence Tool Co. v. Norris, supra. i* Trist v. Child, 21 Wall. (U. S.) 441, 22 L. Ed. 623; Mills v. Mills, 40 N. Y. 543, 100 Am. Dec. 535; Brown v. Brown, 34 Barb. (N. Y.) 533. IB Nichols v. Mudgett, 32 Vt 546. i Gillet v. Logan County, 67 111. 256; Patterson v. Donner, 48 Cal. 869. IT Harrington v. Dock Co., 3 Q. B. D. 548; Rice v. Wood, 113 Mass. 133, 18 Am. Rep. 459; Atlee v. Fink, 75 Mo. 100, 43 Am. Rep. 385. is Byrd v. Hughes, 84 111. 174, 25 Am. Rep. 442. i Crawford v. Russell, 62 Barb. (N. Y.) 92; Duval v. Wellman. 124 N. Y. 156, 26 N. E. 343; Johnson v. Hunt, 81 Ky. 321. 20 Irwin v. Williar, 110 U. S. 499, 4 Sup. Ct 160, 28 L. Ed. 225; Harvey v. Merrill, 150 Mass. 1, 22 N. E. 49, 5 L. R. A. 200, 15 Am. St Rep. 159; Mohr v. Mlesen, 47 Minn. 228, 49 N. W. 862. Post, pp. 404, 459. 94 WHAT ACTS CAN BE DONE BY AGENT. (Ch. 4 CAPACITY OF PARTIES PRINCIPAL 21. Capacity to enter into a contract of agency or to act by means of an agent is coextensive -with the capacity of the principal to contract. EXCEPTION: The appointment of an agent by an infant or lunatic [by power of attorney nnder seal] 1 in void. There are certain persons whom the law declares incapable, wholly or in part, of entering into contracts, and their in- capacity of course debars them equally from entering into contracts of agency or contracting by means of agents. As a rule, capacity to enter into a contract of agency, or to act or contract by an agent, is coextensive with capacity to con- tract. In the case of infants and persons non compos mentis, however, there are exceptions. Infanta. It is a general rule of common law, as established by modern decisions, that the contracts of an infant are not void, but are voidable, at his option, either before or after he has attained his majority. 2 We should naturally expect this rule to prevail in respect to the contracts entered into by an infant through an agent. Nevertheless it is generally laid down broadly by the cases that an infant cannot appoint an agent or attorney, and that any such appointment, and consequently all acts and contracts of the agent under such appointment, are absolutely void. 8 Yet from early times a 21. i The tendency of the cases is to confine the exception to appointment by power under seal, though it is frequently declared that every appointment is void. Upon principle, the appointment of an agent by an infant or lunatic, like the contract of such person, is voidable, and not void. 2 Anson, Contr. 105 et seq.; Pollock, Contr. 50 et seq.; Clark, Contr. 221 et seq. a Saunderson v. Man, 1 H. Bl. 75; Doe v. Roberts, 16 M. & W. 778; Fonda v. Van Home, 15 Wend. (N. Y.) 631, 30 Am. Dec. 77; Bool v. Mix, 17 Wend. (N. Y.) 120, 31 Am. Dec. 285; Bennett v. Davis, 6 Cow. (N. Y.) 393; Knox v. Flack, 22 Pa. 337; Waples v. Hastings, 21) CAPACITY OF PARTIES. 95 distinction was drawn between an appointment of an attor- ney to do an act which is to the infant's advantage and an appointment to do an act which is to his detriment, the one being declared valid and the other void.* "The distinc- tion between deeds of femes covert and infants," said Lord Mansfield, "is important: the first are void; the second voidable. * * * Powers of attorney are an exception to the general rule as to deeds ; and a power to receive seisin is an exception to that. The end of the privilege is to protect infants. To that object, therefore, all the rules and their exceptions must be directed." 8 A somewhat similar dis- tinction was formerly made between the contracts of an in- fant that were manifestly to his prejudice, which were void, and those that were not manifestly so, which were void- able; but the later decisions have generally repudiated 3 Har. (Del.) 403; Wainwright v. Wilkinson, 62 Md. 146; Philpot v. Bingham, 55 Ala. 439; Pyle v. Cravens, 4 Litt (Ky.) 17; Lawrence v. McArter, 10 Ohio, 37; Armitage v. Widoe, 36 Mich. 124; Trueblood v. Trueblood, 8 Ind. 195, 65 Am. Dec. 756; Holden v. Curry, 85 Wis. 504, 55 N. W. 965; Wambole v. Foote, 2 Dak. 1. 2 N. W. 239. See, also, Bartholomew v. Dighton, Cro. Eliz. 424; Whittinghara's Case, 8 Co. 42b; Dexter v. Hall, 15 Wall. (U. S.) 9, 25, 21 L. Ed. 73; Tucker v. Moreland, 10 Pet. (U. S.) 58, 68, 9 L. Ed. 345; Flexner v. Dickerson, 72 Ala. 318; Cole v. Pennoyer, 14 111. 158; Fetrow v. Wiseman, 40 Ind. 148, 155. Botteler v. Newport, Y. B. 21 Hen. VI, 31; Rames v. Machin. Noy, 130; Story, Ag. 6. Zouch v. Parsons, 3 Burr. 1794, 1805, 1808. "All such gifts, grants, or deeds made by an infant as do not take effect by delivery of his hand are void. But all gifts, grants, or deeds made by an infant by matter in deed, or in writing, which take effect by delivery of his own hand, are voidable by himself and his heirs, and by those who have bis estate." Perkins, Prof. Bk. 12. Referring to this statement of the law, Lord Mansfield observed: "The words 'which do take effect* are an essential part of the defini- tion; and exclude letters of attorney, or deeds which delegate a mere power and convey no interest." Zouch v. Parsons, supra. See Wam- baugb, Cas. Ag. 18, note 1. A power, coupled with an interest, held voidable, and not void. Duvall v. Graves, 7 Bush (Ky.) 461. 1)6 WHAT ACTS CAN BE DONE BY AGENT. (Ch. 4 this distinction, holding that the infant is amply secured by refusal to allow the contract to be enforced against him during his infancy and by leaving it to his option to ratify or repudiate it after his majority. 6 It is noticeable that nearly all the cases cited in support of the exception to the general rule which declares the contracts of an infant to be voidable are cases involving the effect of powers of attor- ney or warrants of attorney to confess judgment, 7 and, while as to these the doctrine is perhaps too firmly established by precedent to be departed from, the tendency of the later decisions is to confine the exception, which has frequently been pronounced to be without reason, to such cases. 8 Thus it has been held that an infant may authorize another to in- dorse a note, and that the indorsement, being voidable, Pollock, Contr. 51. t Coursolle v. Weyerhauser, 69 Minn. 328, 333, 72 N. W. 697; Huff- cut, Ag. 15. s Whitney v. Dutch, 14 Mass. 457, 7 Am. Dec. 229; Welch v. Welch, 103 Mass. 562; Moley v. Brine, 120 Mass. 324; Fairbanks v. Snow, 145 Mass. 153, 13 N. E. 596, 1 Am. St. Rep. 446, per Holmes, J.; Hardy v. Waters, 38 Me. 450; Towle v. Dresser, 73 Me. 252; Patterson v. Lippincott, 47 N. J. Law, 457, 1 Atl. 506, 54 Am. Rep. 178; Hastings v. Dollarhide, 24 Cal. 195; Coursolle v. Weyerhauser, 69 Minn. 328, 72 N. W. 697. Cf. Bwell's Evans, Ag. 10, note 1; Swell's Lead. Cas. on Disabil- ities, 44; 13 Am. Law Rev. 287, 288; Bishop, Contr. 930; Mechem, Ag. 55. The following considerations have been suggested as the founda- tion of the exception: "This rule depends upon reasoning, which, if somewhat refined, is yet perhaps well founded. The constituting of an attorney by one whose acts are in their nature voidable is re- pugnant and impossible, for it is imparting a right which the prin- cipal does not possess that of doing valid acts. If the acts when done by the attorney remain voidable at the option of the infant, the power of attorney is not operative according to its terms; if they are bind- ing upon the infant, then he has done through the agency of an- other what he could not have done directly binding acts. The funda- mental principle of law in regard to infants requires that the infant should have the power of affirming such acts done by the attorney as he chooses, and avoiding others, at his option; but this involves 21) CAPACITY OF PABTIE8. 97 may be ratified as if made by the infant in person.* Indeed, it has been held in a recent case in Minnesota that the ap- pointment of an attorney to sell and convey real estate, and a conveyance by the attorney under such appointment, are not void, but are merely voidable, and capable of ratification by the infant on reaching majority. "On principle," said Mitch- ell, J., "we think the power of attorney of an infant, and the acts and contracts made under it, should stand on the same footing as any other act or contract, and should be consid- ered voidable in the same manner as his personal acts and contracts are considered voidable. If the conveyance of land by an infant personally, who is of imperfect capacity, is void- able, as is the law, it is difficult to see why his conveyance made through an attorney of perfect capacity should be held absolutely void. * * * The courts have from time to time made so many exceptions to the exception itself that there seems to be little left of it, unless it be in cases of powers of attorney required to be under seal, and warrants of attorney to appear and confess judgment in courts." 10 As has already been pointed out, whether an act performed without authority on behalf of an infant is capable of ratifi- an immediate contradiction, for to possess toe right of availing him- self of any of the acts he must ratify the power of attorney, and if be ratifies the power all that was done under it must be confirmed. If he affirms part of a transaction, he at once confirms the power, and thereby, against his intention, affirms the whole transaction. Such personal and discretionary legal capacity as an infant is vested with is, therefore, in its nature, incapable of delegation; and the rule that an infant cannot make an attorney is, perhaps, not an arbitrary or accidental exception to a principle, but a direct, necessary, logical necessity of that principle." 1 Am. Lead. Gas. (5th Ed.) 247. It would seem, however, that an infant might ratify a distinct act done under the power without ratifying the power, and without ratifying other acts done under it 9 Whitney v. Dutch, 14 Mass. 457, 7 Am. Dec. 229; Hardy v. Waters, 38 Me. 450. 10 Coursolle v. Weyerhauser, 69 Minn. 328, 72 N. W. 697. In this case the power of attorney was not required to be under seal, the deed being operative as a contract'to sell. TIFF.P.& A. 7 98 WHAT ACTS CAN BE DONE BY AGENT. (Oh. 4 cation depends upon whether his appointment to do the act would be held voidable or void. 11 Lunatics and Di^unken Men. The modern rule of the common law is that the contract of a lunatic or other person non compos mentis, like that of an infant, is not void, but is voidable, at his option. It may be ratified or disaffirmed by the lunatic on recovery of his sanity, or by his guardian or other representative. The principal difference between the contract of a lunatic and that of an infant is that if the other party did not know, or have reasonable cause to know, of the lunatic's condition of mind, and acted in good faith, and the contract has been so far executed that the parties cannot be placed in statu quo, it cannot be avoided. 12 The leading case on this point is Molton v. Camroux, 18 the principle of which has generally, though not universally, been followed in this country. 14 This has been called a decision of necessity, as a contrary doctrine would render unsafe all ordinary dealings between man and man. 16 If, however, the lunatic restores, or offers to re- store, the consideration which he has received, the necessity ceases, and he may avoid the contract. 16 It has been held by some courts that the deed of an insane person is abso- lutely void, but in most jurisdictions no distinction in this respect is made between a deed and a simple contract, and his deed is held to be voidable, and not void. 17 The con- tractual capacity of a lunatic or insane person under guard- ianship depends upon statute, and differs in different states. 11 Ante, p. 59. i* Anson, Contr. 115 et seq.; Pollock, Contr. 98 et seq.; Clark, Contr. 263 et seq.; Tiffany, Sales, 12 et seq. i 2 Ex. 487; 4 Ex. 17; Ewell, Lead. Cas. 614. i* For citation of cases, see Tiffany, Sales, 13, note 46. IB Elliot v. Ince, 7 De G M M. & G. 475, per Lord Gran worth. i Boyer v. Berry men, 123 Ind. 451, 24 N. E. 249; Myers v. Knabe, Cl Kan. 720, 33 Pac. 602; Warfield v. Warfield, 76 Iowa, 633, 41 N. W. 383; Eaton v. Eaton, 37 N. J. Law, 108, 18 ^m. Rep. 716. IT Clark. Contr. 268, and cases cited. ' 21) CAPACITY OP PARTIES. 99 In most jurisdictions contracts of a person who has been judicially declared insane and placed under guardianship are void. 18 Upon principle, we should naturally expect the general rule that the contract of a person non compos mentis is voidable, and not void, to apply to the contract of agency, and also to a contract entered into by an agent on behalf of an insane principal; nevertheless it has generally been declared that an insane person cannot appoint an agent, 19 and it has been held by the Supreme Court of the United States that a power of attorney executed by a lunatic is absolutely void. 20 It is to be observed, however, that the rule which declares the contracts of insane persons voidable and not void is of comparatively recent origin, and its ap- plication to agency has as yet received little attention. In one case, at least, the rule, or rather the exception, that the appointment of an agent by an insane person is void, if, indeed, such rule or exception exists, has been relaxed. 11 i Clark, Contr. 268. Stead v. Thompson, 3 B. & Ad. 357, note (a); Tarbuck v. Bisp- ham, 2 M. & W. 2; Dexter v. Hall, 15 Wall. (U. S.) 9, 21 L. Ed. 73; Snyder v. Sponable, 1 Hill (N. Y.) 567; Marvin v. Inglis, 39 How. Prac. (N. Y.) 329; Lee v. Morris, 3 Bush (Ky.) 210; Story, Ag. 6. See, also, Elias v. Association, 46 S. C. 188, 24 S. E. 102. A husband is liable quasi ex contractu for necessaries supplied to his wife during his insanity. Read v. Legard, 6 Ex. 636; ante, p. 40. Dexter v. Hall, 15 Wall. (U. S.) 9, 21 L. Ed. 73. Much of the rea- soning in this case goes to prove that the contract of a lunatic is void. See, also, McClun v. McClun, 176 111. 376, 52 N. E. 928. Drew v. Nunn, L. R. 4 Q. B. D. 661. See, also, Davis v. Lane, 10 N. H. 156; Matthiessen & Weichers Refining Co. v. McMahon's Adrn'r, 38 N. J. Law, 536; Hill v. Day, 34 N. J. Eq. 150; Merritt v. Merritt, 43 App. Div. 68, 59 N. Y. Supp. 357; Bunce v. Gallagher, 5 Blatchf. (U. S.) 481, 489, Fed. Cas. No. 2,133. Where a husband held out his wife as authorized to pledge hi credit, and a tradesman on the faith thereof supplied goods upon her order, the husband was liable for the price of the goods, notwith- standing his intervening insanity, of which the wife, but not the tradesman, had knowledge. Drew v. Nunn, supra. 100 WHAT ACTS CAN BE DONE BY AGENT. (Ch. 4 While it is a rule that insanity of the principal terminates the authority of the agent, 22 it has been held that a prin- cipal who has become insane after holding out another as agent is nevertheless bound by an executed contract which a third person, in ignorance of the insanity and in reliance upon the holding out, has entered into with the agent, al- though the insanity was known to the agent. This was in Drew v. Nunn," which was placed upon the ground that the holding out is a representation upon which the third person has a right to act until he receives notice that it is with- drawn. "The defendant became insane," said Brett, L. J., 2 * "and was unable to withdraw the authority, * * * and where one of two persons, both innocent, must suffer by the wrongful act of a third person, that person making the representation which, as between the two, was the original cause of the mischief, must be the sufferer and must bear the loss." Perhaps no better ground can be assigned than that suggested in explanation of Molton v. Camroux, that it is a decision of necessity, as a contrary doctrine would render or- a Post, p. 146. 4 Q. B. Div. 661. 24 Drew v. Nunn, 4 Q. B. Div. 661. He also observes: "It ts diffi- cult to assign the ground upon which this doctrine, which, however, seems to me to be the true principle, exists. It is said that the right to hold the insane principal liable depends upon contract I have difficulty in assenting to this. * * I cannot see that an estop- pel is created." "The act of the agent hi execution of the power, however, will not In all cases be avoided on account of the incapacity. If the prin- cipal has enabled the agent to hold himself out as having authority by a written letter of attorney or by previous employment, and the Incapacity of the principal is not known to those who deal with the agent, within the scope of the authority he appears to possess, the transaction may be valid and binding upon the principal. Such cases form an exception to the rule, and the principal, and those claiming under him, may be precluded from setting up his insanity as a revo- cation, because he has given the agent power to hold himself out as having authority, and because the other party has acted in good faith and in ignorance of any termination of it" Davis v. Lane, 10 N. H. 156, per Parker, 0. J. 21) CAPACITY OF PARTIES. 101 dinary dealings between man and man unsafe. From the decision in Drew v. Nunn it would be but a short step to the doctrine that the appointment of an agent by an insane prin- cipal is voidable, and not void. And, although the insanity had existed at the time of the agent's appointment, if neither the agent nor the third person were aware of it, when they contracted, it would seem that the doctrine of Molton v. Camroux might- well apply, and that the principal should be liable upon the contract if it was executed, and the other party could not be placed in statu quo. 26 The rules in regard to the contracts of a man who is so intoxicated as not to know what he is doing are the same as those applicable to insane persons. His contracts are voidable, but not void, and hence may be ratified by him when sober. 26 Upon principle, it would seem that the ap- pointment of an agent by a drunken man is voidable, and not void. Whether an unauthorized act done on behalf of a person non compos mentis may be ratified by him after recovery from his disability must depend upon whether the appoint- ment of an agent by such person is to be deemed voidable or void. 27 Married Women. At common law a married woman is, as a rule, incapable of binding herself by a contract, and her contract is void. Incompetent to act herself, she cannot act through the medi- um of an agent, and her appointment of an agent is void. 28 See Evans, Ag. 10; Mechem, Ag. 48; Huff cut, Ag. 16. If the agent was aware of the insanity, although the third person was not, there would perhaps be less reason for holding the principal liable. In such case, it seems, the agent would be liable to the third person upon his so-called warranty of authority. Drew Y. Nunn, 4 Q. B. Div. 661, per Brett, L. J. Post, p. 146. 2 Pollock, Contr. 98 et seq.; Clark, Contr. 274. 27 Ante, p. 58. as Quids v. Sansom, 3 Taunt. 261; Fairthorne v. Blaqulre, 6 M. & 8. 73; Brirtin v. Wilder, 6 Hill (N. Y.) 242; Dorrance T. Scott 3 102 WHAT ACTS CAN BE DONE BY AGENT. (Oh. 4 In most jurisdictions, however, the common-law disabilities of married women have been partly or wholly removed, with the result that to the extent to which they may act or con- tract in person they may generally act or contract by agent, and are bound by the acts of their agents within the limits of the authority conferred. 28 Conversely, the removal of the disabilities of married women has imposed upon them corresponding liabilities, among them the liability of a prin- cipal, when they have held out another as agent. 80 Ordi- narily a married woman may appoint her husband an agent, 81 although under some statutes this power is denied her." It must always be borne in mind that the capacities of married women are created by statute, and that their acts performed by means of agents are binding upon them only within the limits of the capacity so created. 88 "The dis- abilities of a married woman are general, and exist at com- mon law. The capabilities are created by statute. * * * It is for him who asserts the validity of a contract of a feme covert by evidence to bring it within the exceptions." 8 * And Whart. (Pa.) 309, 31 Am. Dec. 509; Caldwell v. Walters, 18 Pa. 79, 55 Am. Dec. 592; Henchman v. Roberts, 2 Har. (Del.) 74. 2 Weisbrod v. Railway Co., 18 Wis. 35, 86 Am. Dec. 743; Lavassar v. Washburne, 50 Wis. 200, 6 N. W. 616; Knapp v. Smith, 27 N. Y. 277; Baum v. Mullen, 47 N. Y. 577; Vail v. Meyer, 71 Ind. 159; Griffin v. Ransdell, Id. 440; Patten v. Patten, 75 111. 446; McLaren v. Hall, 26 Iowa, 297; Porter v. Haley, 55 Miss. 66, 30 Am. Rep. 502; Maxcy Mfg. Co. v. Burnham, 89 Me. 538, 36 Atl. 1003, 56 Am. St. Rep. 436. so Bodine v. Killeen, 53 N. Y. 93; Lane v. Lockridge's Ex'x (Ky.) 48 S. W. 975; Hoene v. Pollak, 118 Ala. 617, 24 South. 349, 72 Am. St. Rep. 189. Cf. Dobbin v. Cordiner, 41 Minn. 165, 42 N. W. 870, 4 L. R. A. 333, 16 Am. St. Rep. 683. si Weisbrod v. Railway Co., 18 Wis. 35, 86 Am. Dec. 743; Rowell v. Klein, 44 Ind. 290, 15 Am. Rep. 235. sz Sanford v. Johnson, 24 Minn. 172. s Nash v. Mitchell, 71 N. Y. 199, 27 Am. Rep. 38; Walker v. Car- rington, 74 111. 446; Kenton Ins. Co. v. McClellan, 43 Mich. 564, 6 N. W. 88; Wilcox v. Todd, 64 Mo. 390; Troy Fertilizer Co. v. Zachry. 114 Ala. 177, 21 South. 471. 84 Nash v. Mitchell, 71 N. Y. 199, 27 Am. Rep. 38. 21) CAPACITY OF PARTIES. 103 while it is generally true that what a person has a right to do himself he may authorize another to do for him, it does not necessarily follow that because power to act in person has been conferred by statute the power may be exercised by agent or attorney. 85 Whether this result follows de- pends upon the terms of the enabling statute. Frequently such statutes have been construed with extreme strictness. Thus, under statutes empowering a married woman to con- vey her lands by deed executed by herself and her husband, and requiring her separate examination and acknowledg- ment to be certified thereon, it has been held in numerous cases that she can convey only in the manner prescribed, and that a deed executed on behalf of husband and wife by attorney, pursuant to a power of attorney executed by them jointly and acknowledged and certified in the manner required for a deed, is inoperative to convey her title. 88 A more liberal construction of like statutory provisions has re- cently been adopted by the Supreme Court of the United States, and a similar power was sustained, upon the ground that there was nothing in the terms of the statute to ex- clude the natural implication that a power to convey includes the power to appoint another to make the conveyance. 87 A consideration in detail of the power of married women to Ante, p. gk Sumner v. Conant, 10 Vt. 9; Lewis v. Coxe, 5 Har. (Del.) 401; Mott v. Smith, 16 Cal. 533; Gillespie v. Worford, 2 Cold. (Tenn.) 632; McCreary v. McCorkle (Tenn. Ch. App.) 54 S. W. 53; Holland v. Moon, 39 Ark. 120. See, also, Holladay v. Daily, 19 Wall. (U. S.) 606, 609, 22 L. Ed. 187; Earle's Adm'rs v. Earle, 20 N. J. Law, 347; Steele v. Lewis, 1 T. B. Mon. (Ky.) 43; Bishop, Mar. Worn. 602. *i Under the laws of Maryland which were in force In the District of Columbia in 1859, a married woman owning real estate in the District, which she had power to convey by deed Joined in by her husband, and privily acknowledged by her, might, by a power of at- torney similarly executed in another state, authorize an attorney to execute such conveyance in her behalf. Williams v. Paine, 169 U. S. 55, 18 Sup. Ct. 279. 42 L. Ed. 658, affirming 7 App. D. C. 116. Peck- 104 WHAT ACTS CAN BE DONE BY AGENT. (Ch. 4 appoint agents, depending, as it does, upon the enactments of the different states, is beyond the scope of this book. Aliens. Aliens have generally the same power to contract, and consequently to appoint agents, that other persons have, though in some states they are by statute prohibited from acquiring or holding land. 88 War, however, suspends all commercial intercourse between the belligerent countries, except so far as may be allowed by the sovereign authority, and in consequence all contracts between the citizens of the belligerents which tend to increase the resources of the en- emy or look to or involve any kind of trading or commercial dealing between the two countries are prohibited. 88 And it has been held that an alien enemy cannot appoint an agent within the United States for any purpose. 40 Yet war does not necessarily terminate an agency unless it involves such prohibited intercourse. 41 Corporations. Within the limits of the powers conferred by its charter a corporation may appoint an agent. Indeed, a corporation, being impersonal, can act only through the intervention of agents. 42 Frequently, the power to appoint officers and agents is expressly conferred by charter, but the power to appoint agents is inherent in all private corporations. 48 ham, J., said: "When the power is given her by law to convey directly, she can by the same ceremonies authorize another to do the act for her. The reasoning which would prevent It is, as we think, entirely too technical, fragile, and refined for constant use." Clark, Contr. 216. Keershaw v. Kelsey, 100 Mass. 561; Williams v. Paine, 169 U. S. 55, 18 Sup. Ct. 279, 42 L. Ed. 658; United States v. Gross mayer, 9 Wall. (U. S.) 72; New York Life Ins. Co. v. Davis, 95 U. S. 425, 24 L. Ed. 453. 40 United States v. Grossmayer, 9 Wall. (U. S.) 72, 19 L. Ed. 627. " Post, p. 149. * 2 Ante, p. 30. 4 Hurlbut v. Marshall, 62 Wis. 590, 22 N. W. 852; Protection Life Ins. Co. v. Foote, 79 111. 361; St Andrews Bay Land Co. v. Mitchell, 4 Fla. 192, 54 Am. Dec. 340: Clark, Coro. 482. 22-23) CAPACITY or PARTIES. 105 A mere unincorporated association, not being a legal en- tity, is incapable of appointing an agent. 4 * CAPACITY OF PARTIES AGENT CAPACITY TO ACT. 22. All persons [of sound mind], 1 including persons incapa- ble of contracting on their own behalf, are competent to act as agents. SAMECAPACITY TO ENTER INTO CONTRACT OF AGENCY. 23. Capacity to enter into a contract of agency is coextensive with the capacity of the agent to contract. Inasmuch as the act of an agent is in law the act of his principal, incapacity of the agent to make a binding contract on his own behalf does not debar him from making a binding contract on the part of his principal. "Monks, infants, fern coverts, 2 persons attainted, outlawed, excommunicated, villeins, aliens, &c., may be attorneys." 8 So during the ex- istence of slavery in this country it was held that "a slave, who is homo non civilis, a person who is little above a brute in legal rights, may act as the agent of his owner or hirer." * Different considerations, of course, apply to the contract of agency entered into between principal and agent. Here the agent contracts on his own behalf, and the validity and effect of the contract depend upon his contractual capacity. 5 Post, p. 111. 22-23. i As to the qualification of the rule Introduced by the words in brackets, post, p. 106. * As to alien enemies, see ante, p. 104. Co. Lltt. 52a. See, also, Perkins, Prof. Bk. 184-187. In some states It is enacted that any person may be an agent Gal. Civ. Code, 52296. * Lyon v. Kent, 45 Ala. 656. See, also, Powell v. State, 27 Ala. 51; Stanley v. Nelson, 28 Ala. 514; Chastain y. Bowman, 1 Hill (S. C.) 270. B Ante, p. 17. 106 WHAT ACTS CAN BE DONE BY AGBSNT. (Oh. 4 Married Women. In spite of the legal fiction of the common law that hus- band and wife are one person, the capacity of a married woman to act, even as agent or attorney of her husband, 9 or of a third person dealing with him, 7 has always been recog- nized. Within the scope of the authority conferred, the hus- band was bound by her acts and admissions. She might also be the agent of another in dealing with other persons. 8 Of course, no express or implied contract of agency could exist' between principal and agent in any such case. How far such a contract can exist between a husband and wife, where either acts as agent of the other, under the enabling statutes of the present day, depends, of course, upon the terms and construction of the enactments of the different states. Lunatics. It is laid down by Story "that an idiot, lunatic, or person otherwise non compos mentis cannot do any act, as an agent or attorney, binding upon the principal ; for they have not any legal discretion or understanding to bestow upon the affairs of others, any more than upon their own." Yet Anon., 1 Str. 527; Emerson v. Blonden, 1 Esp. 142; Prestwick v. Marshall, 7 Bing. 565; Plimmer v. Sells, 1 N. & M. 422; Pickering v. Pickering, 6 N. H. 124; Felker v. Emerson, 16 Vt. 653, 42 Am. Dec. 532; Mackinley v. McGregor, 3 Whart. (Pa.) 369, 31 Am. Dec. 522; Hopkins v. Mollinieux, 4 Wend. (N. Y.) 465; Edgerton v. Thomas, 9 N. Y. 40; Cantrell v. Colwell, 3 Head (Tenn.) 471. i Co. Lltt. 52a; Fenner v. Lewis, 10 Johns. (N. Y.) 38; Story, Ag. 7. Story, Ag. 7. "A feme covert cannot be an agent for another than her husband except by his consent, in which case he is bound by her acts." Ga. Code (1895) 3001. Cf. Tucker v. Cocke, 32 Mass. 184. 9 Story, Ag. 7. See, also, Mechem, Ag. 58; EwelPs Evans, Ag. 171. "Any one, except a lunatic, imbecile, or child of tender years, may be an agent for another." Lyon v. Kent, 45 Ala. 656, per Peters, J. "Any person may be appointed an agent who is of sound mind." Ga. Code (1895) 3001. 22-23) CAPACITY OF PARTIES. 107 many simple acts of agency can be as well performed by an insane person as by one of sound mind, and it cannot be doubted that such acts of an insane agent would be binding upon the principal. And at the present day, when the con- tracts of the lunatic himself are voidable and not void, and if executed cannot be avoided if the other party was ignorant and acted in good faith and cannot be placed in statu quo, 10 it is improbable that it would be held without exception that a person non compos mentis cannot, as agent, do any act binding upon his principal. The effect of the agent's in- sanity upon the rights of the principal and of third persons does not appear to have come before the courts. Infants. An infant may act as agent, and his acts in that capacity are binding upon his principal. 11 It has been suggested that this rule is subject to the qualification that the infant must possess sufficient mental capacity for the business in- trusted to him, 12 but unless advantage were taken of the tender years of an infant agent by the person dealing with him the principal would apparently have no ground for avoid- ing responsibility. So far as concerns the contract of agen- cy, the infant may, of course, avoid it like other contracts. 18 Other Party Statute of Frauds. There is no inherent reason why one party to a contract may not act for the other in preparing and signing an In- 10 Ante, p. 98. 11 Watkins v. Vince, 2 Stark. 368; In re D'Angiban, L. R. 15 Cb. D. 228; Com. v. Holmes, 119 Mass. 195; Talbot v. Bo wen, 1 A. K. Marsh. (Ky.) 436, 10 Am. Dec. 747. izWharton, Ag. 15; Mechem, Ag. $ 59; Lyon v. Kent, 45 Ala. 65G. i Vasse v. Smith, 6 Cranch (U. S.) 226, 3 L. Ed. 207; Vent v. Os- good, 19 Pick. (Mass.) 572; Gaffney v. Hayden, 110 Mass. 137, 14 Am. Rep. 580; Whitmarsh v. Hall, 3 Denio (N. Y.) 376; Derocher v. Continental Mills, 58 Me. 217, 4 Am. Rep. 286; Widrig v. Taggart, 51 Mich. 103, 16 N. W. 251. 108 WHAT ACTS CAN BE DONE BY AGENT. (Ch. 4 strument which contains its terms, 14 or even as attorney for the other in executing an instrument in its performance. Thus, under a mortgage containing a power of sale, which provides that the mortgagee may purchase at the sale, and that the deed to the purchaser may be made by the mort- gagee as attorney of the mortgagor, it has been held that such a deed executed by the mortgagee as attorney directly to himself is valid. 15 Under the seventeenth section of the statute of frauds, 18 however, a party to a contract of sale may not, as agent of the party to be charged, execute the "note or memorandum" provided for. The statute provides for a note or memorandum to be "made and signed by the parties to be charged by such contract, or their agents thereunto lawfully authorized," and this language has been construed to mean that the agent must be some third per- son, and not the other contracting party ; for to hold other- wise would open the door to the fraud which the statute was intended to prevent. 17 Under the fourth section, pro- viding that the writing shall be signed by "the party to be charged therewith, or some other person thereunto by him lawfully authorized," the same rule prevails. 18 i* A memorandum of an agreement, not required by the statute of frauds, made by one party in a book of the other, in his presence and at his request, is evidence against him. Snyder v. Wolford, 33 Minn. 175, 22 N. W. 254, 53 Am. Rep. 22. is Hall v. Bliss, 118 Mass. 554, 19 Am. Rep. 476; Woonsocket Inst. for Savings v. Worsted Co., 13 R. I. 255; Jones, Mtg. 1892, But see remarks of Walton, J., in Clough v. Clough, 73 Me. 487, 40 Am. Rep. 386. i 29 Car. II, c. 3, 17. " Sharman v. Brandt, L. R. 6 Q. B. 720; Wright v. Dannah, 2 Camp. 203; Fail-brother v. Simmons, 5 B. & Aid. 333 (memorandum signed by auctioneer, suing as seller); Smith v. Arnold, 5 Mason (U. S.) 414, Fed. Cas. No. 13,004; Bent v. Cobb, 9 Gray (Mass.) 397, 69 Am. Dec. 295; Johnson v. Buck, 35 N. J. Law, 338, 342, 10 Am. Rep. 243; Tull v. David, 45 Mo. 444, 100 Am. Dec. 385. The rule does not, however, exclude the agent of the seller from acting as agent of the buyer. Durrell v. Evans, 30 L. J. Ex. 354, 6 H. & N. 660. See Benjamin, Sales, 267, 267a; Tiffany, Sales, 77. is Smith v. Arnold, 5 Mason (U. S.) 414, Fed. Cas. No. 13,004; 22-23) CAPACITY or PARTIES. 109 Person Adversely Interested. It is sometimes said that a person cannot become agent in a transaction where he has an interest or a duty which is adverse to that of his principal. Thus it is said that a person cannot act as agent in buying his own goods, and that at a sale made for his principal he cannot become the buyer. 19 But while an agent will not be permitted to as- sume a position in which his interest is antagonistic to that of his principal, and if he does so the principal may dis- affirm the transaction, adverse interest does not incapacitate the agent. Indeed, the right of the principal to affirm rests upon the very basis of agency. 80 This subject will be dis- cussed in treating of the duties of the agent to his princi- pal." Unlicensed Agent Attorney at Law. There are numerous statutes, enacted for the purpose of protecting the public in dealings with certain classes of agents, principally attorneys at law " and brokers, 2 * which require them to procure a license or certificate as a condi- tion precedent to the right to engage in business. The ef- fect of noncompliance by such persons with these statutes is to preclude them from recovering compensation from their employers for services rendered. 24 In Michigan, under a constitutional provision that any person shall have the right Bent v. Cobb, 9 Gray (Mass.) 397, 69 Am. Dec. 295; Browne, Stat. Frauds, 367. i Story, Ag. 9. * Wharton, Ag. 18. Post, p. 420. 22 Ames v. Oilman, 10 Mete. (Mass.) 239; Hall v. Bishop, 3 Daly (N. Y.) 109; Tedrick v. Hiner, 61 111. 189; Hltteon v. Browne, 3 Colo. 304; Mclver v. Clarke, 69 Miss. 408, 10 South. 581. Cf. Harland v. Lilienthal, 53 N. Y. 438. 28 Cope v. Rowlands, 2 M. & W. 149; Johnson v. Hulings, 103 Pa. 498, 49 Am. Rep. 131; Buckley v. Humason, 50 Minn. 195, 52 N. W. 385, 16 L. R. A. 423, 36 Am. St. Rep. 637; Stevenson v. Ewing, 87 Tenn. 49, 9 S. W. 230. 2* Cases cited, notes 22 and 23, supra. See Clark, Contr. 391; post, P- 459. 110 WHAT ACTS CAN BE DONE BY AGENT. (Ch. 4 to prosecute or defend his suit in person "or by an attorney or agent," the word "agent" was construed as synonymous with "attorney," and it was held that a party to a suit could not appear by an agent who was not licensed as attorney. 20 JOINT PRINCIPALS. 24. Two or more persons may become joint principals by au- thorizing a third person or one of their number to act on behalf of all. In General. Capacity to appoint an agent must be distinguished from authority to appoint. "Capacity means power to bind one- self; authority means power to bind another. * * * Capacity is usually a question of law; authority is usually a question of fact." * Two or more persons, if they are individually capable, may appoint an agent, either one of themselves or a third person, to act for them in a transac- tion in which they are jointly interested, thus becoming joint principals. The assent of all the principals to the crea- tion of the agency is, of course, required. Authority to act, or to appoint an agent to act, on behalf of all, is not con- ferred upon one of several persons because of common in- terest or common ownership. Thus, one of several joint tenants or tenants in common of land or chattels has not, as such, power to sell or to authorize the sale of anything more than his individual interest. 2 To authorize a sale of the whole, all must concur in the appointment of the agent or in ratification of his act.* SB Cobb v. Judge, 43 Mich. 289, 5 N. W. 309. 24. i Chalmers, Sale of Goods, 6. 2 Sims v. Dame, 113 Ind. 127, 15 N. B. 217; Richey v. Brown, 68 Mich. 435, 25 N. W. 386; Tipping v. Robbing, 64 Wis. 546, 25 N. W. 713. Keay v. Fenwick, L. R. 1 C. P. D. 745. 24) JOINT PRINCIPALS. Ill Same Partnership. The rule in the case of partners, although apparently dif- ferent, rests upon the same principle. By virtue of the re- lation existing between partners, each is virtually both prin- cipal and agent. 4 Each has authority, unless the authority is expressly limited, to bind the firm and its members by any act necessary for carrying on the partnership business, and this authority extends to the appointment of agents, so far as proper and necessary for that purpose. The assent of all the partners to such appointment is given by implica- tion in advance by their assent to the formation of a part- nership relation. To the appointment of an agent for any purpose not within the scope of the partnership, and hence not embraced within their original assent, the concurrence of all the partners is requisite.' Same Voluntary Association. Voluntary unincorporated associations, the object of which is not to share profits, such as clubs, social, charitable and religious societies, and the like, are not partnerships, and consequently their members, as such, are not liable for each other's acts. 6 If the members are liable at all for acts done on behalf of the association, it must be because they directly participate in the acts, 7 or because they authorize or ratify them. Authority is not implied from the mere fact of asso- ciation. 8 Authority may, indeed, be conferred in advance by accepting membership in an association whose constitu- * Pooley v. Driver, 5 Ch. D. 458. See George, Partn. 49, 212. Beckham v. Drake, 9 M. & W. 79; Lucas v. Bank, 2 Stew. (Ala.) 280; Durgin v. Somers, 117 Mass. 55; Burgan v. Lyell, 2 Mich. 102, 65 Am. Dec. 53; George, Partn. 218. George, Partn. 24. * Cross v. Williams, 7 H. & N. 675. s Flemyng v. Hector, 2 M. & W. 172; Lafond v. Deems, 81 N. Y. 607; Ash v. Gule, 97 Pa. 493, 39 Am. Rep. 818; Burt v. Lathrop, 52 Mich. 106, 17 N. W. 716; Blakely v. Bennecke, 59 Mo. 193; McCabe v. Goodfellow, 133 N. Y. 89, 30 N. E. 728, 17 L. R. A. 204; Lewis v. Tilton, 64 Iowa, 620, 19 N. W. 911, 52 Am. Rep. 436. See, also. Winona L. Co. v. Church, 6 S. D. 498. 62 N. W. 107. 112 WHAT ACTS CAN BE DONE BY AGENT. (Ch. 4 tion or articles of association expressly provide, for example, that authority to bind the members shall be vested in its officers, or that contracts may be entered into on behalf of the association when authorized by vote of a majority. 9 In other cases, it must be shown that the member sought to be charged has by words or conduct authorized the act or contract in question. 10 JOINT AGENTS. 25. Authority may be given to two or more persons jointly or severally. 'When authority of a private nature is given to two or more persons, unless the principal has manifested a different intention, the authority is pre- sumed to be joint, and all must join in its execution. A different rule of interpretation prevails when the authority is of a public nature. A principal may give authority to two or more agents as well as to a single agent to do an act. Where two or more agents are appointed, the intention of the principal must determine whether the authority is joint or several; that is, whether it must be exercised by all or may be exercised Flemyng v. Hector, 2 M. & W. 172; Todd v. Bmly, 8 M. & W. 505; Davison v. Holden, 55 Conn. 103, 10 Atl. 515, 3 Am. St. Rep. 40; Bennett v. Lathrop, 71 Conn. 613, 42 Atl. 634, 71 Am. St Rep. 222. 10 Ray v. Powers, 134 Mass. 22. See, also, cases cited note g, supra. Where a college class at a class meeting voted to publish a book, the members voting or assenting to the vote were liable for the ex- pense at the suit of the printer under a contract with a member elected as business manager. Willcox v. Arnold, 162 Mass. 577, 39 N. E. 414. "Every member present assents beforehand to whatever the majority may do. * * * If he would escape responsibility, * * * he ought to protest and throw up his membership on the spot." Eichbaum v. Irons, 6 Watts & S. (Pa.) 67, 40 Am. Dec. 540, per Gibson, C. J. See, also, Abels v. McKeen, 18 N. J. Eq. 462. Authority may be shown by acquiesceuce in a course of dealing from which assent is to be inferred. Heath v. Goslin, 80 Mo. 310, 50 Am. Rep. 505. 25) JOINT AGENTS. 113 by one. Yet such powers of attorney and appointments of agents are construed with great strictness, 1 and where au- thority is given to two or more, unless a different intention is expressed or is clearly to be inferred, the authority is pre- sumed to be joint. 2 Thus, if a power of attorney is given to A. and B. to sell or convey land, and the instrument con- tains nothing to indicate that one alone may act, both must join in a sale or conveyance. On the other hand, if an in- tention to confer a several authority is manifest, it will be given effect.* Thus, if authority is given to A. and B., or either of them, execution by both or either is good. And where power was given by the principal to fifteen "jointly and separately * * * to sign and underwrite all such policies as they, his said attorneys, or any of them, should jointly and separately think proper," a policy executed by four was held binding.* For this reason, where a princi- pal appoints a partnership as his agent, each partner may execute, since the act of one partner is the act of the firm, and it is to be assumed that the principal made the appoint- ment in view of the rules ordinarily governing the transac- tion of the business of a partnership. 5 Story says that "in commercial transactions a more liberal interpretation in fav- or of trade is admitted, as thereby public confidence, as well as general convenience, is best consulted." 6 This more lib- eral interpretation rests, as in other cases, upon the supposed intention of the principal, in determining which the character 25. i For example, Coke lays it down that a power of attorney to three jointly and severally, although it may be executed by all or one, may not be executed by two. Co. Litt 181b. 2 Copeland v. Insurance Co., 6 Pick. (Mass.) 198: Salisbury v. Bris- bane, 61 N. Y. 617; Rollins v. Phelps, 5 Minn. 463 (Gil. 373). Hawley v. Keeler, 53 N. Y. 116; French v. Price, 24 Pick. (Mass.) 13. Guthrie v. Armstrong, 5 B. & Aid. 628. B Kennebec Co. v. Banking Co., 6 Gray (Mass.) 204; Deakin v. Un- derwood. 37 Minn. 98, 33 N. W. 318, 5 Am. St Rep. 827. Story, Ag. 44. TDT.P.& A. 8 114 WHAT ACTS CAN BE DONE BY AGENT. (Ch. 4 of the agency is a material circumstance. The rules govern- ing the construction of authority will be considered later. 7 The rules which relate to the authority of directors as agents of a corporation rest upon considerations which do not apply to other private agents.* Same Public Agents. A different rule of construction or interpretation prevails where the agency is of a public nature. This distinction was pointed out by Coke, who gave as an illustration the case of a warrant by a sheriff "to four or three jointly or severally to arrest the defendant," two of whom might ar- rest him, "because it is for the execution of justice, and there- fore shall be more favorably expounded than when it is only for private." * The most frequent application of the distinc- tion is where authority is to be exercised by persons forming a board or other body constituted by law, such as inspectors, commissioners, overseers of the poor, assessors, and the like. In these cases, unless the law otherwise provides, if all meet, the act of the majority will bind. 10 And, if all have been T Post. p. 166 et seq. * Directors can bind the corporation only when regularly assem- bled at a board meeting. Unless this meeting is a stated one, notice must be given to each director, but if all are present want of notice is immaterial. A majority is a quorum, and a majority of the quorum may bind the corporation. These rules apply when the char- ter does not provide otherwise. Clark, Corp. 488 et seq. Generally speaking, a committee of a corporation is subject to the same rules. McNeil v. Chamber of Commerce, 154 Mass. 277, 28 N. E. 245, 13 L. R. A. 559. Co. Litt. 181b. A warrant of distress addressed to two may be executed by one. Lee v. Vesey, 1 H. & N. 90. 10 King v. Beeston, 3 T. R. 592 (church wardens and overseers of a parish); Grindley v. Barker, 1 B. & P. 229 (triers or inspectors of leather); Corlis v. Kent Waterworks, 7 B. & C. 314; Downing v. Rugar, 21 Wend. (N. Y.) 178, 34 Am. Dec. 223; Crocker v. Crane, 21 Wend. (N. Y.) 211, 34 Am. Dec. 228; Sprague v. Bailey. 19 Pick. (Mass.) 436; Williams v. School Dist, 21 Pick. (Mass.) 75, 32 Am. Dec. 243; Cooley v. O'Connor, 12 Wall. (U. S.) 391, 20 L. Ed. 446; 25) JOINT AGENTS. 115 duly notified to meet, it is generally held that an act per- formed by a majority who have met is valid. 11 Martin v. Lemon, 26 Conn. 192; Scott v. Lessee, 1 Doug. (Mich.) 119; Soens v. City of Racine, 10 Wis. 271. 11 Williams v. School Dist, 21 Pick. (Mass.) 75, 32 Am. Dee. 243; Damon v. Inhabitants of Granby, 2 Pick. (Mass.) 345; George v. School Dist, 6 Mete. (Mass.) 497; Martin v. Lemon, 26 Conn. 192. The author- ities are fully collected and discussed in First Nat. Bank v. Town of Mt. Tabor, 52 Vt 87, 36 Am. Rep. 734. This was an action upon in- terest coupons attached to bonds purporting to have been issued by defendant town. Plaintiff relied upon an instrument of assent, to which was appended a certificate of two of three commissioners ap- pointed under an act making such certificate conclusive evidence of the facts set forth. It was held that the act of two, the third shar- ing in the deliberations of the commissioners, but refusing to concur in their decision, was a sufficient compliance with the law. 116 DELEGATION BY AGENT SUBAGENTS. (Gil- 5 CHAPTER V. DELEGATION BY AGENT SUBAGENTS. 26. Delegation of Authority. 27-28. When Authority to Delegate will be Implied. 29. Responsibility for Acts of Subagent Privity of Contract. 30. When Authority to Create Privity of Contract will be Im- plied. DELEGATION OF AUTHORITY. 26. An agent has no power to delegate his authority to a snbagent, or to appoint a deputy or a substitute, to do any act on behalf of his principal, unless author- ity so to do has been expressly or impliedly conferred. Delegata Potestas non Potest Delegari. As we have seen, what a man can do in his own right he can as a rule delegate to an agent, 1 and the act of the agent, within the scope of the authority conferred, is in law the act of the principal. Qui facit per alium facit per se. And, conversely, an act which a person performs on behalf of another is not the act of and binding upon the other, un- less he has authorized that person to perform it. It follows that an act which an agent causes to be performed by a third person on behalf of his principal is not the act of the principal, unless he has authorized the agent to cause the act so to be done; in other words, unless the principal has authorized the agent to appoint a subagent to do the act. 2 26. lAnte, p. 90. 2 "If a man is to be held liable for the acts of his servants, he cer- tainly should have the exclusive right to determine who they shall be. Hence, we think, in every well-considered case where a person has been held liable, under the doctrine referred to [respondeat superior], for the negligence of another, that other was engaged either by the defendant personally or by others by his authority, express or im- plied." Haluptzok v. Railway Co., 55 Minn. 446, 57 N. W. 144, 26 L. R. A. 739, per Mitchell, J. 27-28) WHEN AUTHORITY TO DELEGATE IMPLIED. 117 An agent, as such, has no power to appoint a subagent. 8 Delegata potestas non potest delegari delegated authority cannot be delegated. This maxim has, of course, no appli- cation where power to delegate has been expressly conferred or may reasonably be implied. WHEN AUTHORITY TO DELEGATE WILL BE IMPLIED. 27. MINISTERIAL ACTS. Authority to delegate the per- formance of acts which are ministerial, or do not in- volve the exercise of discretion, will be implied unless such authority is expressly denied. 28. OTHER ACTS. Authority to delegate the performance of acts -which involve the exercise of discretion will be implied when, from the circumstances of the par- ticular agency, it may reasonably be inferred that the principal intends to confer such authority. Distinction between Discretionary and Ministerial Acts. The appointment of an agent is usually made because of his supposed fitness, as by reason of his possession of judg- ment, skill, integrity, or other personal qualifications. Inas- much as confidence in the particular person employed is the basis of the appointment, authority to delegate the perform- ance of the subject-matter of the agency will not, in the ab- sence of peculiar circumstances, be implied. 1 Thus, where Palllser v. Ord, Bunbury, 166. 27-28. i Catlin v. Bell, 4 Camp. 183; Henderson v. Barnwell, 1 Y. & J. 387; Emerson v. Hat Co., 12 Mass. 237, 7 Am. Dec. 66; Appleton Bank v. McGilvray, 4 Gray (Mass.) 518; Wright v. Boyn- ton, 37 N. H. 9, 72 Am. Dec. 319: Lewis v. Ingersoll, 3 Abb. Dec. (N. Y.) 55; Sayre v. Nichols, 7 Cal. 535, 68 Am. Dec. 280; Lynn v. Burgoyne, 13 B. Mon. (Ky.) 400; Ruthven v. Insurance Co., 92 Iowa. 316, 60 N. W. 663; Waldman v. Insurance Co., 91 Ala. 170, 8 South. 666, 24 Am. St. Rep. 883; Fargo v. Cravens, 9 S. D. 646, 70 N. W. 1053. Where plaintiff intrusted to a shipmaster trading to the West Indies goods, which he undertook to sell for her there, it was not a defense, in an action for an accounting, that defendant, not being able to sell them there, had sent them elsewhere in search of a market, where 118 DELEGATION BY AGENT SUBAGENTS. (Ch. 5 goods are consigned to a factor, the factor has ordinarily no authority to deliver over the goods to a third person for sale, and such a disposition of the goods would be a conver- sion. 2 So, a person authorized to sell land must exercise his own judgment and discretion, and cannot delegate the performance of his agency to another. 8 So, a person au- thorized to accept bills of exchange or make promissory notes must exercise his judgment as to the necessity or pro- priety of accepting a bill or executing a note, and, in the absence of circumstances peculiar to the particular agency, authority to delegate the performance of these duties will not be implied. 4 So, an agency to collect and receive money, reposing in personal trust and confidence, may not be dele- gated without authority. 5 they were destroyed by an earthquake. Lord Ellenborough clearly held that, there being a special confidence reposed in the defendant, he had no right to hand them over to another, and to give them a new destination. Catlin v. Bell, supra. "One who has a blank power or authority from another to do any act must execute it himself, and cannot delegate it to a stranger; for, this being a trust or confidence reposed in him personally, it cannot be assigned to one whose integrity or ability may not be known to the principal, and who, if he were known, might not be selected by him for such a purpose. The authority is expressly personal, unless, from the express language used, or from the fair presumptions growing out of the particular transaction, a broader power was intended to be conferred." Wright v. Boynton, supra, per Bell, J. A contract between an agent and a third person, giving the latter entire control of the business of the agency, although unauthorized, and hence not binding upon the principal, held not void as against public policy. Peterson v. Christensen, 26 Minn. 377, 4 N. W. 623. 2 Cockran v. Irlam, 2 M. & S. 301; Warner v. Martin, 11 How. 223, 13 L. Ed. 667; Campbell v. Reeves, 3 Head (Tenn.) 226. See Southern v. How, Cro. Jac. 468. Tynan v. Dulling (Tex. Civ. App.) 25 S. W. 465, 818; Carroll v. Tucker, 3 Misc. Rep. 397, 21 N. Y. Supp. 952. * Emerson v. Hat Co., 12 Mass. 237, 7 Am. Dec. 66; Commercial Bank v. Norton, 1 Hill (N. Y.) 501. 6 Lewis v. Ingersoll, 3 Abb. Dec. 50; Fellows v. Northrup, 39 N. Y. 117. Where the agency is general, to take charge of and manage the 27-28) WHEN AUTHORITY TO DELEGATE IMPLIED. 119 On the other hand, if an act is purely ministerial, and consequently does not involve the exercise of judgment or discretion, it is to be assumed that the principal is willing to have it performed by any person whom the agent may ap- point. The principal may, of course, so limit the authority that every such act must be performed by the very hand of the agent. But, in the absence of such express limitation, authority to delegate the performance of ministerial acts is implied.' Thus, an agent having authority to make con- tracts, accept bills of exchange, or execute promissory notes, may, after exercising his judgment as to the terms of a con- tract or the propriety of accepting a bill or executing a note, delegate to another the mechanical duty of reducing the contract to writing or signing the paper. 7 So, an agent au- thorized to sell land, who has examined the land and fixed the price, may avail himself of the services of another to find a purchaser and conclude a sale upon the terms fixed. 8 Wften Power to Delegate will be Implied. Although power to delegate, except as to ministerial acts, will not be implied as a mere incident to the authority of an agent, it may be implied from the circumstances of the particular agency, and will be implied whenever, from the business of the principal, power to delegate may be implied. McCon- nell v. Mackin, 22 App. Div. 537, 48 N. Y. Supp. 18. Lord v. Hall, 8 C. B. 627; Mason v. Joseph, 1 Smith, 406; Lyon v. Jerome, 26 Wend. (N. Y.) 485. 37 Am. Dec. 271; Williams v. Wood, 16 Md. 220; Newell v. Smith, 49 Vt 255; Grinnell v. Buchanan. 1 Daly (N. Y.) 538; Eldridge v. Hoi way, 18 111. 445; Grady v. Insur- ance Co., 60 Mo. 116; Weaver v. Carnall, 35 Ark. 198, 37 Am. Rep. 22. Cf. Rossiter v. Trafalgar L. Ass'n, 27 Beav. 377, 381. 7 Exp. Button, 2 Cox, 84; Lord v. Hall, 2 C. & K. 698; Commercial Bank v. Norton, 1 Hill (N. Y.) 501; Sayre v. Nichols, 7 Cal. 535, 68 Am. Dec. 280; Norwich University v. Denny, 47 Vt 13 (subscription agreement); Grady v. Insurance Co., 60 Mo. 116 (insurance policy). Renwick v. Bancroft, 56 Iowa, 527, 9 N. W. 367. An agent to sell land may employ another to point out the land to a purchaser. McKinnon v. Vollmar, 75 Wis. 82, 43 N. W. 800, 6 L. R. A. 121, 17 Am. St Rep. 178. 120 DELEGATION BY AGENT SUBAGENTS. (Ch. 5 peculiar circumstances, it may reasonably be inferred that the principal intended such power to exist. 9 The question turns, as do other questions involving the power of agents, upon the construction and interpretation of the particular grant of authority. 10 Thus, power of delegation may be implied from the previ- ous course of dealing, or from the knowledge of the prin- cipal that an agent is in the habit of conducting his business by means of subagents. 11 It will be implied where, from the nature of the business which is the subject of the agency, it is necessary or reasonable that it should be conducted by means of subagents. 12 For example, where a note is de- posited with a bank for collection, authority to employ a notary to protest it in case of dishonor is necessarily im- plied, 18 and if the note is payable at a distant place authority to employ the agency of a bank at the place of payment is necessarily implied. 14 So, authority to prosecute a suit implies authority to employ an attorney to conduct it. 1B And, if a principal knows that the business which he in- trusts to an agent is so extensive that he cannot transact De Bussche v. Alt, 8 Ch. D. 286, per Thesiger, L. J. 10 Post, p. 166. 11 Quebec & R. R. Co. v. Quirm, 12 Mo. P. C. 232; Warner v. Mar- tin, 11 How. (U S.) 223, 13 L. Ed. 667; Johnson v. Cunningham, 1 Ala. 249; Loomis v. Simpson, 13 Iowa, 532. 12 De Bussche v. Alt, 8 Ch. D. 286; Quebec & R. R. Co. v. Quinn, 12 Mo. P. C. 223; Rossiter v. Trafalgar L. A. Ass'n, 27 Beav. 377; Johnson v. Cunningham, 1 Ala. 249; Planters' & Farmers' Nat Bank V. Bank, 75 N. C. 534. A stockbroker may act through a subagent where the purchase or sale is to be made in a distant city. Rosenstock v. Torniey, 32 Md. 169, 3 Am. Rep. 125. is Warren Bank v. Bank, 10 Gush. (Mass.) 582; Baldwin v. Bank, 1 La. Ann. 13, 45 Am. Dec. 72. i* Dorchester & Milton Bank v. Bank, 1 Gush. (Mass.) 177. See, also, cases cited, p. 129, notes 6 and 7. i o Inhabitants of Buckland v. Inhabitants of Con way, 16 Mass. 896 27-28) WHEN AUTHORITY TO DELEGATE IMPLIED. 121 it without employing subagents, authority to do so is im- plied. 18 Power to delegate will be implied where the employment of a subagent is justified by the usage of the business or trade in which the agent is employed, 17 provided the usage is not inconsistent with the express terms of the authority. 18 Thus, where, by usage of trade, a factor is authorized to em- ploy another person to dispose of the property, such author- ity is implied. 18 In many cases where authority is to be im- plied from the nature of the business it may also be implied from usage or custom. Same Unforeseen Emergencies. It is said that power to delegate will also be implied where, in the course of the agency, unforeseen emergencies arise which impose upon the agent the necessity of employing a subagent. 20 But the limits of this doctrine are not clearly defined, and it must be applied with caution. In this country i Bodine v. Insurance Co., 51 N. Y. 117, 10 Am. Rep. 566; Arff v. Insurance Co., 125 N. Y. 57, 25 N. E. 1073, 10 L. R. A. 609, 21 Am. St. Rep. 721; Grady v. Insurance Co., 60 Mo. 116. "We know, according to the ordinary course of business, that in- surance agents frequently have clerks to assist them, and that they could not transact their business if obliged to attend to all the de- tails in person; and these clerks can bind their principals in any of the business which they are authorized to transact. An insurance agent can authorize his clerk to contract for risks, to deliver policies, to collect premiums, and to take payment of premiums in cash or securities, and to give credit for premiums, or to demand cash; and the act of the clerk in all such cases Is the act of the agent, and binds the company just as effectually as if it were done by the agent in per- son. The maxim of 'Delegatus mm potest delegare' does not apply In such a case." Bodine v. Insurance Co., supra, per Earl, J. IT Warner v. Martin, 11 How. (U. S.) 223, 13 L. Ed. 667; Johnson v. Cunningham, 1 Ala. 249; Darling v. Stanwood, 14 Allen (Mass.) 504; Smith v. Sublett, 28 Tex. 163. is Emerson v. Hat Co., 12 Mass. 237, 7 Am. Dec. 66. Laussatt v. Llppincott, 6 Serg. & R. (Pa.) 386, 9 Am. Dec. 440. 20 De Bussche v. Alt, 8 Ch. D. 286, per Thesiger, L. J.; Story, Ag. 201. 122 DELEGATION BY AGENT SUBAGENTS. (Oh. 5 it has sometimes been held that the conductor of a train has implied authority, on the ground of necessity, in such an emergency as the sickness or absence of a brakeman, to em- ploy another person to take his place, and that such person for the time being is the servant of the railway company. 21 In a recent English case, 22 where the driver of the defend- ants' omnibus, being the worse for liquor, was ordered by a police inspector to discontinue driving, it was held by the trial court that under the circumstances the conductor and driver had implied authority to authorize a volunteer to drive the omnibus home, a distance of a quarter of a mile, and that the defendants were liable for an injury caused by his careless driving to a foot passenger. In the court of ap- peal 2S the judgment was reversed upon the ground that the evidence did not justify a finding that there was a neces- sity to delegate the duty of driving the omnibus. The court said that it was not necessary to decide "whether, if there 21 Sloan v. Railway Co., 62 Iowa, 728, 16 N. W. 331; Fox v. Rail- way Co., 86 Iowa, 368, 53 N. W. 259, 17 L. R. A. 289; Georgia Pac. Ry. Co. v. Propst, 83 Ala. 518, 3 South. 764; Id., 85 Ala. 203, 4 South. 711. In Sloan v. Railway Co., supra, the regular brakeman absented himself for a week, and plaintiff took his place with the knowledge and consent of the conductor, but of no superior officer. On the sixth day of his employment plaintiff was ordered by the conductor to per- form a duty, in discharging which he was injured. It was held that he could recover under a, statute making railway corporations liable for damages sustained by employes in consequence of the neglect of other employe's. This case certainly pushes the doctrine of au- thority of necessity beyond its rational limits. 22 Gwilliam v. Twist [1895] 1 Q. B. 577. 28 Gwilliam v. Twist [1895] 2 Q. B. 84. Lord Escher said: "I am very much inclined to agree with the view taken by Eyre, C. J., in the case of Nicholson v. Chapman, 2 H. Bl. 254, and by Parke, B., in the case of Hawtayne v. Bourne, 7 M. & W. 595, to the effect that this doctrine of authority by reason of necessity is confined to cer- tain well-known exceptional cases, such as those of the master of a ship or the acceptor of a bill of exchange for honor of the drawer." See ante, p. 39; post, p. 402. 29) RESPONSIBILITY FOR ACTS OF SUBAGENT. 123 were a necessity for a servant to delegate his duty to another person, that delegation would make that other person a servant of the master so as to render the latter responsible for his acts," but inclined to the opinion that the doctrine of authority by reason of necessity did not apply to such a state of facts. RESPONSIBILITY FOB ACTS OF SUBAGENT PRIVITY OF CONTRACT. 9. Where a subagent i appointed by authority of the prin- cipal, the subagent is, so far as relates to third per- sons, the agent of the principal, and the acts of the subagent are binding npon the principal; bnt wheth- er, as bet-ween principal and subagent, the relation of principal and agent is created, so that the snbagent is responsible to the principal, depends npon whether the agent has been authorized to employ the snbagent on the principal's behalf that is, to create privity of eontract between them or has been authorized simply to employ a snbagent on his own responsibility. If an agent without authority employs a subagent, the latter assumes no obligation towards the principal, since there is no privity of contract between them. 1 The sub- agent is responsible only to the agent, who is his employer, and he in turn is responsible to the principal for the acts of the subagent. 2 It does not follow, however, that because 29. i As to the duties of agent to principal, post. p. 395. 2 Stevens v. Babcock, 3 B. & Ad. 354; Appleton Bank v. McGil- vray, 4 Gray (Mass.) 518, 64 Am. Dec. 92; Barnard v. Coffin, 141 Mass. 37, 6 N. E. 364, 55 Am. Rep. 443. Defendants were employed by plaintiff to aid him in selling land by obtaining offers and communicating them to plaintiff, together with such information as they could readily obtain, and by consum mating a sale in case of acceptance. Defendants employed O., who obtained an offer for $22.50, but reported to defendants that he had received an offer or $10, per acre, which defendants bona fide re- ported to plaintiff, advising him it was a fair price, and a sale was consummated, O. accounting to defendants, and they to plaintiff, on 124 DELEGATION BY AGENT SUBAGENTS. (Ch. 5 the employment of a subagent is authorized privity of con- tract is created between him and the principal, so that he is responsible to the principal, or that the agent is discharged from responsibility for the acts of the subagent. Whenever the employment is authorized, the acts of the subagent are, indeed, binding upon the principal; or, in other words, the subagent is, so far as relates to third per- sons, the agent of the principal. But whether, as between principal and subagent, the relation of principal and agent is created by the employment depends upon the nature of the 'authority conferred upon the agent. The principal may confer authority upon any terms and subject to any condi- tions which he sees fit to impose. He may, on the one hand, authorize the employment of a subagent on his own b half. In such case by the employment privity of contract is created between principal and subagent, who becomes thereby the agent of and responsible to the principal, and the agent discharges his whole duty if he exercises reasonable care in the selection of the subagent, and is not responsible for his acts or defaults. On the other hand, the principal may authorize the employment of a subagent simply on the agent's behalf; that is, at the agent's risk and upon his responsibility. In such case the principal is, of course, bound by the acts of the subagent, because he has consented to be bound by them ; but no privity of contract is created between him and the subagent, because he has not authorized the agent to make a contract of employment to which he (the principal) shall be a party. Privity of contract in such case exists only be- tween the agent and the subagent, and the agent is responsi- ble for the acts and defaults of the subagent, because such was the intention of the principal and the undertaking of the agent. the basis of $10, though O. obtained $22.75 per acre. Held that, if O. was employed without plaintiff's express or implied consent, there being no usage or necessity therefor, no privity was created between plaintiff and O., and defendants were liable for the balance of the price received by O. Barnard v. Coffin, supra. 29) RESPONSIBILITY FOR ACTS OF SUBAGENT. 125 The same principles apply when the authority of an agent to employ a subagent is derived from ratification. The prin- cipal may, of course, ratify the unauthorized employment of a subagent; and, if he does so with knowledge that the subagent was employed as his agent, the ratification will be equivalent to previous authority to create privity of con- tract between them; but if the subagent was not so em- ployed, or if the principal ratifies without such knowledge, the ratification will be equivalent only to previous authority to employ a subagent on the agent's own responsibility, and not to create privity of contract.* If the terms of agency were always fully expressed, no difficulty in applying these principles would arise; but be- cause the intention of the parties, and consequently the na- ture of the authority, is ordinarily matter of inference, dif- ficult questions of fact are presented for determination. "It Is argued that, as the plaintiff knew before he signed the deed that the sale was made by Ochs, the plaintiff, by confirming the sale and signing the deed, ratified the employment of Ochs. If the plaintiff understood that Ochs was employed by the defendants as his agent, then these acts of the plaintiff might be held to be a rati- fication of his employment, and equivalent to an authority to the defendants to employ Ochs as the agent of the plaintiff. But if the plaintiff understood that the defendants employed Ochs as their agent to assist them in transacting the business which they had undertaken, then these acts of the plaintiff might only show that the plaintiff was willing that the defendants should transact the business by means of their servants or agents for whom they should be responsible; and It was competent for the court, on the evidence, to find that this was the understanding and intention of the plaintiff." Barnard v. Coffin, 141 Mass. 37, 6 N. E. 364, 55 Am. Rep. 443, per Field, J. 126 DELEGATION BY AGENT SUBAGENTS. (Oh. 5 WHEN AUTHORITY TO CREATE PRIVITY OF CONTRACT WILL BE IMPLIED. 3O. Authority to create privity of contract between principal and snbagent will be implied when, from the circum- stances of the particular agency, it may reasonably be inferred that the principal intends to confer such au- thority. Where, by power of attorney or other formal instrument, the employment of a substitute is expressly provided for, it is clear that the authority of the attorney or agent ex- tqnds to establishing a direct relation between principal and substitute, and that the agent is responsible only for select- ing a proper substitute. 1 In most cases, however, the au- thority of an agent to employ subagents is implied from the character of the business, the usages of trade or other cir- cumstances peculiar to the agency, and the nature of that authority, depending upon the intention of the parties, must be inferred from the facts of the particular case. 2 Thus, 30. i Wicks v. Hatch, 62 N. Y. 535; Story, Ag. 201. 2 De Bussche v. Alt, 8 Ch. Div. 286; New Zealand & A. L. Co. v. Watson, 7 Q. B. D. 374; Appleton Bank v. McGilvray, 4 Gray (Mass.) 518, 64 Am. Dec. 92; Barnard v. Coffin, 141 Mass. 37, 6 N. E. 364. 55 Am. Rep. 443; Loomis v. Simpson, 13 Iowa, 532; National S. S. Co. v. Sheahan, 122 N. Y. 461, 25 N. E. 858, 10 L. R. A. 782. Cf. Bank of Kentucky v. Express Co., 93 U. S. 174, 23 L. Ed. 872. "But the exigencies of business do from time to time render neces- sary the carrying out of the instructions of a principal by a person other than the agent originally instructed for that purpose, and where that is the case the reason of the thing requires that the rule [delegatus non potest delegare] should be relaxed, so as on the one hand to enable the agent to appoint what has been termed a 'sub- agent' or 'substitute' (the latter of which designations, although it does not exactly denote the legal relationship of the parties, we adopt for want of a better, and for the sake of brevity), and, on the other hand, to constitute, In the interests and for the protection of the prin- cipal, a direct privity of contract between him and such substitute. And we are of opinion that an authority of the effect referred to may and should be implied where, from the conduct of the parties to the 30) AUTHORITY TO CREATE PRIVITY OF CONTRACT. 127 where authority to employ a subagent is to be implied from the course of dealing of the parties or from the usages of trade, it may be clear from the particular course of dealing or usage that the principal intends, or must be deemed to intend, to authorize the agent to create privity of contract.* On the other hand, if the agent has undertaken the perform- ance of a particular piece of business for his employer, and thus stands towards him, as it were, in the relation of inde- pendent contractor, it is clear that authority to employ sub- agents does not include authority to create privity of con- tract between them and his employer, since by the very na- ture of the agent's contract he is to employ them upon his own responsibility. 4 It is, indeed, often declared that, when- ever authority to employ subagents is expressed or may be implied, privity of contract between principal and sub- original contract of agency, the usage of trade, or the nature of the particular business which Is the subject of the agency, it may rea- sonably be presumed that the parties to the contract of agency orig- inally intended that such authority should exist, or where, In the course of the employment, unforeseen emergencies arise which im- pose upon the agent the necessity of employing a substitute; and that when such authority exists, and is duly exercised, privity of contract arises between the principal and the substitute, and the latter be- comes responsible to the former for the due discharge of the duties which his employment casts upon him, as if he had been appointed agent by the principal himself." De Bussche v. Alt, 8 Ch. Div. 286, per Thesiger, L. J. Cf. New Zealand & A. L. Co. v. Watson, supra, which does not seem reconcilable with the last case. But see Bowstead, Dig. Ag. 83. note (d). See, also, Kaltenbach v. Lewis, 10 App. Cas. 617, 636. See Cockran v. Irlam, 2 M. & S. 301; Darling v. Stanwood, 14 Allen (Mass.) 504; McCants v. Wells, 3 S. C. 569; Id., 4 S. C. 381; Strong v. Stewart, 9 Heisk. (Tenn.) 137; Whitlock v. Hicks, 75 111. 460. * "The distinction between the liability of one who contracts to do a thing, and that of one who merely receives a delegation of authority to act for another, is a fundamental one. * * * If the agency is an undertaking to do the business, the original principal may look to the immediate contractor with himself, and is not obliged to look to inferior, or distant undercontractors or subagents, when de- 128 DELEGATION BY AGENT SUBAGENTS. (Ch. 5 agent is created by the employment ; but such statements must usually be read in the light of the facts before the court, and cannot be supported as stating a rule unless "subagent" is used with the restricted meaning of "substitute" or of "agent for the principal." If the rule is so limited, it fur- nishes little practical guidance ; for in doubtful cases the very question in controversy is whether the principal has au- thorized the employment to be made on his own behalf or on behalf of the agent. The difficulty of determining the intention of the parties is illustrated by the conflicting de- cisions referred to in the next paragraph. Same Bank as Agent Deposit for Collection- When a bank receives from a customer for collection a bill or note payable at a distant place, the parties necessarily contemplate that the bank shall send the paper to the place where it is payable, and shall employ some subagent there to collect and receive payment. So far as the debtor is concern- faults occur injurious to his interest. * * * The nature of the contract is the test. If the contract be only for the immediate serv- ices of the agent, and for his faithful conduct as representing his principal, the responsibility ceases with the limits of the personal services undertaken. But where the contract looks mainly to the thing to be done, and the undertaking is for the due use of all proper means to performance, the responsibility extends to all necessary and proper means to accomplish the object, by whomsoever used." Ex- change Nat. Bank v. Bank, 112 U. S. 276, 5 Sup. Ct 141, 28 L. Ed. 722, per Blatchford, J. And see cases cited, note 7, infra, for state- ments of this rule. 6 Wilson v. Smith, 3 How. (U. S.) 763, 11 L. Ed. 820; Campbell v. Reeves, 3 Head (Tenn.) 226; and see De Bussche v. Alt, 8 Ch. Div. 286. "A subagent is accountable ordinarily only to his superior agent when employed without the assent or direction of the principal. But if he be employed with the express or implied assent of the prin- cipal, the superior agent will not be responsible for his acts. There is, in such a case, a privity between the subagent and the principal, who must, therefore, seek a remedy directly against the subagent for his negligence or misconduct." Guelich v. Bank, 56 Iowa, 434, 9 N. W. 328, 41 Am. Rep. 110. 30) AUTHORITY TO CREATE PRIVITY OP CONTRACT. 129 ed, such subagent is the agent of the customer or principal, and payment to the subagent is binding upon the principal. The question remains whether privity of contract is created between principal and subagent, so that the subagent is di- rectly responsible to the principal, and the home bank or agent is responsible only for due care in selection, or whether the subagent is agent of and responsible to the home bank, and it is responsible to the principal for the neglects and de- faults of the subagent. If, as is sometimes done, the par- ties have expressed their intention in this regard, no difficulty arises. In the absence of .any express agreement, the answer to the question depends upon the understanding to be im- plied from the deposit of the paper for collection, and in their interpretation of this transaction the courts have taken opposite views. By a majority of the courts in this country it is held that the home bank merely undertakes to use due care in transmitting the paper and in selecting a subagent. 6 By other courts, 7 including the Supreme Court of the United Dorchester & Milton Bank v. Bank, 1 Gush. (Mass.) 177; East Haddara Bank v. Scovil, 12 Conn. 303; Jackson v. Bank. 6 Har. & J. (Md.) 346; Citizens' Bank v. Howell, 8 Md. 530, 63 Am. Dec. 714; Hyde v. Bank, 17 I,a. 560, 36 Am. Dec. 621; Third Nat Bank v. Bank, 61 Miss. 112, 48 Am. Rep. 78; Stacy v. Bank, 12 Wis. 629; Merchants' Nat. Bank v. Goodman, 109 Pa. 422, 2 Atl. 687, 58i Am. Rep. 728; Bank of Louisville v. Bank, 8 Baxt. (Tenn.) 101, 35 Am. Rep. 691; Daly v. Rank, 56 Mo. 94, 17 Am. Rep. 663; Guelich v. Bank, 56 Iowa, 434. 9 X. W. 328. 41 Am. Rep. 110; First Nat Bank v. Sprague, 34 Neb. 318, 51 N. W. 846, 15 L. R. A. 498. 33 Am. St. Rep. 644; Irwin v. Reeves Pulley Co.. 20 Ind. App. 101, 48 N. E. 601, 50 N. E. 317; Wilson v. Bank, 187 111. 222, 58 N. E. 250, 52 L. R. A. 632. Numerous other cases are cited in the above. T Allen v. Bank, 22 Wend. (N. Y.) 215, 34 Am. Dec. 289: Ayrault v. Bank, 47 N. Y. 570. 7 Am. Rep. 489; Titus v. Bank. 35 N. J. Law, 588; Reeves v. Bank. 8 Ohio St. 465; Simpson v. Waldby, 63 Mich. 439. 30 N. W. 199; Streissguth v. Bank, 43 Minn. 50, 44 N. W. 797, 7 L. R. A. 363, 19 Am. St. Rep. 213; Power v. Bank, 6 Mont 251, 12 Pac. 597; State Nat. Bank v. Manufacturing Co., 17 Tex. Civ. App. 214. 42 S. W. 1016. Numerous other cases are cited in the above. See. also, Mackersy v. Remsay, 9 Cl. & F. 818; Van Wart v. Wooley, TIFF.P.& A. 9 130 DELEGATION BY AGENT SUBAGENTS. (Ch. 5 States, 8 it is held that the bank undertakes to collect the paper, and thus assumes the liability of an independent con- tractor with responsibilty for the acts and defaults of its subagents. It is generally conceded on both sides that the decisive consideration is what was the understanding of the par- ties as to the duty the home bank undertakes to perform. 9 The nature of this understanding, it is submitted, is really a question of fact. In declaring, on the one hand, that in such cases the undertaking of the home bank is to trans- mit to a suitable agent for collection, or, on the other hand, that the undertaking of the home bank is to collect, the court in effect lays down a more or less arbitrary rule of construction, based, indeed, upon the understanding which the court thinks likely to prevail in such cases, to which it resorts because the parties either have no intention on the point or have failed to express it. In view of the diversity of opinion among judges as to the understanding between parties to such a transaction, it is probable that an equal diversity of understanding exists among the parties them- selves, and it would be difficult to say that one rule is better calculated to give effect to their intentions than the other. If, as intimated in Exchange National Bank v. Third Na- tional Bank, 10 the question is to be determined "according to those principles which will best promote the welfare of the commercial community," it would seem that the rule adopted in that case, which does not compel the customer 3 B. & C. 439. Of. Commercial Bank v. Bank, 8 N. D. 382, 79 N. W. 859. s Exchange Nat. Bank v. Bank, 112 U. S. 276, 5 Sup. Ct 141, 28 L. Ed. 722. "The foundation for all the differences of opinion among the learned judges * * * appears clearly to rest in the interpretation of the implied contract between the depositor and the bank at the time the negotiable paper is deposited for collection." Power v. Bank, 6 Mont. 251, 12 Pac. 597, per McLeary, J. 10 112 U. S. 276, 5 Sup. Ct. 141, 28 L. Ed. 722, per Blatchford, J. 30) AUTHORITY TO CREATE PRIVITY OF CONTRACT. 131 to resort for a remedy to a distant and unknown agent, is to be preferred. The same conflict of authority exists in respect to the re- sponsibility of the bank for the acts and defaults of a notary employed by it to protest paper which it has received for col- lection. 11 Same Attorney for Collection. A similar question is presented when a claim is placed in the hands of an attorney for collection. If the debtor resides at a distant place, the attorney necessarily has author- ity to employ an attorney or agent at that place, and whether the latter is agent of the first attorney or of the principal is a question of fact, depending upon the understanding of the original parties. 12 Many cases turn upon the construction of receipts, stating in terms that the claim is received "for collection," and such receipts have generally been construed as importing an undertaking to collect, and not merely to transmit to a suitable agent to collect. 13 The same construc- tion has been placed upon the undertaking of collection and commercial agencies in respect to claims received for collec- That the bank is responsible only for due care in selecting the notary. Warren Bank v. Bank, 10 Cush. (Mass.) 582; Bellemire v. Bank, 4 Whart (Pa.) 105, 33 Am. Dec. 46; Stacy v. Bank, 12 Wis. 629; Baldwin v. Bank, 1 La. Ann. 13, 45 Am. Dec. 72; Third Nat. Bank v. Bank, 61 Miss. 112, 48 Am. Rep. 78. To the same effect, but on the ground that the notary is a public officer whose duties are prescribed by statute. Britton v. Niccolls, 104 U. S. 757, 26 L. Ed. 917 (distinguished in Exchange Nat. Bank v. Bank, 112 U. S. 276, 5 Sup. Ct. 141, 28 L. Ed. 722); First Nat. Bank T. Butler, 41 Ohio St. 519, 52 Am. Rep. 94. That the bank is responsible for the acts and defaults of the no- tary. Ayrault v. Bank, 47 N. Y. 570, 7 Am. Rep. 489: Davey T. Jones. 42 N. J. Law, 28, 36 Am. Rep. 505; Bank of Lindsborg r. Ober, 31 Kan. 599, 3 Pac. 324. 1 2 National Bank of the Republic v. Bank, 50 C. C. A. 443, 112 Fed. 726. is Bradstreet v. Everson, 72 Pa. 124, 13 Am. Rep. 665 (citing cases); Cummins v. Heald, 24 Kan. 600, 36 Am. Rep. 264. 132 DELEGATION BY AGENT SUBAGENTS. (Ch. 5 tion. 14 The receipt may, of course, contain terms requiring a different construction. 15 Bradstreet v. Everson, 72 Pa. 124, 13 Am. Rep. 665; Weyer- hauser v. Dun, 100 N. Y. 150, 2 N. E. 274; Dale v. Hepburn, 11 Misc. Rep. 286, 32 N. Y. Supp. 269. IB Sanger v. Dun, 47 Wis. 615, 3 N. W. 388, 32 Am. Rep. 789. A mercantile agency which contracts with its subscribers to com- municate on request information as to the responsibility of mer- chants throughout the United States, stipulating that the information Is to be obtained mainly by subagents of the subscribers, whose names are not to be disclosed, and that the correctness of informa- tion is not guarantied, is not liable for loss occasioned to a sub- scriber by the willful and fraudulent act of a subagent in furnishing false information. Dun v. Bank, 7 C. C. A. 152, 58 Fed. 174, 23 L. R, A. 687. g 32) TERMINATION OF RELATION. 133 CHAPTER VI. TERMINATION OF RELATION. 81. Modes of Termination. 32. Termination by Limitation. 33. Termination by Act of Party. 34. Termination by Operation of Law. 35. Notice to Third Person Estoppel. 36. Irrevocable Authority Authority Given as Security 37. Authority Coupled with an Interest 38. Authority to Discharge Liability Incurred by Agent MODES OF TERMINATION. 31. The relation of principal and agent may terminate (a) By express or implied limitation; (b) By act of party; (c) By operation of law. The rules relating to the termination of the relation of principal and agent may be discussed conveniently under the above heads. The fundamental rule is that the continuance of the relation, like its formation, depends upon the will of the parties, although circumstances may arise which ter- minate it by operation of law. TERMINATION BY LIMITATION. 32. The relation of principal and agent terminates (a) By expiration of the term, whether a fixed period of time, or a period of time determinate by the occur- rence of an event expressly or impliedly limited for the continuance of the relation; (b) If the appointment of the agent is for a particular transaction, upon his completion of that transaction. The time during which the relation of principal and agent shall continue may be fixed by the express * or implied 2 32. i Danby v. Coutts, 29 Ch. D. 500 (fluring principal's absent-.- from England); Gundlach v. Fischer. 59 111. 172. 2 Dickinson v. Litwall, 4 Camp. 279 (usage that broker's authority expires with day ou which he is employed). 134 TERMINATION OF RELATION. (Ch. 6 terms of the appointment, so that the authority of the agent expires by its own limitation. Thus, the employment may be for a certain period of time or until the happening of an event. Where an agent is employed for a particular trans- action, the relation necessarily ceases when the agent has accomplished the purposes of the agency. 8 When the relation has been so terminated, the agent is functus officio, and can no longer bind his principal, 4 nor is he any longer pre- cluded from acquiring an adverse interest. 5 When an agent is employed to perform an act, it is an implied term of the appointment, unless a contrary inten- tion is manifested, that the authority shall cease in the event of the principal himself performing the act or causing it to be otherwise performed. 6 In such case the authority is de- Blackburn v. Scholar, 2 Camp. 341, 343; Walker v. Derby, 5 Biss. 134, Fed. Gas. No. 17,068. An agent employed to let or sell a house after having let had no authority to sell, and was not entitled to commission on sale. Gillow T. Aberdare, 9 T. L. R. 12. The authority of a solicitor retained to conduct an action ceases with the judgment. Macbeath v. Ellis, 4 Bing. 468; Butler v. Knight, L. R. 2 Ex. 66. An auctioneer's authority ceases with sale. Seton v. Slade, 7 Ves. 265, 276. After completion of the transaction, a declaration of the agent is not binding on the principal. Atlanta Sav. Bank v. Spencer, 107 Ga. 629, 33 S. E. 878. * After contract of sale Is completed, broker cannot alter terms. Blackburn v. Scholer, 2 Camp. 341, 343. 8 Moore v. Stone, 40 Iowa, 259; Short v. Millard, 68 111. 292. Ahern v. Baker, 34 Minn. 98, 24 N. W. 341; Gilbert v. Holmes, 64 111. 548; Bissell v. Terry, 69 111. 184; Walker v. Denison, 86 111. 142; Kelly v. Brennan, 55 N. J. Eq. 423, 37 Atl. 137. The Illinois cases say that there is a revocation by operation of law, the power of the principal over the subject-matter having ceased; but if the agent were entitled to notice, as in case of an exclusive agency to sell, it seems that he might make a binding contract of sale, entitling the purchaser to damages, although the principal had conveyed. "The, plaintiff (defendant) had a right to employ several agents, and the act of one in making a sale would preclude the others 32) TERMINATION BY LIMITATION. 135 termined by implied limitation, and notice of revocation is not necessary. Thus, where an agent authorized to sell a piece of land effected a sale to A., but in the meantime, without notice to him, the principal had sold the land through another agent, and executed a conveyance to another purchaser, it was held that A. could not maintain an action against the prin- cipal for damages for breach of contract. 7 So the authority of the agent terminates upon the extinction of the subject- matter of the agency, as if the principal authorizes the agent to sell a ship, which is afterwards lost, since it is an implied term or condition of the appointment that the thing with ref- erence to which the authority is to be exercised shall continue to exist. 8 without any notice, unless the nature of his contract with them re- quired it" Ahern v. Baker, supra. Cf. Jones v. Hodgkins, 61 Me. 480. Where the treasurer of a town was authorized to borrow to adjust a tax, which was adjusted before he acted, his authority ceased. Benoit v. Inhabitants of Conway, 10 Allen (Mass.) 528. i Ahern v. Baker, 34 Minn. 98, 24 N. W. 341. Story, Ag. 499. Clearly, unless a contrary intention is manifested, a condition is to be implied that the authority shall continue only so long as the ship continues to exist Quaere whether the principal could not con- fer authority in such terms that he would be bound by a contract of sale made on his behalf notwithstanding that when it was entered Into the ship had ceased to exist. A contract for the sale of a thing which, unknown to the parties, has ceased to exist, is void for mutual mistake, but if the seller knew the fact, and the buyer did not, the seller would be bound. The question of the termination of the au- - thority by extinction of the subject-matter is distinct from the ques- tion of the discharge of a contract of employment by subsequent impossibility, but in both cases the result depends upon whether the parties must have contemplated the continued existence of the sub- ject-matter as a condition that is, whether such a condition is to be implied. See Turner v. Goldsmith [1891] 1 Q. B. 544; Anson, Contr. 324; Clark, Contr. 678; Tiffany, Sales, 23, 160. 136 TERMINATION OF RELATION. (Ch. 6 TERMINATION BY ACT OF PARTY. 33. Except where an authority is given to secure an inde- pendent benefit, or continuance of the authority is nec- essary to secure the agent against liability incurred, as explained in sections 36-38, the relation of prin- cipal and agent may be terminated at any time by either party, subject to the right which the other may have to recover damages for breach of any contract of employment (a) By revocation of the authority by the principal; (b) By renunciation of the appointment by the agent. Revocation of Authority. Since the power of one person to act for another depends upon the will of that other, the power to act, if it has been conferred, ceases when the other has manifested his will that it shall cease. It is a rule, therefore, that the principal may revoke the authority of an agent at any time before it is exe- cuted, and that when revoked the authority ceases. 1 No sub- sequent act of the agent is binding upon the principal. 2 Thus, the authority of an auctioneer may be revoked at any time before the goods are knocked down to a purchaser. 3 And, if a broker is authorized to buy or sell, the authority may be revoked at any time before completion of a contract of purchase or of sale, and, if under the statute of frauds a writing is required, even after a verbal contract has been completed. 4 The principal can revoke the authority although he has agreed to employ the agent for a longer time, and by 33. i Hunt v. Rousmanier, 8 Wheat. (U. S.) 174, 5 L. Ed. 589; Rees v. Fellow, 38 C. C. A. 94, 97 Fed. 167; Blackstone v. Butter- more, 53 Pa. 266; Chambers v. Seay, 73 Ala. 373; Smith v. Dare, 89 Md. 47, 42 Atl. 909. 2 Taylor v. Lendley, 9 East, 49; Warwick v. Slade, 11 Camp. 127. Manser v. Back, 6 Hare, 443. A recent English case holds, however, that after land has been bid off the purchaser cannot revoke the auctioneer's authority to sign the memorandum. Van Praagh v. Everidge [1902] 2 Ch. 266. * Farmer v. Robinson, 2 Camp. 339, note. 33) TERMINATION BY ACT OF PARTY. 137 revoking is guilty of a breach of the contract of employment ; for the power is distinct from the right to revoke. 6 The gen- eral rule is subject to important exceptions in certain cases where the interest of the agent or of some other person is in- volved in the continuance of the authority, a subject which will be considered later. 6 Same How Effected Notice. The authority of an agent can be terminated by revocation by any manifestation of the principal's will that the authority shall cease; in other words, by notice of revocation. 7 The notice may be express 8 or implied, 9 and may be communi- cated in any manner. Authority conferred by deed may be revoked by parol. 10 A revocation may be implied from any conduct of the principal brought home to the agent which manifests an intention to revoke. Thus, the appointment of another agent to do the same act may be effective as a revo- cation of the power of the former agent, 11 although no such implication would arise unless the exercise of the authority by both were incompatible. 12 So, if the principal disposes of the subject-matter of the agency, as, for example, if he sells property which he has authorized another to sell, a revoca- tion is to be implied. 18 So, a revocation of authority is to be e Post, p. 139. Post, p. 152. T Jones v. Hodgkins, 61 Me. 480; Robertson v. Cloud. 47 Miss. 208: Weile v. United States, 7 Ct. CI. 535. s Brookshire v. Brookshire, 30 N. C. 74, 47 Am. Dec. 341; Rees v. Pellow, 38 C. C. A. 94, 97 Fed. 167 (letter delivered at agent's office in his absence). Copeland v. Insurance Co., 6 Pick. (Mass.) 198; Kelly v. Brennan. 55 N. J. Eq. 423. 37 Atl. 137 (demand for return of written power and surrender thereof); Chenault v. Quisenberry (Ky.) 57 S. W. 234 (power to convey revoked by conveyance of premises to agent as trustee). 10 Brooksbire v. Brookshire, 30 N. C. 74, 47 Am. Dec. 341. 11 Copeland v. Insurance Co., 6 Pick. (Mass.) 198. 12 Davol v. Quimby, 11 Allen (Mass.) 208; Enright v! Beaumond, 68 Vt 249, 35 Atl. 57. n In Jones v. Hodgkins, 61 Me. 480, where a commission merchant 138 TERMINATION OF RELATION. (Ch. 6 implied from the dissolution of a partnership 14 or from the severance of a joint interest. 15 Same Notice to Third Persons Estoppel. From its very nature the revocation of an agency must be made known to the agent. From that time the authority ceases, and the relation of principal and agent is terminated. It does not follow, of course, that the principal may not still be bound by the acts of the agent ; for if the principal has held out the agent as such he will be estopped to deny the agency as against third persons who may deal with the agent without notice that his authority has been revoked. 16 Therefore, if the principal has recognized the authority of an agent in dealings with a third person, so as to create a repre- sentation of authority, the latter may rely on the continuance of the implied authority until he has received notice of its revocation ; and, if a person has been held out to the public as an agent, third persons may deal with him as such until the principal has given public notice that the general au- thority is withdrawn. 17 On the other hand, if an agent has been authorized merely to do a particular act, unless the principal has made representation creating an estoppel as gold and delivered goods intrusted to him for sale before notice of a sale to another buyer by the principal, the agent was not liable to the principal In trover. "Undoubtedly," said Appleton, C. J., "a sale of property In the hands of a commission merchant employed to sell such property is a revocation is an act revoking the authority given. But so long as it remains unknown to the commission mer- chant he is not bound by it." See ante, p. 134. 14 Schlater v. Winpenny, 75 Pa. 321. 15 Rowe v. Rand, 111 Ind. 206, 12 N. E. 377. is Ante, p. 34; post, pp. 151, 183. IT Anon. v. Harrison, 12 Mod. 952; Trueman v. Loder, 11 Ad. & E. 589; Pole v. Leask, 33 L. J. Ch. 155; Hatch v. Coddington, 95 U. S. 48, 24 L. Ed. 339; Southern Life Ins. Co. v. McCain, 96 U. S. 84, 24 L. Ed. 653; Tier v. Lampson, 35 Vt. 179, 82 Am. Dec. 634; Fellows v. Steamboat Co., 38 Conn. 197; McNeilly v. Insurance Co., 66 N. Y. 23; Lamothe v. Dock Co., 17 Mo. 204; Wheeler v. Mc- Guire, 86 Ala. 398, 5 South. 190, 2 L. R. A. 808. 33) TERMINATION BY ACT OF PARTY. 139 against a particular person, notice to the agent is sufficient. 18 Since the liability of the principal to third persons after revo- cation of the authority rests upon estoppel, express notice of revocation is not requisite to relieve the principal from lia- bility for subsequent acts. An estoppel can exist only in fa- vor of one who has in good faith dealt with the agent in re- liance upon his apparent authority, and hence does not arise if the third person had knowledge of facts which gave him reasonable cause to believe that the authority had been with- drawn. 10 Where, however, a statute provides for the record of powers of attorney, such as powers to convey land, and makes the record constructive notice, and provides for the record of instruments of revocation, third persons who are without notice of an unrecorded revocation may rely upon the presumption of continuance of the authority. 20 Same Revocation befoie Expiration of Term of Employment. As has been pointed out, the principal can revoke the au- thority at any time, although he has agreed to employ the agent for a longer time, and by revoking is guilty of a breach of the contract of employment. It is in this sense that it is sometimes said that the power to revoke is distinct from the right to revoke. In other words, while the power to revoke always exists, except in certain exceptional cases, 21 the prin- cipal may bind himself by contract not to exercise the power, and thus incur liability toward the agent in case of revocation, as for the breach of any other contract. 22 A right on the part of the agent to be employed, or a right on the part of the principal to receive the services of is Watts v. Kavanagh, 35 Vt 34. i Claflin v. Lenheim, 66 N. Y. 301; Williams v. Blrbeck, Hoff. Ch. (N. Y.) 300. 20 Gratz v. Improvement Co., 27 C. C. A. 305, 82 Fed. 381, 40 L. R. A. 393. 21 Post, p. 138. 22 Coffin v. Landis, 46 Pa. 426; Lewis v. Insurance Co., 61 Mo. 534; Standard Oil Co. v. Gilbert, 84 Ga. 714, 11 S. E. 491, 8 L. E. A. 410; Green v. Cole, 127 Mo. 587, 30 S. W. 135. 140 TERMINATION OF RELATION. (Ch. 6 the agent, can arise only by virtue of a contract of employ- ment conferring such rights. A promise on the part of the principal to employ the agent for a certain time may be ex- press or implied, but no such promise is to be implied from the mere appointment. 23 Ordinarily the obligation to serve and the obligation to employ are correlative, and where the agect has bound himself to serve for a fixed term a corre- sponding obligation to employ will readily be implied ; 24 but the parties may contract upon their own terms, and unless the terms are explicit the question turns upon the construc- tion and interpretation of the particular contract. 25 A definite term of employment is often to be implied from the fact that the compensation of the agent is measured by the term of service. Thus, if the agent is to be paid an annual salary, the contract will readily be interpreted as con- 28 Kirk v. Hartman, 63 Pa. 97; Jacobs v. Warfield, 23 La. Ann. 395. 24 Lewis v. Insurance Co., 61 Mo. 534; Horn v. Association, 22 Minn. 233. 25 A. and B. agreed, "in consideration of the services and pay- ments to be mutually rendered," that for seven years, or so long as A. should continue to carry on business at L., A. should be sole agent at L. for sale of B.'s coals. B. was to have control over prices and credits, and if A. could not sell a certain amount per year, or B. could not supply a certain amount, either might, on notice, put an end to the agreement. At the end of four years B. sold the colliery. Held, that A. could not maintain an action for breach of the agreement, since it did not bind B. to keep the colliery or to do more than employ A. as agent for sale of such coals as he sent to L. Rhodes v. Forwood, 1 App. Cas. 256. Defendant, a shirt manufacturer, agreed to employ plaintiff, and plaintiff agreed to serve defendant as agent, canvasser, and traveler, the agency to be determinable by either at the end of five years, by notice, and plaintiff to do his utmost to obtain orders and to sell the goods "manufactured or sold" by defendant as should be for- warded or submitted by sample to plaintiff. After two years de- fendant's factory was burned down, and he did not resume business or further employ plaintiff. Held, that plaintiff could recover for breach of contract, since there was (distinguishing the case from Rhodes v. Forward, supra) an express promise to employ, and a 33) TERMINATION BY ACT OF PARTY. 141 templating an employment for a year; 28 and where an agent employed for a definite term, as a year or a month, con- tinues to be employed after the expiration of the original term, a renewal of the employment for another equivalent term will, in the absence of anything to indicate a different intention, be presumed. 27 But no inflexible rule can be laid down, since the intention of the parties must be gathered from the construction of the contract as a whole. 28 Frequently the contract of employment, although for a definite term, provides for its prior termination upon certain contingencies, and in such cases the principal, if he dischar- ges the agent, merely exercises a right and incurs no liabil- ity for breach of contract. 29 The principal may also dis- charge the agent without liability for breach of any implied condition in the contract of employment. As we shall see, 80 every agent, by entering into the relation, assumes certain condition that the factory should continue to exist could not be im- plied. "The contract," said Lindley, L. J., "will be treated as sub- ject to an implied condition that it is to be in force only so long as a certain state of things continues, in those cases only -where the parties must have contemplated the continuing of that state of things as the foundation of what was to be done. Here the parties cannot be taken to have contemplated the continuance of the defendant's manufactory as the foundation of what was to be done; for * * * the plaintiff's employment was not confined to articles manufactured by the defendant." Turner v. Goldsmith [1891] 1 Q. B. 544. 26 Emmens v. Elderton, 13 C. B. 495; Norton v. Cowell. 65 Md. 359, 4 Atl. 408, 57 Am. Rep. 331; Horn v. Association, 22 Minn. 233. But see Orr v. Ward, 73 111. 318. 27 Tatterson v. Manufacturing Co.. 106 Mass. 56; Sines v. Super- intendents, 58 Mich. 503, 25 N. W. 485; Alba v. Moriarty, 36 La. Ann. 680. 28 Tattersou v. Manufacturing Co.. 10(3 Mass. 56; Franklin Min. Co. v. Harris, 24 Mich. 115; Palmer v. Mill Co., 32 Mich. 274; McCul- lough Iron Co. v. Carpenter, 67 Md. 554, 11 Atl. 176; Haney v. Cald- well, 35 Ark. 156. 2 Oregon & W. Mortg. Sav. Bank v. Mortgage Co. (C. C.) 35 Fed. 22; Adriance v. Rutherford, 57 Mich. 170, 23 N. W. 718. o Post, p. 393. 142 TERMINATION OF RELATION. (Ch. 6 obligations toward his principal, such as the obligations to obey instructions, and to use reasonable skill, diligence, and care, and to act in good faith, and in every contract of agency it is an implied condition that the agent will perform these obligations. Consequently for a breach of any of these im- plied conditions the principal may revoke the authority of the agent without incurring liability on that account. 81 denunciation of Appointment. Since the relation depends upon the will of both parties, it may be determined at any time by the renunciation of the agent, 32 subject, as in the case of revocation, to the right of the other party to recover damages for breach of the contract of employment, if such contract exists. 33 The intention to renounce must, of course, be communicated to the principal, but it may be implied from the conduct of the agent, as when he abandons the business of the agency, and the principal may then treat the agency as terminated. 34 If the principal has held out the agent as such, he must, at his peril, notify third persons of the termination of the authority. 86 The principal is entitled to reasonable notice of renunciation ; and although the agent has not' bound himself by contract to i Phoenix Mut. Life Ins. Co. v. Holloway, 51 Conn. 311, 50 Am. Rep. 21; Dioringer v. Meyer, 42 Wis. 311, 24 Am. Rep. 415; Newman v. Reagan, 65 Ga. 512; Ford v. Danks, 16 La. Ann. 119; Case v. Jen- nings, 17 Tex. 661. See Edwards v. Levy, 2 F. & F. 94; Caldo v. Bruncher, 4 C. & P. 518. As to the implied obligations of a servant, Wood, Mast. & S. (2d Ed.) 83. See, also, Id. 110-120. as United States v. Jarvis, 2 Ware, 278, Fed. Cas. No. 15,468; Bar- rows v. Cushway, 37 Mich. 481. See, also, First Nat Bank v. Bissell (C. C.) 2 McCrary, 73, 4 Fed. 694. On breach of a contract of agency by the principal, the agent is justified in repudiating the agency. Duffield v. Michaels (C. C.) 97 Fed. 825. ss United States v. Jarvis, 2 Ware, 278, Fed. Cas. No. 15,468; White v. Smith, 6 Lans. (N. Y.) 5; Cannon Coal Co. v. Taggart, 1 Colo. App. 60, 27 Pac. 238. 3* Stoddart v. Key, 62 How. Prac. (N. Y.) 137; Case v. Jennings, 17 Tex. 661. Cf. Leopold v. Salkey, 89 111. 412, 31 Am. Rep. 93. SB Capen v. Insurance Co., 25 N. J. Law, 67, 44 Am. Dec. 412. 34) TERMINATION BY OPERATION OF LAW. 143 serve for a definite time or to complete the business delegated to him, it seems that he will be liable to the principal for any loss that may result from his failure to give reasonable no- tice. 86 If the renunciation is not in breach of his con- tract, the agent will be entitled to compensation and reim- bursement as in other cases. His right to compensation where his renunciation is in breach of contract will be con- sidered later. 37 Termination by Agreement. Since the relation of principal and agent may be terminated by either party, it may, of course, be terminated by agreement. TERMINATION BT OPERATION OF LAW. 34. Except where an authority is given to secure an inde- pendent benefit or the continuance of the authority is necessary to protect the agent against liabilities incurred, as explained in sections 36-38, the relation of principal and agent is terminated (a) By the death of either party; (b) By the insanity of either party; (c) At common law, if a feme sole is principal, by her mar- riage : and where the subject of the authority is real estate, in -which a husband or wife acquires an interest upon marriage, the authority is revoked, at least to that extent, by marriage of the principal; (d) By the bankruptcy of the principal, so far as relates to rights of which he is thereby divested, and by the bankruptcy of the agent, except so far as relates to the performance of formal acts; (e) When the principal and agent are in different conn- tries, as a rule, by the outbreak of war between those countries. Circumstances may occur, after the creation of an agency, which terminate it irrespective of its original limitation or of the act of the parties directed to that end. An agency is 8 United States v. Jarvis, 2 Ware, 278. Fed. Gas. No. 15,468. Quaere in the case of a gratuitous agency. See Story, Ag. 478. 7 Post, p. 445. 144 TERMINATION OF RELATION. (Ch. (> terminated by the death, insanity, marriage, or bankruptcy of one or the other of the parties, by war, or by a change of law rendering the continuance of the agency unlawful. In these cases the agency may be said to be dissolved, for lack of better term, "by operation of law." * Some of these forms of termination for example, termination by death or bank- ruptcy of the agent might perhaps be classed logically under the head of termination by original limitation, but the above classification has been adopted for the sake of convenience. Death. The authority of the agent, unless it be coupled with an in- terest, 2 is terminated by the death of the principal. 8 This re- sults logically from the representative character of the agent, the authority to act necessarily presupposing a principal to be bound. The authority is also terminated by the death of one of two or more joint principals, 4 or by the death of a partner in case of an agent appointed by a firm. 5 Moreover, the contract of employment, likewise, if one exists, is ter- minated, and the agent is not entitled to recover damages 34. i Under dissolution by operation of law, Story includes all forms of dissolution except by revocation or renunciation. Story, Ag. 462. 2 Post, p. 152. Watson v. King, 4 Camp. 272; Wallace v. Cook, 5 Esp. 46; Blader v. Free, 9 B. & C. 167; Hunt v. Rousmanier, 8 Wheat. (U. S.) 174, 5 L. Ed. 589: Pacific Bank v. Hannah, 32 C. C. A. 522, 90 Fed. 72; Lincoln v. Emerson, 108 Mass. 87; Brown v. Cushman, 173 Mass. 368, 53 N. E. 860; Harper v. Little, 2 Greenl. (Me.) 14, 11 Am. Dec. 25; Davis v. Bank, 46 Vt. 728; Clayton v. Merrett, 52 Miss. 353; Darr v. Darr, 59 Iowa, 81, 12 N. W. 765; Connor v. Parsons (Tex. Civ. App.) 30 S. W. 83; Duckworth v. Orr, 126 N. C. 674, 36 S. E. 150; Tuttle v. Green (Ariz.) 48 Pac. 1009; In re Kern's Estate, 176 Pa. 373, 35 Atl. 231. 4 Rowe v. Rand, 111 Ind. 206, 12 N. E. 377. Cf. Tasher v. Shep- hard, 6 H. & N. 575; Long vi Thayer, 150 U. S. 520, 14 Sup. Ct 189, 37 L. Ed. 1167. Griggs v. Swift, 82 Ga. 392, 9 S. E. 1062, 5 L. R. A. 405, 14 Am. St. Rep. 176. But see Bank of New York v. Vanderhorst, 32 N. Y. 653. 34) TERMINATION BY OPERATION OP LAW. 145 for the failure to employ him for the balance of the term." The authority terminates from the moment of death, and all subsequent acts of the agent are nullities, although the death was unknown to him and to the third person dealing with him. 7 "In the case of a revocation, the power continues good against the constituent, till notice is given to the attorney, but the instant the constituent dies the estate belongs to his heirs, or devisees, or creditors; and their rights cannot be divested or impaired by any act performed by the attorney after the death has happened; the attorney then being a stranger to them, and having no control over their proper- ty." * Owing to the harshness of this rule, it has not become established without some dissent. 9 Story was of the opinion that it should not apply where the act to be done may law- fully be done in the sole name of the agent, as in the case of a factor, supercargo, or shipmaster, and that the author- ity should in those cases be binding upon all the parties in interest. 10 But this exception has not generally prevailed, and the rule is almost universally recognized that, except where the authority is coupled with an interest, the death of the principal works an instantaneous termination of the Baxter v. Bui-field. 2 Srr. 1266; McNaughton v. Moore, 2 N. C. 189; Yenington v. Givene, 7 R. I. 589, 84 Am. Dec. 578. See Tasher v. Shepherd, 6 H. & N. 575. i Long v. Thayer, 150 U. S. 520, 14 Sup. Ct. 189, 37 L. Ed. 1167; Weber v. Bridgmaii, 113 N. Y. 600, 21 N. E. 985; Farmers' Loan & Trust Co. v. Wilson, 339 N. Y. 284, 34 N. E. 784, 36 Am. St. Rep. 696; Soltau v. Vulcanite Co., 12 Misc. Rep. 131, 33 N. Y. Supp. 77; Jenkins v. Atkins, 1 Humph. (Tenn.) 294, 34 Am. Dec. 648; Lewis v. Kerr, 17 Iowa, 73. And see cases cited note 3, supra. s Harper v. Little, 2 Greenl. (Me.) 14, 11 Am. Dec. 25, per Mellen, C. J. Cassiday v. McKenzie, 4 Watts & S. (Pa.) 282, 39 Am. Dec. 76; Ish v. Crane, 8 Ohio St. 520; Id., 13 Ohio St. 574; Dick v. Page, 17 Mo. 234, 57 Am. Dec. 267; Deweese v. Muff, 57 Neb. 17, 77 N. W. 361, 42 L. R. A, 789, 73 Am. St Rep. 488; Story, Ag. 495-498i; Wharton, Ag. 102-104. 10 Story, Ag. 496. TIFF.P.& A. 10 146 TERMINATION OF RELATION. (Ch. 6 agency, and consequently that any subsequent act of the agent is inoperative to bind the principal's estate. The agency is also terminated by the death of the agent. 11 The authority is personal to him, and does not vest in his executors or administrators, unless, indeed, the authority is conferred upon them by the terms of the appointment. If, however, the authority is coupled with an interest, it sur- vives. 12 The death of one of two or more joint agents, 18 or of a member of an agent firm, 14 unless by the terms of the appointment authority is conferred upon the survivors, also terminates the agency. The death of an agent terminates the authority of a subagent, 16 unless the agent was authorized to employ the subagent on the principal's behalf, and thus create privity of contract. 1 " Insanity. Where such a change occurs that the principal can no longer act for himself, the agent whom he has appointed can no longer act for him. Hence, if the principal becomes in- sane, the authority of the agent is thereby terminated. 17 This 11 Johnson v. Johnson's Adm'rs, Wright (Ohio) 594; Gage v. Alli- son, 1 Brev. (S. C.) 495, 2 Am. Dec. 682; In re Merrick's Estate, 8 Watts & S. (Pa.) 402. See, also, Adriance v. Rutherford, 57 Mich. 170, 23 N. W. 718. 12 Harnickell v. Orndorff, 35 Md. 341; Collins v. Hopkins, 7 Iowa, 463; Merrin v. Lewis, 90 111. 505; Jones, Mtg. 1786. is Hartford Fire Ins. Co. v. Wilcox, 57 111. 180; Salisbury v. Bris- bane, 61 N. Y. 617. i * Martine v. Insurance Co., 53 N. Y. 339, 13 Am. Rep. 529. IB Peries v. Aycinena, 3 Watts & S. (Pa.) 64; Lehigh Coal & Navigation Co. v. Mohr, 83 Pa. 228, 24 Am. Rep. 161; Watt v. Watt 2 Barb. Ch. (N. Y.) 371. is Smith v. White, 5 Dana (Ky.) 376; Story, Ag. 490. IT Drew v. Nunn, 4 Q. B. D. 661; Davis v. Lane, 10 N. H. 156; Matthiesson & Weichers Refining Co. v. McMahon, 38 N. J. Law, 536; Hill's Ex'rs v. Day, 34 N. J. Eq. 150; Bunce v. Gallagher, 5 Blatchf. 481, Fed. Cas. No. 2,133; Renfro v. City of Waco (Tex. Civ. App.) 33 S. W. 766. Contra: Wallis v. Manhattan Co., 2 Hall (N. Y.) 495, so far as it 34) TERMINATION BY OPERATION OF LAW. 147 rule is subject to the usual exception, if the authority is coupled with an interest. 18 And, as has been shown, if the principal has, by word or conduct, represented that an agent is authorized to act in his behalf, he is bound, notwithstand- ing his subsequent insanity, by an executed contract which a third person, in ignorance of the insanity and in reliance upon the representation, has entered into with the agent. 19 In most jurisdictions the contracts of a person who has been judicially declared insane are void, and in such case the ad- judication would doubtless be constructive notice of the ter- mination of authority. 20 It is laid down by all text-writers that the insanity of the agent terminates his authority, 21 but the question does not appear to have been presented to the courts. It seems that holds that lunacy must be established by inquisition. "I think that the satisfactory principle to be adopted is that, where such a change occurs as to the principal that he can no longer act for himself, the agent whom he has appointed can no longer act for him. In the present case a great change has occurred in the condition of the principal: he was so far afflicted with insanity as to be disabled from acting for himself; therefore his wife, who was his agent, could no longer act for him. Upon the ground which I have pointed out, I think that her authority was terminated." Drew v. Nunn, supra, per Brett, L. J. is Davis v. Lane, 10 N. H. 156; Matthiesson & Weichers Refining Co. v. McMahon, 38 N. J. Eq. 536; Hill's Ex'rs v. Day, 34 N. J. Eq. 150. i Ante, p. 100. * Ante, p. 99. See Huff cut, Ag. 71. In Motley v. Head, 43 Vt. 633, it was held that the mere appoint- ment of a guardian would not warrant a holding that the agency was terminated, unless It appeared that the insanity was such as to dis- qualify from making a valid contract 21 "The case of the insanity of the agent would seem to constitute a natural, nay, a necessary, revocation of his authority; for the principal cannot be presumed to intend that acts done for him and to bind him, shall be done by one who is incompetent to understand, or to transact, the business which he is employed to execute. The ex- ercise of sound judgment and discretion would seem to be required In all such cases, as preliminaries to the due execution of the author- ity." Story, Ag. | 487. 148 TERMINATION OP RELATION. (Ch. 6 third persons dealing with the agent in good faith, and in re- liance upon his apparent authority, if they could not be re- stored to their former position, would be entitled to protec- tion." Marriage At common law the marriage of a feme sole operates to revoke the authority of an agent previously appointed by her. 28 Under the modern statutes conferring upon married women the power of disposing of their property, a married woman may appoint an agent, 24 and hence the marriage of a feme sole does not as a rule revoke the authority of her agent. 25 But where the joinder of the husband is necessary to a conveyance by a married woman, the power of a feme sole is necessarily revoked by marriage. 26 Where by mar- riage a husband or wife acquires an interest in the other's land, which can be divested only by joining in a conveyance, a power to sell land executed by a single man or woman is necessarily revoked by marriage to the extent of such, inter- est. It has been held in Texas that such a power executed by a single man is revoked entirely by marriage, 21 but in Indiana it has been held that such a power might be exercised not- withstanding marriage, subject only to such rights as the law conferred upon the wife. 28 It would seem that an authority given as a security, although not technically coupled with an interest, would not be impaired by marriage. Ante, p. 101. Charnley v. Winstanley, 5 East, 266; McCan v. O'Ferrall, 8 01. & F. 30; Judson v. Sierra, 22 Tex. 365; Wambole v. Foote, 2 Dak. 1, 2 N. W. 239. Cf. Eneu v. Clark, 2 Pa. 234, 44 Am. Dec. 191. 2* Ante, p. 101. B Reynolds v. Rowley, 2 La. Ann. 890. as Ante, p. 101. *T Henderson v. Ford, 46 Tex. 627. This must, of course, rest upon the presumed Intention of the prin- cipal, unless the husband's deed would be totally inoperative without Joinder of the wife. as Joseph v. Fisher. 122 Ind. 399, 23 N. E. 856. jj 34r) TERMINATION BY OPERATION OF LAW. 149 Bankruptcy. The bankruptcy of the principal terminates the authority of the agent so far as relates to rights of property of which the principal is divested by the bankruptcy, 29 although as to oth- er rights the authority is not affected, 30 nor is the authority revoked if it be part of a security or coupled with an inter- est. 31 The revocation dates from the act of bankruptcy, pro- vided an adjudication of bankruptcy follows, but the doctrine of relation is not allowed to defeat the , rights of an in- tervening bona fide purchaser, who has no notice of the act of bankruptcy.* 2 The bankruptcy of the agent terminates his authority to receive money and do acts of a like nature," but not to do merely formal acts. 34 Termination by bankruptcy of the agent appears to be a result of the implied intention of the principal, rather than a necessary consequence of his bank- ruptcy. War. As has already been stated, war terminates all commercial intercourse' between the belligerent countries, and hence a citi- zen of one country cannot appoint an agent in the other. 35 For the same reason war as a rule terminates an agency if the principal is a citizen of one country and the agent a citi- zen of the other.** A recognized exception to the rule is an a Minett v. Forrester, 4 Taunt 541; Parker v. Smith, 16 East, 382; In re Daniels, 6 Biss. (U. S.) 405, Fed. Cas. No. 3,566; Wilson v. Harris, 21 Mont. 374, 54 Pac. 46 (assignment for benefit of creditors); Elwell v. Coon (N. J. Ch.) 46 Atl. 580 (assignment). Story, Ag. 482. o Dixon v. Ewart, 3 Meriv. 322. i Dixon v. Ewart, 3 Meriv. 322; Hall v. Bliss, 118 Mass. 554, 19 Am. Rep. 476; post, p. 153. 2 Ex parte Snowball, L. R. 7 Cb. 534, 548. Audenried v. Betteley, 8 Allen (Mass.) 302. Story, Ag. 486. Ante, p. 104. New York Life Ins. Co. v. Davis, 95 U. S. 425, 24 L. Ed. 453; Same v. Statham, 93 U. S. 24, 23 L. Ed. 789; Ward v. Smith, 7 Wall. (U. S.) 447, 19 L. Ed. 207; Howell v. Gordon, 40 Ga. 302. 150 TERMINATION OF RELATION. (Ch. 6 agency for collection of debts, where the agent resides in the same country with the debtor. Such an agency is not neces- sarily and as matter of law terminated, yet in order to sub- sist it must have the assent of both parties, and the assent of the principal is not to be presumed unless perhaps it is his manifest interest that the agency should continue, in which case it will be presumed unless the contrary be shown ; but otherwise assent to the continuance or ratification of the agent's act must .be proved. Furthermore, no payment is good or capable of ratification if made with a view of trans- mitting the funds to the principal during the continuance of the war. 87 The exception is not strictly confined to agencies for the collection of debts, but extends to other agencies, the execution of which does not involve commercial inter- course between citizens of the belligerents. Thus, in a recent case in the Supreme Court of the United States it was held that a power of attorney executed by a married woman and her husband, authorizing her brother to sell and convey real estate owned by her in the city of Washington, was not re- voked by the Civil War, although her husband became an officer of the Confederate army, and he and she remained within the Confederate lines during the war. 88 An authority coupled with an interest is not terminated by *T New York Life Ins. Co. v. Davis, 95 U. S. 425, 24 L. Ed. 453, and cases cited note 36, supra. 8 Williams v. Paine, 169 U. S. 55, 18 Sup. Ct. 279, 42 L. Ed. 658. "It is not every agency," said Peckham, J., "that is necessarily re- voked by the breaking out of a war. * * * Certain kinds of agencies are undoubtedly revoked. * * * Agents of an insurance company, it is said, would come within that rule. New York Life Ins. Co. v. Davis, 95 U. S. 425, 24 L. Ed. 453. * * * Agents of a life insurance company are undoubtedly engaged in the active busi- ness of their principal. Their duty is to receive the premiums for all policies obtained by them, and to transmit such premiums to the home office. * * * It is easy to see that active and continuous business of such a nature could not be carried on during a war where the principal and agent reside in the different countries engaged in such war. * * * Under the circumstances of this case, we think 35) NOTICE TO THIRD PERSONS ESTOPPEL. 151 reason that the principal is within the lines of the enemy ; 89 nor, on principle, is an authority given as a security thereby terminated. NOTICE TO THIRD PERSONS-ESTOPPEL. 35. Where a principal has by -words or conduct represented, that an agent is authorized to act on his behalf, he in bound by the acts of the agent, notwithstanding term- ination of his authority otherwise than by death, bank- ruptcy, or marriage of the principal, or by -war, with respect to third persons dealing with the agent in good faith in reliance upon snch representation, without notice of snch termination. 1 It has already been pointed out a that if the principal has held out an agent as such he will be estopped to deny the agency as against third persons who may deal with the agent in reliance upon the apparent authority, notwithstanding termination of the agency by act of either party. The same result must of course follow notwithstanding termination of the authority by express or implied limitation,* or even, in some cases, by what has been termed operation of law. No estoppel in favor of third persons can arise if the agency has been terminated by death, 4 or where it has been terminated by the marriage B or bankruptcy * of the principal to thepreju- the attorney In fact had the right to make the conveyance he did. It was not an agency of the class such as was mentioned in New York Life Ins. Co. v. Davis. * * * The mere fact of the breaking out of a war does not necessarily and as matter of law revoke every agency. Whether It is revoked or not depends upon the circum- stances surrounding the case and the nature and character of the agency." 39 Washington University v. Finch, 18 Wall. (U. S.) 106, 21 L. Ed. 818; Jones, Mtg. 1800. 35. i Of. Bowstead, Ag. $ 134. * Ante, p. 138. * Ante, p. 144. See cases cited ante, p. 134, note 6. Ante, p. 148. Except as to the rights of intervening bona fide purchasers before the adjudication. Ante, p. 149. 162 TERMINATION OF RELATION. (Ch. 6 dice of the intervening rights of other persons, or where the exercise of the apparent authority would be illegal, as in case of war. 7 But an estoppel may be created notwithstanding the insanity of the principal, 8 and, apparently, notwithstanding the insanity or bankruptcy 10 of the agent. IRREVOCABLE AUTHORITY AUTHORITY GIVEN AS SECURITY. 36. Where an authority in given for a valuable consideration, to secure or effect some benefit, independent of the agent's compensation, it is irrevocable by act of the principal (and is not terminated by the death, insanity, marriage, or bankruptcy of either party, or by war). 1 EXCEPTION DEATH OI PRINCIPAL. An authority which is not coupled with an interest is terminated by the death of the principal; SAME AUTHORITY COUPLED WITH AN INTEREST. 37. An authority is "coupled with an interest," as the term is generally used in the United States, when it is vested in one in whom is also vested such an interest or estate in the thing which is the subject of the authority that he can exercise the authority in his own name. i Ante, p. 149. Ante, p. 147. Ante, pp. 100, 146. 10 Ante, p. 149. 36-38. i The rule that an authority, although given as a secu- rity, terminates by the constituent's death, while supported by weight of authority, is based upon highly artificial reasoning. It is submit- ted that an authority given as a security, although not coupled with an interest, is not terminated by the occurrence of any of the events above enumerated (except the death of the principal), whose occur- rence would cause a bare power to terminate by operation of law. Their occurrence might, indeed, often render it difficult or impossible to enforce the security without resort to the courts; but the author- ity ought not to be held to have terminated because of the difficulty, or even impossibility, of exercising it in the constituent's name. 36-38) IRREVOCABLE AUTHORITY. 153 SAME AUTHORITY TO DISCHARGE LIABILITY INCUR- RED HY AGENT. 38. Where an agent l employed to do an act involving per- sonal liability, and is given authority to discharge such liability on behalf of the principal, the authority (it seems) becomes irrevocable, unless the principal otherwise discharges or indemnifies the agent against the liability as soon as it is incurred.* Irrevocable Authority. Although, as a rule, the principal may, at his pleasure, re- voke the authority of an agent, it is possible for the principal to confer upon the agent or a third person such a right to the continuance of the authority as to render it irrevocable. If an authority is conferred upon a person, on sufficient consideration, for the purpose of securing or effecting some benefit to him, independent of his compensation as agent, such an authority is irrevocable. The authority, however, does not survive the death of the principal unless it is vested in one in whom is also vested such an interest or estate in the thing which is the subject of the authority that it can be ex- ercised in his own name ; in other words, unless the authority is, as the term is employed in the United States, "coupled with an interest." In England, while the rule in respect to irrevocable authorities appears to be substantially the same as in the United States, the term "coupled with an interest'' is employed in a different sense, and is applied to any au- thority in the execution of which the person invested with it has such an interest or right as to make it irrevocable. 8 In other words, in England "authority coupled with an interest'' is coextensive with "irrevocable authority." It is perhaps owing to the different meaning which is attached to the term "authority coupled with an interest" by different courts that Of. Bowstead, Ag. 129. Terwilliger v. Railroad Co., 149 N. Y. 86, 43 N. B. 432, per Andrews. C. J. 154 TERMINATION OF RELATION. (Ch. 6 there is some confusion in the cases in respect to the nature of the right or interest which renders an authority irrevocable. It must always be borne in mind that, to make the author- ity irrevocable, the benefit sought to be secured or effected must be something more than the mere advantage or profit which the agent as such will derive from the continuance of the authority. The profit that will accrue to the agent by way of compensation for his services, even if he is to re- ceive a share of the proceeds, as of a sale or collection to be made by him, is not sufficient. 4 Nor, unless the interest is otherwise sufficient, is an authority irrevocable because it is a term of the contract of employment that it shall be irrevo- cable. 5 In such cases the law deems that the agent is suffi- ciently protected by his right of action for breach of the contract. Same Hunt v. Rousmanier The leading case on the subject of irrevocable authority in the United States is Hunt v. Rousmanier. 6 In that case Hunt loaned money to Rousmanier, who executed his notes Blackstone v. Buttermore, 53 Pa. 266; Hartley's Appeal, 53 Pa. 212, 91 Am. Dec. 207; Oregon & W. Mortg. Sav. Bank v. Mortgage Co. (C. C.) 35 Fed. 22; Hall v. Gambrill (C. C.) 88 Fed. 709; Cham- bers v. Seay, 73 Ala. 372; Gilbert v. Holmes, 64 111. 548; Frink v. Roe, 70 Cal. 296, 11 Pac. 820; Simpson v. Carson, 11 Or. 361, 8 Pac. 325; Darrow v. St. George, 8 Colo. 592, 9 Pac. 791; Ballard v. Insur- ance Co., 119 N. C. 187, 25 S. E. 956. The fact that the agent was entitled to commissions on rents col- lected did not create an authority coupled with an interest. Farmers' Loan & Trust Co. v. Wilson, 139 N. Y. 284, 34 N. E. 784, 36 Am. St. Rep. 696. s Blackstone v. Buttermore, 53 Pa. 266; Walker v. Denison, 86 111. 142; Flanagan v. Brown, 70 Cal. 254, 11 Pac. 706; Woods v. Hart, 50 Neb. 497, 70 N. W. 53. "In order to make an agreement for irrevocability contained In a power to transact business for the benefit of the principal, binding on him, there must be a consideration for it independent of the com- pensation to be rendered for the services to be performed." Black- stone v. Buttermore, supra 8 Wheat. 174, 5 L. Ed. 589. 36-38) IRREVOCABLE AUTHORITY. 155 for the amount, and a day or two after executed a power of attorney authorizing Hunt to execute a bill of sale of Rous- maniers interest in a certain vessel to himself or any other person, and to collect any insurance money that might be- come due in the event of the vessel being lost. The instru- ment also recited that the power was given for collateral se- curity for payment of the notes, and was to be void on their payment, but that in case of nonpayment Hunt was to pay the notes out of the proceeds, and return the residue. It was held that the power, since it contained no words of convey- ance or assignment, was not coupled with an interest, and hence that, although it would have been irrevocable by Rous- manier, it expired on his death. "It becomes necessary," said Marshall, C. J., "to inquire what is meant by the expression 'a power coupled with an interest.' Is it an interest in the subject on which the power is to be exercised, or is it an interest in that which is pro- duced by the exercise of the power? We hold it clear that the interest which can protect a power after the death of a person who creates it must be an interest in the thing itself. In other words, the power must be engrafted on an estate in the thing. The words themselves would seem to import this meaning. 'A power coupled with an interest' is a power which accompanies, or is connected with, an interest. The power and the interest are united in the same person. But if we are to understand by the word 'interest' an interest in that which is produced by the exercise of the power, then they are never united. The power, to produce the interest, must be exercised, and by its exercise is extinguished. The power ceases when the interest commences, and, therefore, cannot, in accurate law language, be said to be 'coupled' with it." While holding that the power in question terminated with the death of the constituent, because it was not coupled with an interest, Chief Justice Marshall was of the opinion that the power could not have been revoked by any act of the principal during his life, drawing a distinction between a 156 TERMINATION OF RELATION. (Ch. 6 power "coupled with an interest" and a power given as se- curity but without conveyance or assignment of any interest. "Where a letter of attorney forms part of a contract, and is a security for money, or for the performance of any act which is deemed valuable," he said, "it is generally made ir- revocable in terms, or, if it is not so, is deemed irrevocable in law. Although a letter of attorney depends, from its na- ture, on the will of a person making it, and may, in general, be recalled at his will ; yet, if he binds himself for a consid- eration, in terms, or by the nature of his contract, not to change his will, the law will not permit him to change it. Rousmanier, therefore, could not, during his life by any act of his own, have revoked this letter of attorney." The basis of the distinction between a mere authority given as a se- curity, which terminates with the life of the principal, and a power coupled with an interest, which does not so terminate, he found in the doctrine that an authority must be executed in the name of the person who gives it, from which results the legal impossibility of the exercise of the authority after the death of the person in whose name it must be exercised a result which does not follow if the interest or title in the thing which is the subject of the agency passes with the pow- er, and is vested in the person by whom it is to be exercised, so that in exercising it he acts in his own name. "The power given by the principal is, under such circumstances,'* says Story, "rather an assent or agreement that the agent may transfer the property vested in him, free from any equities of the principal, than strictly a power to transfer." 7 Same American Rule. The definition of an "authority coupled with an interest" given by Chief Justice Marshall in Hunt v. Rousmanier, and the distinction drawn by him between a power coupled with an interest and a mere power given as a security, have gen- erally, if not universally, been approved in this country. Ac- cordingly it is declared that in order to constitute "an au- T Story, Ag. 489. 36-38) IRREVOCABLE AUTHORITY. 157 thority coupled with an interest" the agent must have more than a mere interest by way of security in the exercise of the authority; that he must have an interest in the thing which is the subject of the authority, and not a mere interest in that which is produced by its exercise. 8 And it is held, on the one hand, that an authority given upon sufficient consid- eration, for the purpose of securing to or conferring upon the agent some benefit, independent of his compensation as where an agent is authorized to sell real or personal prop- erty 9 or to collect a claim 10 and apply the proceeds to the payment of a debt, or is authorized to confess judgment " is irrevocable by the act of the principal ; and, on the other hand, that unless the authority is "coupled with an interest," as above defined, the authority terminates upon the death of the principal, 1 * but that if it is coupled with an interest it survives. 18 s State v. Walker, 125 U. S. 339, 8 Sup. Ct. 929, 31 L. Ed. 769; Stler v. Insurance Co. (C. C.) 58 Fed. 843; Johnson R. Signal Co. v. Sig- nal Co. (C. C.) 59 Fed. 20. And see cases cited in notes 4 and 5, supra. Posten v. Rassette, 5 Cal. 467; Hutchins v. Hebbard, 34 N. Y. 27; Denson v. Thurmond, 11 Ark. 586; Gausen v. Morton, 10 B. & C. 731; Terwilliger v. Railroad Co., 149 N. Y. 86, 43 N. E. 432. Contra: Mansfield v. Mansfield, 6 Conn. 559, 16 Am. Dec. 76. A power to enter upon and sell and convey land, given for a. con- sideration of $5, held Irrevocable. Montague v. McCarroll, 15 Utah, 318, 49 Pac. 418. 10 Marzion v. Pioche, 8 Cal. 522. 11 Kindig v. March, 15 Ind. 248. Otherwise if without consideration, and not as security for a debt. Evans v. Fearne, 16 Ala. 689. 50 Am. Dec. 197. 12 McGriff v. Porter, 5 Fla. 373; Huston v. Cantril, 11 Leigh (Va.) 136; Hougbtaling v. Marvin, 7 Barb. (N. Y.) 412. Where to secure a loan the borrower executed an instrument au- thorizing the lender on default in payment to enter and take away and sell certain slaves, and from the proceeds pay himself, returning the overplus, the power was revoked by the grantor's death. Mc- Griff v. Porter, 5 Fla. 373. is Leavitt v. Fisher, 4 Duer (N. Y.) 1; Houghtaling v Marvin, 7 Barb. (N. Y.) 412. See Willingham v. Rushing, 105 Ga. 72, 31 S. E. 130. 158 TERMINATION OP RELATION. (Ch. 6 In accordance with this distinction, it has been held that the power of sale in an ordinary mortgage, being coupled with an interest or estate, is not revoked by the death of the mortgagor; 14 but in states where by statute a mortgage is declared to be a mere security for debt, passing no title or estate in the land to the mortgagee, the power of sale has generally been held to be incapable of execution after the death of the mortgagor. 15 An authority which is coupled with an interest is not revoked by the bankruptcy ie or in- sanity 17 of the principal, or by war; 18 and it would seem that the result would be the same if the authority were given as a security so as to be irrevocable by act of the principal, although not, strictly speaking, coupled with an interest. 19 Yet, in spite of the almost universal acceptance of Hunt v. Rousmanier as a correct statement of the law, it must be conceded that many cases have given a broader interpreta- tion to the term "coupled with an interest" than can be justi- fied by the language or the reasoning of that decision, which i* Varnum v. Meserve, 8 Allen (Mass.) 158; Bergen v. Bennett, 1 Caines, Cas. (N. Y.) 1, 2 Am. Dec. 281; Berry v. Skinner, 30 Md. 567; Hudgins v. Morrow, 47 Ark. 515, 2 S. W. 104; Harvey v. Smith, 179 Mass. 592, 61 N. E. 217 (chattel mortgage); Jones, Mtg. 1792. "Strictly speaking, a mortgage vests the whole legal estate in the mortgagee. His title to the land is complete as a legal title, and the power of sale is to relieve him of the equities attached to the mort- gage." Per Hoar, J.. Varnum v. Meserve, supra. IB Wilkins v. McGehee, 86 Ga. 764, 13 S. E. 84; Johnson v. John- son, 27 S. C. 309, 3 S. E. 606, 13 Am. St. Rep. 636. Otherwise when other provisions of statute declare the power to be a trust and part of the security. Reilly v. Phillips, 4 S. D. 604, 57 N. W. 780. le Hall v. Bliss, 118 Mass. 554, 19 Am. Rep. 476. Where the owner of shares of stock in a national bank delivered his certificate, together with a power of attorney to transfer the same, to secure his note, the power was coupled with an interest, and was not revoked by the bankruptcy of the constituent Dickinson v. Bank, 129 Mass. 279, 37 Am. Rep. 351. See, also, Crowfoot v. Gur- ney, 9 Bing. 372; ante, p. 149. IT Berry v. Skinner, 30 Md. 567; ante, p. 146. is Ante, p. 150. "Ante, p. 158, notes 9-11. 36-38) IRREVOCABLE AUTHORITY". 159 demands that the authority be accompanied by a conveyance or assignment of the legal title. 20 Thus, in the leading case of Knapp v. Alvord,* 1 where the power authorized the at- torney to sell personal property and to apply the proceeds to the payment or security of a note indorsed by himself and another, it was held that the fact that the power was accom- panied by a delivery of possession was enough to couple the power with an interest, and that the power survived the death of the constituent. "As the possession of the property was delivered to Meads," said Chancellor Walworth, "in connec- tion with this power to dispose of it for the security and pro- tection of himself and the other indorsers, the property must be considered as pledged to him for that purpose. The pow- er to sell, therefore, was coupled with an interest in the prop- erty thus pledged, and survived." Indeed, the reasoning of the chancellor goes far to show that he would have been *o Where the agent was authorized to sell goods, and out of the proceeds pay liens and other claims, and apply the balance , to pay- ment of notes held by him, the authority was not extinguished by the principal's death. Merry v. Lynch, 68 Me. 94. Where an instrument authorized an attorney to collect rents from mortgaged premises, and to apply upon the mortgage, and contained a clause assigning as security the rents under the present or any future lease, the authority was not revoked by death of the grantor. Kelly v. Bowerman, 113 Mich. 446, 71 N. W. 836. An agreement between joint owners of land, providing that either may sell to pay purchase-money notes, and that the legal title, if either dies before the notes are payable, shall vest in the survivor, to sell and dispose of and to pay such notes, is an authority coupled with an interest, which does not terminate on the death of one of the parties. Carleton v. Hausler, 20 Tex. Civ. App. 275, 49 S. W. 118. Where the principal executed an agreement authorizing the agent to collect certain rents, and apply them on the principal's indebted- ness, the authority was coupled with an interest, and did not ter- minate upon the principal's death. Stephens v. Sessa, 50 App. Div. 547, 64 N. Y. Supp. 28. See, also, Raymond v. Squire, 11 Johns. (N. Y.) 46; Keilly y. Phil- lips, 4 S. D. 604, 57 N. W. 780. 21 10 PaJce (N. Y.) 205, 40 Am. Dec. 241. 160 TERMINATION OF RELATION. (Ch. 6 willing to rest the decision upon the existence of an equitable lien upon the property, which he was satisfied was created by the clause in the power authorizing the sale of the prop- erty, and the application of the proceeds to the payment of the notes secured. And upon principle it is submitted that this view is correct, and that such a power, although con- taining no words of conveyance or assignment, is properly to be construed in connection with all the circumstances as cre- ating an equitable lien or right enforceable by the courts, even after the death of the constituent. 2 * Same English Rule. The English decisions appear in the main to be in accord with the decisions in this country, although a different and broader definition is given to the term "authority coupled with an interest." In Walsh v. Whitcomb, 23 where an insol- vent executed a power of attorney together with a general assignment of all his effects to a creditor, authorizing the at- torney to collect all outstanding debts for the benefit of cred- itors, it was held that the principal could not revoke the pow- er. "There is," said Lord Kenyon, "a difference in cases of powers of attorney ; in general they are revocable from their nature, but there are these exceptions: 'Where a power of attorney is part of a security for money, then it is not revoca- ble ; where a power of attorney was made to levy a fine, as part of a security, it was held not to be revocable ; the princi- ple is applicable in every case where a power of attorney is necessary to effect any security ; such is not revocable.' " In Watson v. King 24 it was held that an authority to sell certain shares of a ship given by a debtor to his creditor terminated upon the constituent's death. The power was not accompa- 22 See Bowstead, Ag. 129. Cf. American Loan & Trust Co. v. Billings, 58 Minn. 187, 59 N. W. 998. *s 2 Esp. 565 (1797). * 4 Camp. 272 (1815). See, also, Lepard v. Vernon, 2 Ves. & B. 51. 36-38) IRREVOCABLE AUTHORITY. 161 nied by an assignment, and the decision is thus in accord with Hunt v. Rousmanier ; but it is to be observed that Lord El- lenborough referred to the power as a "power coupled with an interest," saying that as such it was necessarily revoked by the principal's death, 25 whereas Chief Justice Marshall, employ- ing the term with a different meaning, would have declared that the power was revoked by the principal's death because it was not coupled with an interest. In Raleigh v. Ander- son, 28 goods having been consigned to a factor for sale with a limit as to the price, he made advances, and afterwards the principal gave him authority to sell at the market price, and to retain the amount of his advances. It was held that the authority was revocable, because there was no consideration for the agreement. In Gansen v. Morton 2T it was held that a power of attorney executed by a debtor and authorizing his creditor to sell certain lands and to discharge his debt out of the proceeds was coupled with an interest and irrevocable by act of the principal. In Smart v. Sandars 28 it was held that a factor to whom goods had been consigned for sale did not, by making advances, acquire such an interest as to render the authority irrevocable ; while it was said that, if the advances had been made in consideration of an agreement that the authority to sell should not be revoked, it would have been irrevocable. Wilde, C. J., after referring to the cases above cited, said : "The result appears to be that where an agree- ment is entered into on a sufficient consideration, whereby an authority is given for the purpose of securing some benefit to the donee of the authority, such an authority is irrevoca- ble. That is what is meant by an authority coupled with an 88 "A power, coupled with an interest, cannot be revoked by the person granting it; but It is necessarily revoked by his death. How can a valid act be done in the name of a dead mail?" Per Lord Ellenborough, Watson v. King, 4 Camp. 272. zo 6 M. & W. 670 (1830). ** 10 B. & C. 731 (1830). ** 5 C. B. 895 (1848). TIFF.P.& A. 11 162 TERMINATION OP RELATION. (Ch. 6 interest, and which is commonly said to be irrevocable/' This rule has been approved by later cases. 20 It is to be observed that, in spite of the different use of the term "authority coupled with an interest," the rule de- clared by Wilde, C. J., differs little, if at all, from that de- clared by Marshall, C. J., when he said that "where a letter of attorney forms part of a contract, and is a security for money, or for the performance of any act which is deemed valuable, it . * * * is deemed irrevocable in law." 80 Whether such an authority, if not accompanied by the con- veyance or assignment of an interest in the thing, is revoked by the death of the principal does not appear to have been considered in any English case since Watson v. King. 81 Same Authority for Benefit of Third Person. It is not necessary, in order to render an authority ir- revocable, that it be vested in the person to be benefited by its exercise, but the beneficiary may be a third person. 82 Thus, where a debtor authorizes another to sell property and 29 De Comas v. Prost, 3 Moore, P. C. (N. S.) 158; Clerk v. Laurie, 2 H. & N. 199. P. promoted a company for the purpose of purchasing from him and working a mining property. C. signed an underwriting letter addressed to P., by which he agreed, in consideration of a commis- sion, to subscribe for 1,000 shares In the company, and that the agree- ment and application should be irrevocable, and, notwithstanding any repudiation by him, should be sufficient to authorize P. to apply for the shares on behalf of C., and the company to allot them. P., by letter, accepted the terms. Subsequently C. wrote to P., and to the company, repudiating the agreement; but P. applied on behalf of C. for the shares, and the company allotted them, and placed C.'s name on the register. Held, thSt C. was not entitled to have his name removed, since the authority was coupled with an interest, and there- fore not revocable. Lopes, L. J., said: "The object was to enable Mr. Phillips, the vendor, to obtain his purchase money, and * * * it therefore conferred a benefit on the donee of the authority." Han- nan's Empress Gold Mining & D. Co. [1896] 2 Ch. 643. so Ante, p. 156. i Supra. See Bowstead, Ag. 322. 82 Walsh v. Whitcomb, 2 Esp. 565; Kindig v. March, 15 Ind. 248 (warrant of attorney to confer judgment). 36-38) IRREVOCABLE AUTHORITY. 1C3 to pay the proceeds to a creditor, the authority becomes irrevocable upon the creditor's acceptance of the security. 81 If the authority is accompanied by a conveyance or assign- ment of an interest, the authority is not revoked by the prin- cipal's death. 84 So, if a debtor, having funds in the hands of an agent, authorizes him to pay the debtor's creditor, and the agent promises the creditor to pay him or to hold the funds to his use, the principal can no longer revoke the au- thority, nor would it be revoked by his death. 88 Same Authority to Discharge Liability Incurred by Agent. While an authority conferred for the benefit of the prin- cipal, and not as a means of securing some benefit to the agent, is ordinarily revocable, 88 it seems that an authority may become irrevocable if its continuance is necessary to se- cure the agent against liability already incurred in favor of a third person. It is true that the principal must indemnify the agent for any loss sustained or liability incurred in the course of the agency, and this is ordinarily the agent's sole protection or security. 87 But if an agent is employed to do an act involving personal liability, and is given authority to discharge the liability on behalf of the principal, it would be manifestly unjust to permit the principal to revoke the au- thority after the liability has been incurred, at least without fully indemnifying the agent. For example, if an agent is American Loan & Trust Co. v. Billings, 58 Minn. 187, 59 N. W. 898. * Hunt v. Rousmanier, 8 Wheat (U. S.) 174, 5 L. Ed. 589. Where a deed or a power of attorney executed by a member of an underwriters' association authorized the agent to adjust and pay losses, and provided for a deposit of money by the members with the agent, which was a trust fund for protection of the insured, the power was coupled with an interest, and was not revoked by death of a member as to losses under policies issued during his lifetime. Durbrow v. Eppens, 65 N. J. Law, 10, 46 Atl. 582. SB Crowfoot v. Gurney, 9 Bing. 372; Hodgson v. Anderson, 3 B. & C. 842; Goodwin v. Bowden, 54 Me. 425; Simonton v. Bank, 24 Minn. 216; ante, p. 379. Ante, p. 136. ? Post, p. 456. 164 TERMINATION OF RELATION. (Gh. 6 authorized to make a contract in his own name, and to dis- charge it out of moneys of the principal in his hands, it seems that the authority to use the funds for that purpose becomes irrevocable as soon as the contract has been entered into, provided that the principal does not himself discharge the contract or provide other funds, or at least secure the agent against loss. Perhaps there is no decision which directly sus- tains this proposition," but its soundness has been approved by high authority.* See Read v. Anderson, 10 Q. B. D. 100, affirmed 13 Q. B. D. 781; Hess v. Rau, 95 N. Y. 359. affirming 17 J. D. S. 324. Of. Seymour v. Bridge, 14 Q. B. D. 460; Perry v. Barnett, 15 Q. B. Div. 460; Tatam v. Reeve L1893] 1 Q. B. 44; Anson, Contr. 359. In Read v. Anderson, supra, it was held that a turf commission agent could recover the amount of bets made by him in his own name at the request of and for defendant, and paid by the plaintiff to the winners, although defendant had directed him not to pay. The trial judge took the view that the agent's authority to pay the bets if lost was a security against any loss which might result from the per- sonal obligation to pay the bets, and was thus coupled with an inter- est, and that it was immaterial that the obligation was not legally enforceable, since its nonfulfillment would injure the plaintiff's busi- ness. It was said that the case might be supported on the ground that the principal was bound to indemnify the agent against the con- sequences of the act. The judgment was affirmed by the court of appeal apparently on the second ground. "The plaintiff," said Bowen, Jr., "has placed himself in a position of pecuniary difficulty at the defendant's request, who impliedly contracted, I think, to In- demnify him from the consequences which would ensue, in the or- dinary course of his business, from this step." It is true that where a debtor, having funds in the hands of an agent, authorizes him to pay a creditor, and the agent promises the creditor to pay, the authority is irrevocable, but in that case the creditor acquires an irrevocable right with respect to the funds. Crowfoot v. Gurney, 9 Bing. 372; Hodgson v. Anderson, 3 B. & C. 842; Goodwin v. Bowden, 54 Me. 425; Simonton v. Bank, 24 Minn. 216. 89 "if a principal employs an agent to perform an act, and if upon revocation of the authority the agent will be by law exposed to loss or suffering, the authority cannot be revoked. But in the present 36-38) IRREVOCABLE AUTHORITY. 165 case no claim could be lawfully enforced against the agent." Per Brett, M. R., dissenting, Read v. Anderson, 10 Q. B. Div. 100. "There is a qualification of the rule where the agent has entered upon the execution of the authority before revocation, and has so bound himself that a retraction of the authority would subject him to liability. In such cases the principal cannot revoke the authority as to the part of the transaction remaining unexecuted, at least not without indemnifying the agent" Per Andrews, C. J., In Terwilliger T. Railroad Co., 149 N. Y. 86, 43 N. K. 432. See Story, Ag. 446, 447; Huffcut, Ag. (2d Ed.) 87, 89; Bowstead. Dig. Ag. 321. 166 CONSTRUCTION OF AUTHORITY. (Ch. 7 CHAPTER VH. CONSTRUCTION OF AUTHORITY. 89. Express Authority Power of Attorney. 40. Informal Authority. 41. Ambiguous Authority. 42. Implied Authority. 43. Express Authority Incidental Powers Implied. 44. Powers Implied from Usage* In General. In the preceding chapters we have considered how the relation of principal and agent may be created, and also some other matters closely connected with that question. We have seen that in what may be called the normal type of agency the relation is created by the principal's appointment or prior authorization of the agent to act for him in bringing him into legal relations with third persons. When the re- lation of principal and agent is thus established, the act of the agent, pursuant to the authority conferred upon him, is the act of the principal, and as between the principal and third persons, with whom the agent deals, the same rights and obligations ordinarily result as if the principal dealt in person. 1 The power of the agent, indeed, under these cir- cumstances, to subject his principal to liabilities in favor of third persons, is not confined to cases in which the acts of the agent are done pursuant to the authority actually con- ferred; for, as we shall see, 3 the principal may be bound if the agent acts in excess of his actual authority, provided he acts within his so-called "apparent" or "ostensible" author- ity. In very many cases, however, no question of "apparent" authority is involved, and the rights and obligations which arise between the principal and third persons depend solely upon the actual authority of the agent. i Post, p. 182. Post, p. 180 et seq. 39-41) EXPRESS AUTHORITY. 167 Again, when the relation of principal and agent has once become established, certain rights and obligations arise as between principal and agent.* It is the duty of the agent to conform strictly to the authority actually conferred upon him. Any departure on his part from the terms of his au- thority is a breach of his implied undertaking to obey the in- structions of his principal, rendering him liable to respond in damages for any resulting loss, and in many cases work- ing a total forfeiture of his right to remuneration, reim- bursement, or indemnity.* Finally, the rights and obligations arising between the agent and third persons with whom he deals may depend upon the authority actually conferred upon him." It is important, therefore, before entering in detail upon a consideration of the respective rights of ti.e various sets of parties, to consider the nature and extent of the actual authority conferred upon the agent by appointment. The object in each case is to ascertain the intention of the prin- cipal as expressed by him, or to be inferred from his conduct, interpreted in the light of the surrounding circumstances. The question is therefore one of construction or interpreta- tion. The rules applicable are in the main similar to those which apply to the construction and interpretation of con- tracts. EXPRESS AUTHORITY POWER OF ATTORNEY. 39. A formal power of attorney is strictly construed, as giv- ing only such, authority as it confers expressly or by necessary implication. Therefore (1) The operative part of the power i* controlled by the recitals ; (2) Where authority to do particular acts I* followed by general words, they are construed as enlarging the authority only so far a* necessary to accomplish the particular acts. Post, pp. 885, 439. * Post, pp. 396, 454. P Post, pp. 330-394. 168 CONSTRUCTION OF AUTHORITY. (Ch. 7 SAME INFORMAL AUTHORITY. 40. Where authority is expressly conferred upon an agent otherwise than by formal power of attorney, the au- thority is construed liberally, -with a view to accom- plishing the object of the authority and in the light of the usages of business. SAME AMBIGUOUS AUTHORITY. 41. Where authority is conferred in such terms as to Be capa- ble of more than one construction, an act done by the agent, in good faith, which, is warranted by one con- struction, is deemed to have been authorized, although that construction -was not intended by the principal. Power of Attorney. A formal power of attorney must be strictly construed. To bring an act within the authority conferred, it must ap- pear, on a fair construction of the whole writing, that the authority is to be found within the four corners of the in- strument, either by express terms or necessary implication. 1 For example, a power to confess judgment at a specified term of court does not confer authority to confess judgment at a later term ; * a power to "negotiate, make sale, dispose of, assign, and transfer" promissory notes does not include power to pledge ; * and it has even been held that a power 39-41. lAttwood v. Munnings, 7 B. & O. 278; Withington v. Herring, 5 Bing. 442, 458; Bryant v. La Banque du People [1893] A. C. 170; Rossiter v. Rossiter, 8 Wend. (N. Y.) 494, 24 Am. Dec. 62; Craighead v. Peterson, 72 N. Y. 279, 28 Am. Rep. 150; Brantley v. Insurance Co., 53 Ala. 554; Gilbert v. How, 45 Minn. 121, 47 N. W. 643, 22 Am. St. Rep. 724. Rankln v. Eakin, 3 Head (Tenn.) 229. Jommenjoy Coondoo v. Watson, 9 App. Gas. 561. It is not necessary to invoke the rule of strict construction to hold that power to sell real estate does not include power to mortgage. Wocd v. Goodridge, 6 Gush. (Mass.) 117, 52 Am. Dec. 771; Jeffrey v. Hursh, 49 Mich. 31, 12 N. W. 898; Morris v. Watson, 15 Minn. 212 (Gil. 165). 39-41) EXPRESS AUTHORITY. 169 to sell real estate does not cover land subsequently acquired by the constituent.* Authority to act in the name of the principal, unless a contrary intention appears, confers au- thority to act only in his individual business, and for his personal benefit. 6 Thus, a power authorizing an agent to execute or indorse bills or notes in the name of the prin- cipal does not authorize their execution or indorsement for the agent's own benefit * or for the accommodation of a stranger ; T nor will separate powers given to one agent by two persons, authorizing him to execute and indorse notes in their names, respectively, authorize him to make a joint note in the name of both principals. 8 On the other hand, "the object of the parties is to be kept in view, and when the language used will permit that construction should be adopted which will carry out instead of defeating the purpose of the appointment." For this rea- Penfold v. Warner, 96 Mich. 179, 55 N. W. 680, 35 Am. St Rep. 591. See, also, Weare v. Williams, 85 Iowa, 253, 52 N. W. 328. But see Fay v. Winchester, 4 Mete. (Mass.) 513; Bigelow v. Livingston, 28 Minn. 57, 9 N. W. 31; Benschoter v. Lack, 24 Neb. 251, 38 N. W. 746. Attwood v. Mnnnings, 7 B. & C. 278; North River Bank v. Aymar, 8 Hill (N. Y.) 262; Adams Exp. Co. v. Trego. 35 Md. 47; Harris v. Johnston, 54 Minn. 177, 55 N. W. 970, 40 Am. St. Rep. 312; Wilson \. Wilson-Rogers, 181 Pa. 80, 37 Atl. 117. Stainer v. Tysen, 3 Hill (N. Y.) 279; Camden Safe Deposit & Trust Co. v. Abbott, 44 N. J. Law, 257; Stainback v. Bank, 11 Grat. (Va.) 269. T Gulick v. Grover, 33 N. J. Law, 463, 97 Am. Dec. 728; St John v. Redmond, 9 Port. (Ala.) 428; Wallace v. Bank, 1 Ala. 565. Mechanics' Bank v. Schaumburg, 38 Mo. 228. Where each of several tenants in common executed a separate power authorizing the attorney to sell and convey the constituent's interest in the land, and "to sell and indorse any promissory notes that may be taken and secured by mortgage" on the land, the power did not authorize the attorney to bind his principal as indorser, jointly with the other tenants, of a note taken payable jointly to alL Harris v. Johnston, 54 Minn. 177, 55 N. W. 970. 40 Am. St. Rep. 312. a Holladay v. Daily, 19 Wall. (U. S.) 606, 22 L. Ed. 187, per Field, J. See, also, Hemstreet v. Burdick, 90 111. 444. 170 CONSTRUCTION OP AUTHORITY. (Ch. 7 son, with formal powers as well as with informal powers, the grant of authority must be construed to include all medium powers which are necessary to the effective execution of the authority expressly granted, 10 and evidence of usage is ad- missible for the purpose of interpreting the authority. 11 Thus, a power to convey has frequently been held to be im- plied in a power to sell real estate, as necessarily incident to its effectual execution; 12 and a power to convey has been held to include by implication power to convey with general warranty, where a general warranty is a common and usual mode of assurance on the sale of real estate. 18 In questions of construction, precedents and even rules are of comparatively little value, since each case must turn upon the language of the particular instrument. One or two rules, however, offer practical' guidance in the construction of powers. 14 (i) The grant of authority is controlled by the recitals. Thus, where a power recited that the constitu- ent was going abroad, and the operative part gave author- ity in general terms, it was held that the authority was lim- ited to the principal's sojourn abroad. 18 (2) Where author- ity to do particular acts is followed by general words, the general words are restricted to what is necessary for the performance of the particular acts, and are to be construed as enlarging the authority granted only when necessary to o Howard v. Baillie, 2 H. Bl. 618; Witherlngton v. Herring, 5 Blng. 442; LeRoy v. Beard, 8 How. (U. S.) 451, 12 L. Ed. 1151; post, p. 174. " Post, p. 174. 12 Valentine v. Piper, 22 Pick. (Mass.) 85, 33 Am. Dec. 715; Hem- street v. Burdick, 90 111. 444; Farnham v. Thompson, 34 Minn. 330, 26 N. W. 9, 57 Am. Rep. 59. is Schultz v. Griffin, 121 N. Y. 294, 24 N. E. 480, 18 Am. St. Rep. 825. See, also, Leroy v. Beard, 8 How. (U. S.) 451, 12 L. Ed. 1151; Taggart v. Stanbery, 2 McLean (U. S.) 543, Fed. Gas. No. 13,724:' Peters v. Farnsworth, 15 Vt. 155, 40 Am. Dec. 671; Vanada v, Hop- kins, 1 J. J. Marsh. (Ky.) 285, 19 Am. Dec. 92. i* See Bowstead, Dig. Ag. art 33. iBDanby v. Coutts, 29 Ch. D. 500. 39-41) . EXPRESS AUTHORITY. 171 effectuate the purpose for which the authority is given. 18 Thus, under a power to demand and receive all moneys due and "to transact all business," the words "all business" were construed to mean all business necessary for the recov- ery of the moneys, and hence it was held that the power did not confer authority to indorse a bill of exchange received by the agent under the power. 17 And generally, where the authority to do particular acts is followed by a broad grant of authority, "to do all other acts which the principal could do in person," "to transact all business," and like phrases, the particular authority granted will be taken as indicating the true purpose of the agency, and the general authority will be construed as enlarging the particular authority only so far as necessary to accomplish that purpose. 18 Indeed, this rule applies with much the same force, if less frequently, to cases where the authority is conferred orally. 1 * Same Parol Evidence. Where authority is conferred by written instrument, the authority cannot be enlarged or varied by parol evidence. 20 This rule applies, of course, only when the parol evidence is offered to contradict or vary the terms of a writing from which the authority is solely derived. Parol evidence of a subsequent grant of authority, enlarging or varying the au- thority previously granted, is admissible, provided that the i Attwood v. Munnings, 7 B. & C. 278; Harper v. Goodsell, L. R. 5 Q. B. 422; Wood v. Goodridge, 6 Cush. (Mass.) 117, 52 Am. Dec. 771; Craighead v. Peterson, 72 N. Y. 279, 28 Am. Rep. 150; Pollock V. Cohen, 32 Ohio St 514. IT Hay v. Goldschmidt stated In Hogg v. Snaitb, 1 Taunt. 347. i Esdaile v. La Nanse, 1 Y. & C. 394; Rossiter v. Rossiter, 8 Wend. (N. Y.) 494, 24 Am. Dec. 62; Billings v. Morrow, 7 Cal. 172, 68 Am. Dec. 235. i Wood v. McCain, 7 Ala. 800, 42 Am. Dec. 612; Gullck v. Grover, 33 N. J. Law, 463, 97 Am. Dec. 728. 20 Gardner v. Baillie, 6 T. R. 591; Claflin v. Continental Jersey Works, 85 Ga. 27, 11 S. B. 721; Pollock v. Cohen, 32 Ohio St 514: Ashley v. Bird, 1 Mo. 640, 14 Am. Dec. 313; Allis Y. Goldsmith, 22 Minn. 123. 172 CONSTRUCTION OP AUTHORITY. . (Ch. 7 authority is not of a kind that must be conferred by writ- ing. 21 Thus, the parol evidence rule excludes evidence of usage or custom, when such evidence is offered to enlarge or to vary the express terms of a written authority. 82 Evidence of usage may, however, be admitted to interpret the author- ity, since even a formal power is to be construed as confer- ring by implication powers reasonably necessary for its ef- fectual execution, and hence as including in such cases cus- tomary and usual powers. 28 Informal Authority. Where the authority is conferred by writing not under seal, a more liberal construction will generally obtain. 2 * The strict construction of powers under seal, however, does not rest upon the mere presence of the seal, but upon their formal character, and upon the fact that the grant of au- thority is carefully guarded; and an equally strict construc- tion must obtain, in spite of the absence of a seal, if the in- strument appears to be drawn with exactness and precision. 20 Commercial instruments, such as orders and letters of in- struction, are generally construed with greater liberality, be- cause they are generally drawn in a loose and inartificial manner, and leave much for inference and implication. 26 A fortiori the same liberal construction ordinarily prevails where the grant of authority is oral. Nevertheless, in every case, the question is one of intention, and if the intention is * Hartford Fire Ins. Co. v. Wilcox, 57 111. 180; Williams v. Coch- ran, 7 Rich. Law (S. C.) 45; Magill v. Stoddard, 70 Wis. 75, 85 N. W. 346; Story, Ag. 79, 80. 22 Hogg v. Snaith, 1 Taunt. 347; Delafield v. State of Illinois, 26 Wend. (N. Y.) 192. 23 Hartford Fire Ins. Co. v. Wilcox, 57 111. 180; Reese v. Medlock, 27 Tex. 123, 84 Am. Dec. 611; Frink v. Roe, 70 Oal. 296, 11 Pac. 820; Story, Ag. 76, 77; ante, p. 169. 24 See Pole v. Leask, 28 Beav. 562, 29 L. J. Ch. 888; Bnthwistle v. Dent, 1 Ex. 812; Craighead v. Peterson, 72 N. Y. 279, 28 Am. Rep. 150. u See Kilgour v. Finlyson, 1 H. Bl. 156. Story, Ag. $ 75. 39-41) EXPRESS AUTHORITY. 173 clearly expressed, at least as between principal and agent, the authority must be strictly pursued. 21 Ambiguous Authority. Where authority is conferred in such terms as to be fairly susceptible of one or more constructions, and one of them is in good faith adopted and acted upon by the agent, it is not competent for the principal to repudiate the act as un- authorized because the construction adopted was not in- tended by him. The principal must bear the consequences if the departure from his intention was due to his failure to give his instructions in clear and unambiguous terms. 28 Obviously, this rule can have little application to formal pow- ers, which are subject to strict construction. 29 27 Bertram v. Godfrey, 1 Kiiapp, 381; Wood v. McCain, 7 Ala. 800, 42 Am. Dec. 612. Where an agent authorized by letter to sell land at a fixed price, In case he could sell Immediately, wrote that he could not sell at that price, and requested authority to sell for less, or else to let the matter drop, and afterwards, without further communication, sold for the price first fixed, it was held that the sale was unauthorized. Mat- thews v. Sowle, 12 Neb. 398, 11 N. W. 857. 28 Ireland v. Livingstone, L. R. 5 H. L. 395; Le Roy v. Beard, 8 How. (U. S.) 451, 468, 12 L. Ed. 1151; De Tastett v. Crousillat, 2 Wash. C. C. 132, Fed. Gas. No. 3,828; Winne v. Insurance Co., 91 N. Y. 185; Bessent v. Harris, 63 N. C. 542; Minnesota Linseed Oil Co. v. Montague, 65 Iowa, 67, 21 N. W. 184; post, p. 404. 29 "They [formal powers] are not subject to that liberal interpreta- tion which is given to less formal instruments, as letters of instruc- tion, etc., In commercial transactions, which are interpreted most strongly against the writer, especially where they are susceptible of two interpretations, and the agent has acted in good faith upon one of such interpretations." Craighead v. Peterson, 72 N. Y. 279, 28 Am. Rep. 150. But see Le Roy v. Beard, 8 How. (U. S.) 451, 12 L. Ed. 1151. 174 CONSTRUCTION OP AUTHORITY. (Ch. 7 IMPLIED AUTHORITY. 42. Where an agency is established by implication from tie adoption by the principal of acts unauthorized, the scope of the authority in strictly limited to acts sim- ilar to those adopted. EXPRESS AUTHORITY INCIDENTAL POWERS IM- PLIED. 43. Every agent in the execution of his express authority has implied authority to do whatever is reasonably nec- essary to its effective execution, unless the principal has indicated a contrary intention. SAME POWERS IMPLIED FROM USAGE. 44. Every agent in the execution of his express authority has implied authority to act in accordance with the estab- lished usages and customs of the particular business which he is employed to transact, or of the particular agency in -which he is employed, unless his principal has indicated a contrary intention. It has already been pointed out that the appointment of an agent may be implied as well as express, and that au- thority to act as agent will be implied whenever the conduct of the principal is such as to manifest an intention to con- fer it. 1 Most frequently an implied agency arises from the principal's adoption of unauthorized acts, such conduct read- ily giving rise to the inference that he desires the agent to perform other acts of the same kind, and thus being strong, if not conclusive, evidence of actual authority to perform other like acts. It follows that when authority is conferred in this manner by implication it can be no broader than the inference warrants, and must be strictly limited to acts sim- ilar to those previously adopted. 2 The same evidence which may thus establish an implied agency may establish an agen- 42-44. i Ante, p. 32. * Ante, p. 33. 42-44) INCIDENTAL POWERS IMPLIED. 175 cy by estoppel in favor of one subsequently dealing with the agent, if he was a party to the former course of dealing, and dealt with the agent in reliance upon the representation of authority created by the principal's adoption of the former acts. 8 Here, also, the agency by estoppel can be no broader than the representation, and must be limited to acts similar to those adopted. Incidental Powers. Authority to accomplish a particular end necessarily in- cludes authority to employ reasonable means to its accom- plishment, unless such means be expressly excluded. 4 As we have seen, even a formal power of attorney is construed as conferring medium powers necessary for its effective execu- tion. 5 The rule is necessarily very general. What is reason- ably necessary must, of course, depend upon the object sought to be accomplished and the circumstances of the par- ticular case. It is not easy, indeed, to draw a line between the powers which are implied from usage and custom * and those which are implied as necessarily incident to the effect- ive execution of the authority conferred. The general ap- plication of the rule will be seen from the illustrations given. Thus, an agent authorized to receive and sell certain goods, and to pay himself a debt out of the proceeds, has authority to bring an action against a person wrongfully withholding possession. * An agent authorized to enter into a binding contract has authority to sign a memorandum to satisfy the statute of frauds. 8 An agent employed to find a purchaser for property has authority to describe it to an intending pur- Ante, p. 36. * Pole v. Leask, 28 Beav. 562, 29 L. J. Ch. 888; Dingle v. Hare, 7 C. B. (N. S.) 145; Sprague v. Gillett, 9 Mete. (Mass.) 91; Peck v. Harriott, 6 Serg. & R. (Pa.) 146, 9 Am. Dec. 415; Williams v. Getty, 31 Pa. 461, 72 Am. Dec. 757; Michigan S. & N. L R. Co. v. Day, 20 111. 375. 71 Am. Dec. 278; National Bank v. Bank, 50 C. C. A. 443; 112 Fed. 726. Ante, p. 170. * Curtis v. Barclay, 7 D. & R. 539. Tost, p. 177. Durrell v. Evans, 1 H. & C. 174. 176 CONSTRUCTION OP AUTHORITY. (Ch. 7 chaser and to make representations as to facts affecting its value ; but an agent employed to find a purchaser and con- tract for the sale of real estate has not authority to receive the purchase money. 10 An agent authorized to secure im- mediate possession of a storeroom may bind his principal by a contract to pay a bonus therefor, if it cannot be otherwise obtained. 11 An attorney employed by one of the parties to an arbitration to pay the amount awarded against him, and directed to do whatever is needful in the matter, has power to execute a release required by the award. 12 An agent sent to hurry forward goods, and instructed to see that there is no delay in shipping them, has authority to bind his principal by a contract to pay wharfage due on the goods, in order to release them from a claim of lien under which they are held. 1S An agent authorized to open a new channel for the purpose of turning the course of a stream has implied author- ity to erect a dam or breakwater across the old channel to expedite the work. 14 An agent employed to obtain subscrip- tions to an agreement to form a joint-stock company to con- trol certain lands has authority to make representations as to the location and quality of such lands. 18 An agent em- ployed to travel about the country and sell goods has im- plied authority to hire a horse to enable him to get from place to place ; or, at least, in such case an inference or im- plication of authority arises sufficient to justify a finding of Mullins v. Miller, 22 Ch. D. 194. 10 Mynn v. Joliffe, 1 M. & Rob. 326. 11 Shackman v. Little, 87 Ind. 181. 12 Dawson v. Lawley, 4 Esp. 65. is Robinson v. Iron Co., 39 Hun (N. Y.) 634. Where goods shipped to an agent, to be by him reshipped and sold In a foreign market, were held under a claim of general average resulting from an accident to the vessel, it was held that he had au- thority to execute a general average bond in order to secure posses- sion of the goods, and thus carry out the object of bis agency. Hardee v. Hall, 12 Bush (Ky.) 327. i Barns v. City of Hannibal, 71 Mo. 449. 16 Sandford v. Handy, 23 Wend. (N. Y.) 260. 42-44) POWERS IMPLIED FROM USAGE. 177 fact that such authority is conferred upon the agent. 16 In- deed, it is perhaps overstating the case in some other of the foregoing illustrations to affirm that as matter of law the agent had the authority attributed to him, the question whether the means employed was reasonably necessary be- ing often a mere question of fact, dependent upon the cir- cumstances of the particular case. 1 * Usages of Particular Business. The authority of an agent is to be construed in the light of the established usages and customs of the business in which he is employed. Where one person employs another to transact business for him, it is reasonable to infer that he intends the agent to transact the business according to the recognized usages and customs of the particular business or of the place in which it is to be transacted; and hence, in the absence of any indication of a contrary intention, authority to act in accordance with any such usage or cus- tom will be implied. 18 In order that any particular usage may be thus read into the authority, it must be established ; that is, it must be so general that it is generally known, and will hence be presumed to be known by the principal, al- though it is not essential that it be actually known to him. 18 If it is not established, it must appear that it was known to i Huntley v. Mathias, 90 N. C. 101, 47 Am. Rep. 516. See, also, Bentley v. Doggett, 51 Wis. 224, 8 N. W. 155, 37 Am. Rep. 827. IT Story, Ag. 110. is Sutton v. Tatham, 10 Ad. & E. 27; Pollock v. Stables, 12 Q. B. 765; Pelham v. Hilder (1841) 1 Y. & C. 3; Upton v. County Mills, 11 Gush. (Mass.) 586, 59 Am. Dec. 163; Sumner v. Stewart, 69 Pa. 321; Kraft v. Fancher, 44 Md. 204; Corbett v. Underwood, 83 111. 324, 25 Am. Rep. 392; Plckert v. Marston, 68 Wis. 465, 32 N. W. 550, 60 Am. Rep. 876. i Sutton v. Tatham, 10 Ad. & E. 27; Pollock v. Stables, 12 Q. B. 765; Guesnard v. Railroad Co., 76 Ala. 453; Bailey v. Bensley, 87 111. 556; Hibbard v. Peek, 75 Wis. 619, 44 N. W. 641; Milwaukee & W. Inv. Co. v. Johnston, 35 Neb. 554, 53 N. W. 475. As to requisites of usage, see Clark, Contr. 482. TIFF.P.& A. 12 178 CONSTRUCTION OF AUTHORITY. (Ch. 7 him. 20 The usage must be legal; that is, it must not be in conflict with positive law. 21 It must be reasonable. 28 Evi- dence of usage cannot be admitted to change the intrinsic character of the agency, 23 and, of course, usage can never override the positive instructions of the principal. 24 Illus- trations of the part played by usage and custom in interpret- ing the authority expressly conferred upon agents could be multiplied indefinitely. For example, in the absence of ex- press limitation of his authority, an agent employed to sell has implied authority to sell with customary warranty, 28 and to sell on credit, if it is customary in such sales to sell on credit. 26 A broker who is employed to transact business at a certain place has implied authority to act in accordance with the reasonable usages of that place, 27 and, if he is a member of the stock exchange, has implied authority to buy and sell, and generally to govern himself, according to the usages of the stock exchange. 28 Other illustrations will 20 Robinson v. Mollett, L. R, 7 H. L. 802; Allen v. Bank, 120 U. S. 20, 7 Sup. Ct 460, 30 L. Ed. 573; Byrne v. Packing Co., 137 Mass. 313. 21 Day v. Holmes, 103 Mass. 306; Evans v. Wain, 71 Pa. 69. 22 Robinson v. Mollett, L. R. 7 H. L. 802; Sweeting v. Pearce, 7 C. B. (N. S.) 449; Whitney v. Esson, 99 Mass. 308, 96 Am. Dec. 762. 23 Robinson v. Mollett, L. R. 7 H. L. 802; Allen v. Bank, 120 U. S. 20, 7 Sup. Ct. 460, 30 L. Ed. 573 (usage authorizing factor to pledge). 24 Barksdale v. Brown, 1 Nott. & M. 517; Hall v. Storrs, 7 Wis. 253. 2 s Dingle v. Hare, 7 C. B. (N. S.) 145; Upton v. County Mills, 11 Gush. (Mass.) 586, 59 Am. Dec. 163; Smith v. Tracy, 36 N. Y. 82; Herring v. Skaggs, 62 Ala. 180, 34 Am. Rep. 4; Pickert v. Marston, 68 Wis. 465, 32 N. W. 550, 60 Am. Rep. 876; post, p. 207. 26 Pelham v. Hilder, 1 Y. & C. 3. 27 Pollock v. Stables, 12 Q. B. 765; Cropper v. Cook, L. R. 3 C. P. 199; Bailey v. Bensley, 87 111. 556. 2 Young v. Cole, 3 Bing. N. C. 724; Coles v. Bristow, L. R. 4 Ch. 3; Nickalls v. Merry, L. R. 7 H. L. 530; Bibb v. Allen, 149 U. S. 481, 13 Sup. Ct. 950, 37 L. Ed. 819; Skiff v. Stoddard, 63 Conn. 198, 26 Atl. 874, 28 Atl. 104, 21 L. R. A. 102. 42-44) POWERS IMPLIED FROM USAGE. 179 be given in discussing the scope of various particular author- ities. 29 Usages of Particular Agencies. There exist various classes of agents, such as factors, brokers, auctioneers, and attorneys at law, who hold them- selves out as ready to serve the public generally, and who may be termed professional agents. Because they are cus- tomarily invested with certain powers, and charged with cer- tain duties, usages and customs defining their powers have grown up, and are so well established that the courts take judicial notice of them. When a person employs an agent of one of these classes to transact business peculiar to his profession or business, it is to be inferred that the principal intends the employment to be regulated by the usages and customs pertaining to it; and hence, in the absence of any indication of a contrary intention, the usual and customary powers of such an agent will be implied. For example, a factor to whom goods are intrusted for sale has implied authority to fix the price, to sell on credit, but not to pledge or to barter. 80 There exist other classes of agents, such as shipmasters and bank cashiers, who do not hold themselves out as ready to serve the public generally, and who serve ex- clusively one employer, whose business is nevertheless con- fined to well-defined fields of agency, and who likewise are customarily invested with certain powers and charged with certain duties in the course of their employment. The pow- ers and duties of these agents also are to a greater or less extent defined by usage and custom, and in respect to them the same implication of authority to act in the usual and cus- tomary manner arises. Illustrations of the implied powers of these agents will be found in discussing the scope of par- ticular agencies. 81 Post, p. 208. Post, p. 222. * Post, p. 221. 180 LIABILITY OF PRINCIPAL TO THIRD PERSON. (Gh. 8 PART II. RIGHTS AND LIABILITIES BETWEEN PRINCIPAL AND THIRD PERSONS. CHAPTER VHE. LIABILITY OF PRINCIPAL TO THIRD PERSON- CONTRACT. 45. Liability on Contract Disclosed Principal. 46. Apparent Authority. 47. Estoppel. 48. Scope of Particular Agencies. 49. Contract Induced by Collusion of Other Party and Agent. LIABILITY ON CONTRACT DISCLOSED PRINCIPAL. 45. The principal is liable upon a contract duly made by his agent with a third person (1) When the agent acts within the scope of his actual authority; (2) When the contract, although unauthorized, ha* been ratified; (3) When the agent acts within the scope of his apparent authority, unless the third person has notice that the agent is exceeding his actual authority. SAMEAPPARENT AUTHORITY. 46. "Apparent authority," as the term is used in the fore- going section, includes authority to do whatever is usual and necessary to carry into effect the principal power conferred upon the agent and to transact the business which he is employed to transact; and the principal cannot restrict his liability for acts of his agent within the scope of his apparent authority by limitations thereon of which the person dealing with the agent has not notice. 45-47) LIABILITY ON CONTRACT. 183 SAME ESTOPPEL. 47. The principal may be estopped to deny that a person is his agent, or that his agent has acted within the scope of his authority. Principal, Disclosed or Undisclosed. In entering into a contract with a third person the agent usually discloses the agency, but the principal is ordinarily liable whether he be disclosed or undisclosed. Subject to some qualifications, the liability of the principal upon the con- tract is the same in both cases. The liability of the dis- closed principal will, however, be considered first, and the liability of the undisclosed principal considered separately. 1 Manner of Execution. Although an agent has power to bind his principal by a contract made on his behalf within the scope of the author- ity conferred, the contract may fail to bind him by reason of its form or other circumstances. Where the agent, acting within his authority, makes a contract in the name of the principal, the principal, and he alone, is bound. 2 And al- though the contract be unauthorized, if it be made in the name of the principal, and he ratifies it, he, and he only, is bound. 8 It does not follow, however, that the principal is not bound because the contract is in the name of the agent ; for the principal may be bound although he be undisclosed. 4 And even if he be disclosed, and the contract made in the name of the agent, the principal is bound, except in the case of contracts under seal and negotiable instruments, if such 45-47. i Post, p. 231 et seq. 2 Johnson v. Ogilby, 3 P. Wm. 277; Owen v. Gooch, 2 Esp. 567; Exp. Hartop, 12 Ves. 352; Robins v. Bridge, 3 M. & W. 114; Ma- hony v. Kekule, 14 C. B. 390; Green v. Hopke, 18 G. B. 549; Klrk- patrick v. Stainer, 22 Wend. (N. Y.) 244; Judson v. Gray, 11 N. Y. 408, 411; Co veil v. Hart, 14 Hun (N. Y.) 252; Bray v. Kettell, 1 Allen (Mass.) 80; Whitney y. Wyman, 101 U. S. 392, 26 I* Ed. 1050. Ante, p. 81. * Post, p. 235. 182 LIABILITY OF PRINCIPAL TO THIRD PERSON. (Ch. 8 was the intention of the parties ; 5 and, although the contract is in writing, parol evidence is admissible to show who was the real principal, in order to charge him, but not to dis- charge the agent from liability.* In such case, either the principal or the agent may be charged upon the contract. On the other hand, the agent, although authorized to bind the principal, may contract in such manner as to bind only himself. 7 In short, the agent may contract in such manner as to bind the principal only, to bind the principal and him- self, to bind himself only, or to bind neither. Logically, it would perhaps be in order at the present time to consider in what manner the agent must contract in order to bind his principal; but it will be convenient to postpone the discus- sion, and to discuss this phase of the liability of the principal upon contracts made on his behalf in connection with the discussion of the liability of the agent for such contracts toward the person with whom he deals. 8 Actual Authority. Every contract duly made by an agent for or on behalf of his principal, pursuant to the authority actually conferred up- on him, is binding upon the principal. This is an obvious application of the fundamental doctrine of agency, qui facit per alium facit per se. It is to be borne in mind that actual authority may be express or implied, and that even when authority is expressly conferred it includes by implication authority to do what is reasonably necessary to its effective execution 8 and authority to act in accordance with usage and custom. 10 Ratification. As we have already seen, the principal is bound by a con- tract made without authority upon his behalf when he has ratified it. 11 This branch of the subject has already been sufficiently discussed. 12 Post, p. 235. 8 Tost, p. 330 et seq. " Ante, p. 81. Post, p. 233. Ante, p. 175. is Ante, c. 3. i Post, p. 355. 10 Ante, p. 177. 4:5-47) LIABILITY ON CONTRACT. 183 Apparent Authority Estoppel. The power of an agent to render his principal liable upon a contract, or to bind him by a representation, may be far broader than his actual authority. A person may be estop- ped to deny that another person is his agent; or, if an agency actually exists, may be estopped to deny that an act is within the authority actually conferred. The nature of a so-called "agency by estoppel" has already been explained. 13 To constitute an estoppel there must have been words or conduct of the principal amounting to a representation of authority, and the person asserting the estoppel must have dealt with the agent in reliance upon the appearance of authority thereby created. A frequent application of the doc- trine of estoppel to agency is in cases where the principal is bound by the acts of his agent in excess of his actual author- ity, but within the authority which it has been represented that he possesses, as where the principal has acquiesced in his agent's unauthorized acts occurring either in a course of dealing with the person asserting the estoppel or with the public, and the person asserting the estoppel has relied upon the appearance of authority to perform other acts of a like nature thereby conferred upon the agent. 14 So, where the principal places his agent in such a situation as to justify a reasonable man in inferring that he has authority to per- form a particular act, the principal is estopped, as against one who has dealt with the agent in reliance upon the ap- pearance of authority so created, to deny the agent's author- ity to perform it, as where one places an agent upon his premises in apparent charge of the business there conducted, or in apparent charge of the business which it might reason- ably be inferred would be conducted on the premises. 15 Apparent Authority When Principal is Bound Indepen- dently of Estoppel. Independently of a technical estoppel, however, the princi- pal may be bound by the acts of his agent in excess of the au- Ante, p. 34. l4 Ante, p. 36. " Ante, p. 37. 184 LIABILITY OF PRINCIPAL TO THIRD PERSON. (Ch. 8 thority actually conferred upon him. Indeed, in most cases where the principal is bound by acts in excess of the actual au- thority the liability rests, not upon a technical estoppel, but upon the doctrine of agency, by which the principal is liable for all the acts of his agent which are within the scope of the authority usually confided to an agent employed to trans- act the business which the agent is employed to transact, notwithstanding limitations upon that authority which are not disclosed to those with whom the agent deals. 19 "Every agency carries with it, or includes in it, the authority to do whatever is usual and necessary to carry into effect the prin- cipal power, and the principal cannot restrict his liability for acts of the agent within the apparent scope of his author- ity by private instructions not communicated to those with whom he deals." 1T Same Illustrations. For example, the principal is bound by a warranty given by an agent whom he has authorized to make sales if the warranty is a usual one, although he has instructed the agent not to warrant, provided the buyer was not aware of this limitation, the power to warrant in the usual manner being ie Watteau v. Fenwick [1893] 1 Q. B. 346. See, also, Whitehead v. Tuckett, 15 East, 400; Smith v. McGuire, 3 H. & N. 554; Edmunds v. Bushell, 1 Q. B. 97; Butler v. Maples, 9 Wall. (U. S.) 766, 19 L. Ed. 822; Gowan v. Bush, 22 C. C. A. 196, 76 Fed. 349; Daylight Burner Co. v. Odlin, 51 N. H. 56, 12 Am. Rep. 45; Putnam v. French, 53 Vt 402, 38 Am. Rep. 682; Lobdell v. Baker, 1 Mete. (Mass.) 193, 35 Am. Dec. 358; Byrne v. Packing Co., 137 Mass. 313; Rathbun v. Snow, 123 N. Y. 343, 25 N. E. 379, 10 L. R. A. 355; Trainer v. Morison, 78 Me. 160, 3 Atl. 185, 57 Am. Rep. 790; Law v. Stokes, 32 N. J. Law, 249, 90 Am. Dec. 655; Williams v. Getty, 31 Pa. 461, 72 Am. Dec. 757; Lister v. Allen, 31 Md. 543, 100 Am. Dec. 78; Wheeler v. McGuire, 86 Ala. 398, 5 South. 190, 2 L. R. A. 808; Fatman v. Leet, 41 Ind. 133; Baker v. Produce Co., 113 Mich. 533, 71 N. W. 866; Bentley v. Doggett, 51 Wis. 224, 8 N. W. 155, 37 Am. Rep. 827; Watts v. Howard, 70 Minn. 122, 72 N. W. 840; Oberne v. Burke, 30 Neb. 581, 46 N. W. 838. IT Watts v. Howard, 70 Minn. 122, 72 N. W. 840, per Mitchell, J. 45-47) LIABILITY ON CONTRACT. 185 within the agent's "apparent" or "ostensible" authority. 18 Again, if a principal authorizes his agent to buy cotton on his behalf, instructing him in no case to pay more than a certain price, the principal is bound by a contract of pur- chase, although the agent exceeds his instructions in respect to the price, if the limitation upon his authority is not dis- closed to the seller, since the power to fix a price is within the scope of the authority usually confided to an agent em- ployed in that character. 19 So, where a person who traveled about selling his own goods was authorized to sell the plain- tiff's goods upon commission, and it was a usual incident to that general authority to fix the terms of sale, including the time, place, and mode of delivery and the price of the goods, and the time and mode of payment, and the agent sold goods on credit, which were forwarded by the principal addressed to the buyer, maked C. O. D., by express, it was held that the defendant expressman, being without notice of the agent's want of authority, was justified in delivering the goods upon the agent's order without payment. "We have a case, then," said the court, "where the agent was appar- ently clothed with the authority to sell the plaintiff's goods, without limitation as to the quantity, and on commission, for cash or on credit, as he might think proper; and, this being so, Moore must be regarded, in respect to third per- sons, as the plaintiff's general agent, whose authority would not be limited by instructions not brought to the notice of such third persons. As Moore, then, in respect to third per- sons, had the power to sell on credit, the authority to con- trol the delivery * * * would necessarily come within the scope of his agency ; and we think his order to the de- fendant would justify a delivery of the goods without pay- ment, unless he had notice of the agent's want of authority. As to him the agent's apparent authority was real author- is Post, p. 207. i Butler v. Maples, 9 Wall. (U. S.) 766, 19 L. Ed. 822. See, also, Nunnelly v. Goodwin (Tenn. Ch. App.) 39 S. W. 855. 186 LIABILITY OF PRINCIPAL TO THIRD PERSON. (Ch. 8 ity." 20 So, where the plaintiffs solicited the defendant to buy logs, and he referred them to C. as the person who at- tended to that business for them, and in pursuance of this direction the plaintiffs sought C., and took him where the logs were, and they thereupon agreed on the terms of sale, one of which was that the logs were to be scaled by the sealer employed at the defendant's mill and paid for ac- cording to the scale, it was held that C. had authority to bind the defendant by such an agreement notwithstanding any private instructions limiting C.'s authority to agree that the measurement and price should be so determined. "In this state," said the court, "the purchase and sale of logs according to a scale to be made is so general and notorious that the courts will take notice of the fact. The manner stipulated * * * was the usual and ordinary way, and hence within the apparent authority of an agent to purchase logs, and the plaintiffs are not bound by any private limita- tions upon C.'s authority in that regard, not communicated to them." ai So, where an agent was employed to travel about the country and sell goods by sample, power to hire horses and carriages for the transportation of the agent and his samples being necessarily incident to the business re- quired to be done, it was held that the principal was liable to a liveryman who furnished such transportation to the agent, although, unknown to the liveryman, the principal had supplied the agent with money and forbidden him to pledge his credit. "From the nature of the business re- quired to be done by their agent," said the court, "the de- fendants held out to those who might have occasion to deal with him that he had the right to contract for the use of teams and carriages necessary and convenient for doing such business, in the name of his principals, if he saw fit, in the way such service is usually contracted for." * a 20 Daylight Burner Co. v. Odlin, 51 N. H. 56, 12 Am. Rep. 45. ' 21 Watts v. Howard, 70 Minn. 122, 72 N. W. 840. 22 Bentley v. Doggett, 51 Wis. 224, 8 N. W. 155, 37 Am. Rep. 827, 45-47) LIABILITY ON CONTRACT. 187 Same Basis of Liability. The use of the words "apparent" or "ostensible" in this connection is somewhat misleading, for it implies that the binding effect upon the principal of an act within the scope of the agent's apparent or ostensible authority in such cases rests upon the doctrine of estoppel. And the same may be said of the frequent use in this connection of the phrase "holding out," as it is used in the passage last quoted. Estoppel, indeed, is not infrequently asserted to be the basis of the doctrine of agency under consideration ; 23 but the explanation, it is submitted, is inadequate. The basis of an agency by estoppel must be a representation of author- ity on the part of the principal, and reliance upon the au- thority represented to exist on the part of the third person. Yet in the class of cases now under consideration both ele- ments may be lacking. Let it be assumed, for example, that a traveling agent employed to sell, but forbidden to give some usual warranty, sells with that warranty to a buyer who knows nothing of the agent's authority except what he communicates. The warranty, being within the usual authority of an agent em- ployed in that character, is binding, 24 but the principal has made no representation of authority. On the contrary, the only representation of authority is that of the agent himself, who, indeed, by assuming to sell with warranty, does im- pliedly represent that he is authorized to do so; but this representation, being unauthorized, cannot, for the purpose of creating an estoppel, be attributed to the principal. In other words, it cannot be said that the principal has authorized the agent to hold himself out as authorized to sell, and is consequently estopped, when the agent has so held himself out, to say that he was not authorized to sell with usual 2 Ewart, Estoppel; Huffcut, Ag. p. 66 et seq., p. 128 et seq.; Johnston Y. Investment Co., 46 Neb. 480, 64 N. W. 1100. Against this view, see 13 Green Bag, 50; 15 Harv. L. R. 324. 2* Post, p. 207. 188 LIABILITY OF PRINCIPAL TO THIRD PERSON. (Ch. 8 warranty, since the case supposes that the agent was not authorized to hold himself out as authorized to sell without disclosing this limitation upon his authority. It would be reasoning in a circle to say that the principal is estopped because the representation of authority to warrant appears to be within the agent's authority, since the appearance of authority rests upon that very representation. Moreover, even if the conduct of the principal in permit- ting the agent to hold himself out as authorized to sell could properly be considered a representation on the principal's part of authority to sell with usual warranty, nevertheless, unless the buyer knew that the warranty given was a usual one, and therefore included by implication in the repre- sentation of authority to sell, he could not be said to rely upon any representation of authority to warrant. And the case would be the same if the principal directly held the agent out as authorized to sell, as when a seller should refer an in- tending buyer to another as his selling agent. 25 In either case, if the buyer's right to hold the principal upon the war- ranty rested upon estoppel, it would be part of the buyer's case to show, not merely that the warranty was a usual one, but that he knew that it was such ; or, at least, his right to recover upon the warranty would be defeated if it were shown that he was ignorant that the warranty was a usual one, and consequently did not rely upon the agent's appar- ent authority to warrant. Or if it were sought to charge a bank upon a contract made by its cashier, or an insurance company upon a contract made by its general agent, 26 such contract being within the customary powers of agents em- ployed in that character, but in violation of special instruc- tions, the right of the other party to the contract to recover would depend upon whether he was sufficiently acquainted 25 See Watts v. Howard, 70 Minn. 122, 72 N. W. 840; Trickett v. Tomlinson, 13 C. B. (N. S.) 663. 26 See cases cited in note 16, supra. As to powers of bank cash- iers, post, p. 220. As to powers of insurance agents, post, p. 218. 4:5-47) LIABILITY ON CONTRACT. 189 with the usages and customs of the banking business or the insurance business to know that an agent of that character would ordinarily have authority to make such a contract. Such, however, is not the rule. The principal is bound irre- spective of the other party's knowledge of the usual course of business, provided he has not notice of any limitation upon the usual authority. The apparent powers must, in- deed, be such as a reasonable man, conversant with business usages, would be justified in assuming to exist, but it is not essential that the party seeking to charge the principal should be acquainted with the usage on which his right de- pends. The liability of the principal for the acts of his agent with- in the scope of his "apparent" authority, as the term is here used, must rest, therefore, not upon a technical estoppel, but upon a broader doctrine of agency, that a principal is liable for acts of his agent which are within the ordinary and usual scope of the business he is employed to transact, notwithstanding undisclosed limitations upon that apparent authority a doctrine which, as we shall see, applies even when the very existence of the agency is undisclosed. 27 It is true that in many cases all the elements of a technical estoppel may exist, but it is by no means necessary that they do exist, to charge the principal, within this doctrine. No doubt the development of the doctrine was influenced by the practical consideration that "it is more reason that he who puts a trust and confidence in the deceiver should be a loser than a stranger," " or, as it is more fre- quently put, that, "where one of two innocent persons must suffer by the act of a third, he who has enabled the other to occasion the loss must sustain it": but these general state- ments are far from being statements of any principle of uni- versal application. 28 One who intrusts the custody of his 2f Watteau v. Fenwick [1893] 1 Q. B. 346; post, p. 237. 28 Hern v. Nichols, 1 Salk. 289. 2Knox v. American Co., 148 N. Y. 441, 42 N. E. 988, 31 L. R. A. 779, 51 Am. St. Rep. 700. 190 LIABILITY OF PRINCIPAL TO THIRD PERSON. (Gh. 8 goods to another is not ordinarily bound by an attempted sale, however great the trust and confidence reposed and however innocent the purchaser ; but, if the property is in- trusted with authority to sell, a sale with usual warranty or usual credit is binding, although warranty and credit, un- known to the buyer, were forbidden. 80 Same General and Special Agent. It must be conceded that the rule that the principal is bound by the acts of his agent within the scope of his ap- parent or usual authority, notwithstanding undisclosed lim- itations, is commonly said to apply only to "general" agents. The principal is bound, it is said, by the acts of his general agent, acting within the scope of his general authority, al- though in violation of his private instructions ; 31 but the authority of a "special" agent must be strictly pursued, and if he exceeds his limited authority the principal is not bound. 32 Agents are said to be divided, in respect to the extent of their authority, into "universal," "general," and "special" agents. A universal agent has been defined as one "ap- pointed to do all the acts which his principal can personally o Post, pp. 205, 207, 222. i Fenn v. Harrison, 3 T. R. 757; Whitehead Y. Tuckett, 15 East, 400; Butler v. Maples, 9 Wall. (U. S.) 766, 19 L. Ed. 822; Allen v. Ogden, 1 Wash. C. C. (U. S.) 174, Fed. Gas. No. 233; Rossiter v, Rossiter, 8 Wend. (N. Y.) 494, 24 Am. Dec. 62; Munn v. Commission Co., 15 Johns. (N. Y.) 44, 8 Am. Dec. 219; Lobdell v. Baker, 1 Mete. (Mass.) 202, 35 Am. Dec. 358; Markey v. Insurance Co., 103 Mass. 78, 92; Daylight Burner Co. v. Odlin, 51 N. H. 56, 12 Am. Rep. 45; Williams v. Getty, 31 Pa. 461, 72 Am. Dec. 757; Adams Exp. Co. v. Schlessinger, 75 Pa. 246; Lister v. Allen, 31 Md. 543, 100 Am. Dec. 78; Manning v. Gaskarie, 27 Ind. 399; Cruzan v. Smith, 41 Ind. 298; Blackwell v. Ketcham, 53 Ind. 186; City of Davenport v. Insurance Co., 17 Iowa, 276; Palmer v. Cheney, 35 Iowa, 281; Rockford Ins. Co. v. Nelson, 65 111. 415; Inglish v. Ayer, 79 Mich. 516, 44 N. W. 942; Montgomery Furniture Co. v. Hardaway, 104 Ala. 100, 16 South. 29. 32 See cases cited in last note. 45-47) LIABILITY ON CONTRACT. 191 do, and which he may lawfully delegate the power to another to do." 33 Such an agency, says Story, "may potential- ly exist ; but it must be of the very rarest occurrence." '* This term is seldom met with, and universal agents call for no discussion. A general agent is usually defined as one authorized to act for his principal in all matters concerning a particular business or employment or of a particular nature. A special agent is usually defined as one authorized to do a particular act or to act in a single transaction. "The distinction be- tween the two kinds of agencies is that the one is created by power given to do acts of a class, and the other by pow- er given to do individual acts only." 35 Yet while this dis- tinction is commonly said to indicate the dividing line be- tween general and special agents, there is by no means uni- versal agreement in the use of the terms. For example, the term "general agent" is sometimes said to apply to, or to include, any professional or customary agent, such as an at- torpey, broker, factor, or auctioneer, although he may be employed only in a single transaction. 36 Under this use of the term a broker employed in a single transaction is a gen- eral agent, while if the distinction usually drawn is correct he is a special agent. Sometimes, even, the difference is made to turn upon whether or not the authority, even though it be to do a particular thing, is strictly limited as to the mode of doing it. 37 If the power of an agent to bind Story. Ag. 21. * Id. e Butler v. Maples, 9 Wall. (U. S.) 776, 19 L. Ed. 822. See, also, cases cited In uote 31, supra. s Paley, Ag. (Lloyd's Ed.) 199, note; Evans, Ag. 102; Bowstead, Dig. Ag. art 1. See Lobdell v. Baker, 1 Mete. (Mass.) 193, 35 Am. Dec. 358; Bell v. Offutt, 10 Bush (Ky.) 632; Lister v. Allen, 31 Md. 543, 100 Am. Dec. 78. 7 Story, Ag. 18. "A special agent is one employed for a particular purpose only. He also may have a general authority to accomplish that purpose, or be limited to do It In a particular manner." Bryant v. Moore, 26 Me. 84, 45 Am. Dec. 96, per Shepley, J. 192 LIABILITY OF PRINCIPAL TO THIRD PERSON. (Gh. 8 his principal by acts within the scope of his apparent au- thority turned in reality upon whether his agency were gen- eral or special, it is obvious that accurate definitions of the terms would be essential, and, indeed, would have been worked out long ago by the courts. It is, however, very gen- erally admitted at the present day that the distinction is un- satisfactory. The distinction was stated by Story to be as follows : "It seems proper to refer again to * * * the distinction commonly ta*ken between the case of a general agent and that of a special agent, the former being appointed to act in his principal's affairs generally, and the latter to act concern- ing some particular object. In the former case the principal will be bound by the acts of his agent within the scope of the general authority conferred on him, although he violates by those acts his private instructions and directions, which are given to him by the principal, limiting, qualifying, suspend- ing, or prohibiting the exercise of such authority under par- ticular circumstances. In the latter case, if the agent exceeds the special and limited authority conferred upon him, the principal is not bound by his acts, but they become mere nullities, so far as he is concerned; unless, indeed, he has held him out as possessing a more enlarged authority." 88 So far as it relates to general agents, as there defined, the passage quoted states the rule with sufficient accuracy, under- standing "general authority" as authority to act within the ordinary and usual scope of the business which the agent is authorized to transact. 39 But, so far as this passage states a different rule for special agents that is, for agents appointed "to act concerning some particular object" it is believed that it is incorrect. Clearly, a broker or other cus- tomary agent is a special agent, as there defined ; but a broker employed in a single transaction has power to bind his prin- cipal within the scope of the ordinary authority of a broker employed in such a transaction, notwithstanding private or s Story, Ag. 126. Ante, p. 183. 45-47) LIABILITY ON CONTRACT. 193 undisclosed instructions limiting that authority. 4 * And even a special agent who is not a customary agent may bind his principal by acts within the ordinary and usual scope of the business confided to him, notwithstanding undisclosed limita- tions. That this is so, if the instructions are intended to be kept secret, and not communicated by the agent to those with whom he may deal, is clear. 41 "No man is at liberty to send another into the market to buy or sell for him as agent, with secret instructions as to the manner in which he shall execute his agency, which are not to be communicated to those with whom he is to deal ; and then, when his agent has deviated from these instructions, to say that he was a special agent, that the instructions were limitations upon his author- ity ; and that those with whom he dealt in the matter of the agency acted at their peril, because they were bound to in- quire, where inquiry would have been fruitless, and to ascer- tain that of which they were not to have knowledge." 4 * But it is believed that the rule is not confined to cases where the instructions limiting the usual or apparent author- ity of a special agent are intended to be kept secret. "If a man sends his servant to market to sell goods, or a horse, for a certain price, and the servant sells them for less, the mas- ter is bound by it." 48 "Every agency carries with it, or o Post, p. 224. i Hatch v. Taylor, 10 N. H. 538; Towle y. Leavitt, 23 N. H. 860, 55 Am. Dec. 195. Hatch v. Taylor, 10 N. H. 538. * "If a man, by his conduct, holds out another as his agent, by permitting him to act in that character and deal with the world as a general agent, he must be taken to be the general agent of the per- son for whom he so acts, and the latter is bound, though, in a par- ticular instance, the agent may have exceeded his authority. It Is so even in the case of a special agent; as, for instance, if a man sends his servant to market to sell goods, or a horse, for a certain price, and the servant sells them for less, the master is bound by it There even the violation of a particular authority does not render the sale null and void." Smith v. McGuire, 3 H. & N. 554, per Pol- lock, C. B. TIFF.P.& A. 13 194 LIABILITY OP PRINCIPAL TO THIRD PERSON. (Ch. 8 includes in it, the authority to do whatever is usual and neces- sary to carry into effect the principal power, and the princi- pal cannot restrict his liability for acts of his agent within the apparent scope of his authority by private instructions not communicated to those with whom he deals. These prin- ciples apply as well to special as to general agents. An agent with authority to sell or buy has authority to sell or buy in the usual manner." ** It is doubtless true that the usual and necessary powers which are incidental to the principal power are ordinarily fewer in the case of an agent employed to act in a single transaction than in the case of an agent employed to act in all matters concerning a particular business. 45 But upon principle the power of the agent in such cases to bind his principal by acts in excess of his actual authority does not turn upon whether the agency is general or special, but upon whether the powers which he assumes to exercise are such usual and necessary powers as would be implied in the ab- sence of any indication of a contrary intention as incidental to the principal power, provided, of course, that the person seeking to hold the principal had not notice of the terms of the actual authority. Same Notice of Limitations upon Apparent Authority. The burden of proof is upon the person dealing with any one as an agent, through whom he seeks to charge another as principal, to show that the agency did exist, and that the agent had the authority, real or apparent, which he assumed to exercise, or otherwise that the alleged principal is estop- ped from disputing the agency. A person dealing with any one as an agent who has not been held out as such deals at his peril, and if he does not apply to the alleged principal to ascertain whether an agency exists, and to what extent, he Watts v. Howard, 70 Minn. 122, 72 N. W. 840. "Blackwell v. Ketcham, 53 Ind. 184; Chicago & G. W. R. Land Co. v. Peck, 112 111. 408; Gilbert v. Deshon, 107 N. Y. 324, 14 N. E. 818. 45-47) LIABILITY ON CONTRACT. 195 takes the risk of its existence and of its extent. 4 * It is not in the power of an agent to establish or enlarge his author- ity by his own declarations. 47 Nevertheless, if an agency did exist, the third person can charge the principal for any act of the agent within the scope of his authority, although he made no inquiry; and the scope of the authority, as be- tween the principal and a third person who had no notice of unusual limitations, will be measured by the powers which would ordinarily be implied and included in such an agency. 48 By failing to inquire, the third person does not take the risk of unusual limitations; it is enough to protect him that he had not notice of such limitations, and it is for the principal to show that he had such notice. 4 ' And this rule applies as " "Pole v. Leask, 33 L. J. (N. S.) Ch. 155, per Lord Cran worth. See, also, Schimmelpennich v. Bayard, 1 Pet. (U. S.) 264, 7 L. Ed. 138; Hatch v. Taylor, 10 N. H. 547; Murdock v. Mills, 11 Mete. (Mass.) 5; Lister v. Allen, 31 Md. 543, 100 Am. Dec. 78; Hurley v. Watson, 68 Mich. 531, 36 N. W. 726; Rice v. Peninsular Club, 52 Mich. 87, 17 N. W. 708; Berry v. Anderson, 22 Ind, 36; Davidson v. Porter, 57 111. 300; Chaff e v. Stubbs, 37 La. Ann. 656; Dozier v. Freeman, 47 Miss. 647. Where an agent was appointed by resolution expressed by words In prsesenti, but intended to not take effect till certain stages of the business were completed, the agent could not bind the company by holding himself out as agent to one who relied merely on his rep- resentations, without knowledge of the resolution, Bathbun v. Snow, 123 N. Y. 343, 25 N. E. 379, 10 L. R. A. 355. * Post, p. 256. *8 Daylight Burner Co. v. Odlln, 51 N. H. 56, 12 Am. Rep. 45; Bentley v. Doggett, 51 Wls. 224, 8 N. W. 155, 37 Am. Rep. 827; But- ler v. Maples, 9 Wall. (U. S.) 766, 19 L. Ed. 822. 4 Bentley v. Doggett, 51 Wis. 224, 8 N. W. 155, 37 Am. Rep. 827. And see cases cited in notes 46 and 48, supra. If the principal relies upon a custom to withhold or limit some power which would otherwise be included as necessarily incidental to the main power, it is for him to show that the custom was so uni- versal that the person dealing with the agent must be presumed to have knowledge of it. Bentley v. Doggett, supra; Roche v. Penning- ton, 90 Wis. 107, 62 N. W. 946. If such a custom in fact existed, the 196 LIABILITY OF PRINCIPAL TO THIRD PERSON. (Clj. 8 well to cases where the third person has dealt with the agent without any direct holding out on the part of the principal as to cases where the principal has directly held him out as hav- ing authority. The rule that the person dealing with an agent need not make inquiry for, and is not affected with notice of, undis- closed limitations upon the apparent, or usual, authority, is commonly stated as applying only to general agents, and it is said that a person dealing with a special agent is bound to make inquiry and is affected with such notice. 50 What has already been said concerning the distinction between general and special agents is applicable here. No inquiry need be made for secret instructions to a special agent or for limita- tions upon his authority which are not intended to be dis- closed. And it seems that no inquiry need be made for any possible limitations upon the powers which would otherwise necessarily be included and implied as incidents to an agency of the character in question. 81 Where an agent is appointed to do a single act, however, the scope of the apparent au- thority is in most cases very narrow, and a person dealing with him must ascertain the terms of the authority at his peril. 5 * apparent authority of the agent would be an authority so limited. In Baines v. Ewing, L. R. 1 Ex. 320, 1 H. & C. 511, the principal gave authority to an insurance broker to underwrite marine risks, the risk not to exceed 100 by any one vessel, and the broker underwrote a policy for 150. The assured was not aware of the limitation, but it was well known in Liverpool that in almost all cases, if not in all, a limit was put to the amount for which the broker could sign. It was held that the principal was not liable. "The utmost that can be said," said Bramwell, B., "is that the principal held out the broker as having the authority which a Liverpool broker ordinarily has." so See cases cited note 31, supra. BI Hatch v. Taylor, 10 N. H. 538; Towle v. Leavitt, 23 N. H. 360, 55 Am. Dec. 195. ea Blackwell v. Ketcham, 53 Ind. 184; Gilbert v. Deshon, 107 N. Y. 324, 14 N. E. 318; Milne v. Kleb, 44 N. J. Eq. 378, 14 Atl. 646; Bohart v. Oberne, 36 Kan. 284, 13 Pac. 388. Where a special agent authorized to buy cotton of a designated 45-47) LIABILITY ON CONTRACT. 197 On the other hand, if the person dealing with an agent has notice that he is exceeding his actual authority, such per- son cannot charge the principal." In cases resting upon estoppel this must be so from the very nature of an estoppel. And although the liability of the principal for acts of his agent within the ordinary and usual scope of the business delegated does not rest upon a technical estoppel, nevertheless it is an essential element of the doctrine of agency on which the lia- bility rests that no limitation upon the ordinary and usual authority of such an agent be disclosed. 54 Of course, if the third person has been informed of limitations he cannot hold the principal beyond the authority so limited. 88 Knowl- edge of the limitations, however, is not essential ; it is enough if he have notice, actual or constructive. 88 Actual notice is communicated by knowledge of circumstances sufficient to put him as a reasonable man upon inquiry, which if pursued would lead to knowledge of the limitations. 81 Such notice person at a certain place bonght cotton of equal value and quality of other persons in a different locality, the principal was not bound. Robinson Mercantile Co. v. Thompson, 74 Miss. 847, 21 South. 794. . 08 In re Kern's Estate, 176 Pa. 373, 35 AtL 231; Littleton v. As- sociation, 97 Ga. 172, 25 S. E. 826; Park Hotel Co. v. Bank, 30 C. C. A. 409, 86 Fed. 742 (notice that agent is contracting with himself). Ante, p. 183 et seq. Strauss v. Francis, L. R. 1 Q. B. 379; Wood Mowing Mach. Co. T. Crow, 70 Iowa, 340, 30 N. W. 609. ee Howard v. Braithwaite, 1 Ves. & B. 202, 209; Collen v. Gardner, 21 Beav. 540. See Daylight Burner Co. v. Odlin, 51 N. H. 56, 12 Am. Rep. 45, where it was held that marking the package C. O. D. was not in law want of authority to authorize delivery without payment, and that It was properly left to the jury whether it was sufficient to put the expressman upon inquiry. Where husband and wife executed a deed, absolute in form, of the land of the wife, who delivered it to the husband, to be by him delivered as an equitable mortgage for a certain amount, and he delivered it in payment of a larger sum he owed the grantee, who was aware the deed was to be delivered as a security, he was bound to ascertain the conditions of delivery. Gilbert v. Deshon, 107 N. Y. 324, 14 N. E. 318; Brown T. West, 69 Vt 440, 38 Atl. 87. 198 LIABILITY OF PRINCIPAL TO THIRD PERSON. (Ch. 8 would be communicated by a previous course of dealing be- tween the parties indicating unusual limitations." So, if the person dealing with an agent has knowledge that his au- thority is conferred by a power of attorney or other instru- ment, he will be charged with knowledge of the conditions and limitations of the instrument. 69 And if the act which the agent assumes to do is one for which the law requires authority in writing, or under seal, or of record, the person dealing with the agent will be charged constructively with notice of the conditions and limitations of the authority.* So the assured is affected with constructive notice of restric- tions, contained in his policy, upon the authority of the agent to waive conditions of the policy, although the assured has not read the policy. 61 By the law merchant, a signature "per procurationem'* on a bill of exchange, promissory note, or check operates as constructive notice that the agent had only a limited authority to sign, and the principal is bound only if the agent in signing was acting within the actual limits of his authority. 62 A restrictive indorsement operates as construc- tive notice ; " and hence, when a bill or note is indorsed "for collection," this gives notice that the indorsee is merely agent for collection, and has not the legal title. 6 * * Ante, p. 82. Stainback v. Read, 11 Grat. (Va.) 281, 62 Am. Dec. 648. o Backman v. Charlestown, 42 N. H. 125; Peabody v. Hoard, 46 HI. 242: Lewis v. Commissioners, 12 Kan. 186; Reese v. Med- lock, 27 Tex. 120, 84 Am. Dec. 611. i Quinlan v. Insurance Co., 133 N. Y. 356, 31 N. E. 31, 28 Am. St. Rep. 645; post, p. 219. 62 Stagg v. Elliott, 12 C. B. N. S. 373, 381; Attwood V. Munnings, 7 B. & C. 278; Alexander v. McKenzie, 6 C. B. 766; In re Floyd Ac- ceptances, 7 Wall. (U. S.) 666, 19 L, Ed. 169; Nixon v. Palmer, 8 N. Y. 398; Pope v. Bank, 57 N. Y. 126. The letters "p. p. a.," added to the signature, are evidence of no- tice that the agent professes to act per power of attorney. Mt Mor- ris Bank v. Gorham, 169 Mass. 519, 48 N E. 341. s Ancher v. Bank, 2 Doug. 63; Treuttel v. Barendon, 8 Taunt. 100. Lloyd v. Sigourney, 5 Bing. 525; Commercial Nat Bank v. Arm- 45-47) LIABILITY ON CONTRACT. 199 Same Condition of Exercise of Power Peculiarly within Knowledge of Agent Estoppel. Where, by a power of attorney, the agent is authorized to exercise the authority upon a certain condition, or in a cer- tain event, as to incur indebtedness not exceeding at any one time a certain amount, it has been held that the person deal- ing with the agent must, at his peril, ascertain the existence of the fact upon which the right to exercise the power de- pends, and cannot rely upon the representation of th^ agent that the fact exists.* 8 A different rule, however, obtains in many jurisdictions, where it is held that when the authority of the agent depends upon some fact outside the terms of the power, which from its nature rests peculiarly within his knowledge, the principal is bound by the representation of the agent, although false, as to the existence of such fact. In accordance with this rule, it was held in a leading case that where, by the terms of a power of attorney, the authority of the agent to issue negotiable paper was expressly limited (as it would, indeed, have been limited by implication) to the busi- ness of the principal, and the agent exercised the power to raise money for his own benefit, but ostensibly for the benefit of his principal, the principal was equitably estopped to deny that the authority had been pursued." strong, 148 U. 8. 50, 13 Sup. Ct 533, 37 L. Ed. 303; Manufacturers' Nat. Bank v. Bank, 148 Mass. 553, 20 N. E. 193, 2 L. R. A. 689, 12 Am. St. Rep. 598; Freeman's Nat. Bank v. Tube- Works, 151 Mass. 413, 24 N. E. 779, 8 L. R. A. 42, 21 Am. St. Rep. 461; National Butchers' & Drovers' Bank v. Hubbell, 117 N. Y. 384, 22 N. E. 1031, 7 L. R. A. 852, 15 Am. St. Rep. 515; Merchants' Nat. Bank v. Han- son, 33 Minn. 40, 21 N. W. 849, 53 Am. Rep. 5. o Mussey v. Beecher, 3 Gush. (Mass.) 511. See, also, Lowell Five Cent Sav. Bank v. Inhabitants of Winchester, 8 Allen (Mass.) 109; Craycraft v. Selvage, 10 Bush. 696. But see Montaignac v. Shitta, 15 App. Cas. 357. North River Bank v. Aymar, 3 Hill (N. T.) 262. See, also, Farmers' & Mechanics' Bank v. Bank, 16 N. Y. 125, 69 Am. Dec. 678; New York & N. H. R. Co. v. Schuyler, 34 N. Y. 30, maintaining the authority of North River Bank v. Aymar, supra. 200 LIABILITY OF PRINCIPAL TO THIRD PERSON. (Ch. 8 The principle of this decision is of wide application, 67 and the failure of many courts to recognize it or to apply it in all cases has resulted in much conflict of authority, as is illustrated in cases involving bills of lading. It is not within the usual powers of the master of a ship or of the shipping agent of a carrier to issue bills of lading for goods not received, and the extent of his authority, real and ap- parent, is therefore to issue bills only for goods actually received. It follows that the consignee or indorsee for value of a bill of lading acts at his own risk as respects the ex- istence of the fact upon which alone the agent has authority to issue the bill, and that, when the agent has fraudulent- ly and collusively or by mistake issued a bill without re- ceiving the goods, the principal is not liable upon the con- tract, unless he is liable by virtue of an equitable estop- pel. The English rule, 68 which is followed by many courts of this country, 69 denies his liability, but his liability is main- tained by courts which give full application to the principle in question. 70 While the earlier rule is a plausible appli- T Where the proper officer of a bank fraudulently certifies a check, the bank is bound as against a bona fide holder. Farmers' & Mechanics' Bank v. Butchers' & Drovers' Bank, 14 N. Y. 623; Id., 16 N. Y. 125, 69 Am. Dec. 678; Meads v. Bank, 25 N. Y. 143, 82 Am. Dec. 331; Merchants' Nat. Bank v. Bank, 10 Wall. (U. S.) 604, 646, 650, 19 L. Ed. 1008. Grant v. Norway, 10 C. B. 665; Coleman v. Riches, 16 0. B. 104 [wharfinger giving receipt for goods not received]; Cox v. Bruce, 18 Q. B. D. 147. Pollard v. Vinton, 105 U. S. 7, 26 L. Ed. 998; Priedlander v. Railway Co., 130 U. S. 416, 9 Sup. Ct. 570, 32 L. Ed. 991; Sears v. Wingate, 3 Allen (Mass.) 103; Baltimore & O. R. Co. v. WUkens, 44 Md. 11, 22 Am. Rep. 26; Dean v. King, 22 Ohio St. 118; Williams v. Railroad Co., 93 N. C. 42, 53 Am. Rep. 450; Louisiana Nat. Bank v. Laveille, 52 Mo. 380; National Bank of Commerce v. Railroad Co., 44 Minn. 224, 46 N. W. 342, 560, 9 L, R. A. 263, 20 Am. St. Rep. 566. TO Armour v. Railroad Co., 65 N. Y. Ill, 22 Am. Rep. 603; Bank of Batavia v. Railroad Co., 106 N. Y. 195, 12 N. E. 433, 60 Am. Rep. 440; Brooke v. Railroad Co., 108 Pa. 529, 1 Atl. 206, 56 Am. Rep. 235; St Louis & I. M. R. Co. v. Lamed, 103 111. 293; Sioux City 45-47) LIABILITY ON CONTRACT. 201 cation of the doctrine of agency, there seems much reason for applying here, and in analogous cases, the principle of convenience, which is the basis of the equitable estoppel recognized by those courts which maintain the liability of the principal, that "whenever one of two innocent parties must suffer by the act of a third he who has enabled the third person to occasion the loss must sustain it." " In jurisdictions where this view prevails the principal is estopped from denying the receipt of the goods to the prejudice of a third person who has dealt with the agent or acted on his representation in good faith, in the ordinary course of busi- ness. Same Public Agent. The rule that a principal is bound by the acts of his agent, acting within the scope of his general authority, although he acts in violation of special instructions, does not apply to public agents. 78 This rests partly upon the ground that the powers and duties of public agents are defined and limited by public law, of which persons dealing with such agents are charged with notice ; 78 and also upon the ground of public policy, "for the reason that it is better that an individual should occasionally suffer from the mistakes of public of- ficers or agents than to adopt a rule which, through im- proper combinations or collusion, might be turned to the detriment and injury of the public." T * "The government & P. R. Co. v. Bank, 10 Neb. 556, 7 N. W. 811, 35 Am. Rep. 488; Wichita Sav. Bank v. Railroad Co., 20 Kan. 519; Fletcher v. Ele- vator Co., 12 S. D. 643, 82 N. W. 184. T1 For an able presentation of the arguments pro and con, see the opinion of Mitchell, J., in National Bank of Commerce v. Railroad Co., 44 Minn. 224, 46 N. W. 342, 560, 9 L. R. A. 263, 20 Am. St Rep. 666. Post, p. 294. 72 Lee v. Munroe, 7 Cranch (U. S.) 366, 3 L. Ed. 373; Whiteside v. United States, 93 TJ. S. 247, 23 L. Ed. 882; Delafleld T. State of Illinois, 26 Wend. (N. Y.) 192. TS Mayor of Baltimore v. Eschbach, 18 Md. 276, 282; New York & C. S. S. Co. v. Harbison (D. C.) 16 Fed. 681: Id. (C. C.) 691. T* Whiteside v. United States, 93 U. S. 247, 23 L. Ed. 882. 202 LIABILITY OF PRINCIPAL TO THIRD PERSON. (Oh. 8 or public authority is not bound in such a case, unless it mani- festly appears that the agent was acting within the scope of his authority, or that he had been held out as having author- ity to do the act, or was employed in his capacity as a public agent to do the act or make the declaration for the govern- ment." 7B Same Contracts Beyond Scope of Authority. It follows, of course, from what has been said, that if an act is not within the actual authority, nor within the apparent authority, of an agent, the principal is not bound by it, un- less he subsequently ratifies it. 76 If, for example, the prin- cipal authorizes a stockbroker to sell stock, he is not bound by a sale on credit, because he has not actually authorized it, and it is not usual or necessary, and hence not within the apparent authority of the broker, to sell stock on credit. 77 So, if the principal intrusts goods to a factor to sell, he is not bound by a pledge, since a pledge is not within the usual authority of a factor, and there is no actual authority. 78 An exception to the general rule exists by the law merchant in case of negotiable instruments. An agent, like any other person, can transfer title to money or to a negotiable in- strument transferable by delivery, in his possession, to a bona fide purchaser for value without notice, notwithstand- ing absence of authority to transfer it. 79 If, however, the in- strument is transferable by indorsement, his power to trans- fer title is no greater than his actual or apparent authority. 80 TB Whiteside v. United States, 93 U. S. 247, 23 L. Ed. 882. 76 Wiltshire T. Sims, 1 Camp. 258; Re Cunningham, 36 Ch. Div. 532; Wheeler v. Sleigh Co. (C. C.) 39 Fed. 347; Crane v. Gruenewald, 120 N. Y, 274, 24 N. E. 456, 17 Am. St. Rep. 643; Hurley v. Watson, 68 Mich. 531, 36 N. W. 726; Deering & Co. v. Kelso, 74 Minn. 41, 76 N. W. 792, 73 Am. St. Rep. 324; Oberne v. Burke, 30 Neb. 581, 46 N. W. 838; Blackmer v. Mining Co., 187 111. 32, 58 N. E. 289. 77 Wiltshire v. Sims, 1 Camp. 258. 78 Post, p. 317. As to changes in the law made by the factors' acts, post, pp. 315, 317. 79 Post, pp. 315, 316. o See Robinson v. Yarrow, 7 Taunt. 455; post, p. 316. 48) SCOPE OF PARTICULAR AGENCIES. 203 SCOPE OF PARTICULAR AGENCIES. 48. The foregoing rules apply to all classes of private agents, and trill be illustrated by considering the scope of the authority of the following* (1) Agents to sell. (2) Agents to purchase* (3) Agents to collect. (4) Agents to execute commercial paper. (5) Agents to manage business. (6) Bank cashiers. (7) Insurance agents. (8) Shipmasters. (9) Factors. (10) Brokers. (11) Auctioneers. (12) Attorneys at law. In General. It has already been explained that every agent, in the exe- cution of his express authority, unless the principal has in- dicated a contrary intention, has implied, authority to do what is reasonably necessary to effect what he is directed to do, 1 and furthermore has implied authority to act in ac- cordance with the usages and customs of the business which he is employed to transact.' It is the express authority, as thus supplemented by what is to be implied, that consti- tutes the actual authority of the agent, by which the rights and duties of the principal and the agent inter se are meas- ured. And it is the express authority, supplemented by those necessary and usual powers, which, in the absence of notice that those powers have been denied or limited, constitutes the apparent authority of the agent in dealing with third persons. The scope of any particular agency must depend, therefore, both as between the principal and the agent (where the powers otherwise implied have not been limited), and as between the principal and third persons who have not notice { 48. i Ante, pp. 174, 175. Ante, pp . 174, 177. 204 LIABILITY OF PRINCIPAL TO THIRD PERSON. (Ch. 8 that these powers have been limited, not merely upon the nature of the acts directed and their necessary incidents, but upon the usages and customs which prevail in reference to the performance of such acts, either generally or when per- formed by an agent of the class employed. As has been pointed out, 3 there are certain classes of agents, such as factors, brokers, auctioneers, and attorneys at law, who serve the public generally, and who, by virtue of the usages of their profession, are invested, in the absence of any indication of a contrary intention, with well-defined .powers. And there are other classes of agents, such as shipmasters and bank cashiers, and in some cases insurance agents, who serve only one employer, but whose powers, within the field of their agency, are in the same manner largely defined by usage. 4 But, while usage plays a larger part in defining the powers of agents of these two classes, the same principles are applicable in determining the scope of their authority as in the case of other agents. It is beyond the purpose of this book to discuss in detail the scope of particular authorities or particular agencies, but a brief discussion of some of them is desirable for further illustration. It is to be borne in mind throughout this dis- cussion that the express authority, as supplemented by the powers which are prima facie to be implied, is also the ap- parent authority of the agent in respect to third persons who have not notice that the powers otherwise to be implied have been limited. Agent to Sell. (a) Personalty. Authority to sell personal property is in most instances conferred verbally or by informal writing, and may, of course, be inferred from the conduct of the prin- cipal. No authority to sell is to be inferred from the mere possession of the goods. 8 Intrusting another with the pos- Ante, p. 179. 4 Ante, p. 179. Cole v. Northwestern Bank, L. R. 10 C. P. 354; Johnson v. Credit Lyonnais, 2 C. P. D. 224, affirmed 3 C. P. D. 32; Saltus v. Everett, 48) SCOPE OF PARTICULAR AGENCIES. 205 session, indeed, if accompanied by other circumstances in- vesting the possessor with an appearance of ownership, may estop the owner from denying the ownership of the person whom he has trusted as against a purchaser from him who has relied upon the apparent ownership as where the owner has invested the person intrusted with possession with the indicia, or documentary evidence, of title.* And, perhaps, if the owner sends his goods to a place where it is the ordinary business of the person to whom they are confided to sell as agent, as to an auction room, the owner may be estopped, as against a purchaser who has relied upon the appearance of authority to sell, to deny that authority. 7 But it is not enough to raise an estoppel that the person to whom the goods are intrusted is a dealer in that class of goods, 8 al- though that fact might have weight in connection with other 20 Wend. (N. Y.) 267, 32 Am. Dec. 541; Covlll v. Hill, 4 Denlo (N. Y.) 323. Pickering v. Busk, 15 Bast, 38 (permitting transfer in books of wharfinger from name of seller to that of broker); Dyer v. Pearson, 3 B. & C. 38; Cole v. Northwestern Bank, L. R. 10 C. P. 354; Calais Steamboat Co. v. Van Pelt, 2 Black, 372, 17 L. Ed. 282 (permitting vessel to be enrolled in name of agent); Nixon v. Brown, 57 N. H. 84 (permitting agent to retain bill of sale taken in his own name); McNeil v. Bank, 46 N. Y. 325, 7 Am. Rep. 341 (delivering to broker certificate of stock indorsed with blank assignment and power of at- torney purporting to be executed for consideration); Walker v. Rail- way Co., 47 Mich. 338, 11 N. W. 187. 7 Pickering v. Busk, 15 East, 38, per Lord Ellenborough. See, also. Cole v. Northwestern Bank, L. R. 10 C. P. 354, 364, 365; Towle v. Leavitt, 23 N. H. 360, 55 Am. Dec. 195. Plaintiff, a dealer in pianos, intrusted a piano to an agent, also a piano dealer, to leave at defendant's house, intending himself to thereafter go to the house to try to sell the piano to defendant. The agent, however, sold the piano to defendant, and received and appro- priated the money. The agent had previously, as plaintiff knew, been endeavoring to sell defendant a piano. Held, that the sale was within the agent's apparent authority. Heath v. Stoddard, 91 Me. 499, 40 AtL 547. s Biggs v. Evans [1894] 1 Q. B. 88; Levi v. Booth, 58 Md. 305, 42 Am. Rep. 332; Oilman Linseed Oil Co. v. Norton, C3 Iowa, 434, 206 LIABILITY OF PRINCIPAL TO THIRD PERSON. (Oh. 8 circumstances indicating that the owner had conferred actual authority upon him. 9 An agent authorized to sell has implied authority to fix the price, provided it is not unreasonable, and to agree upon the terms of sale, provided they are usual. 10 Authority to sell confers only authority to sell for money, and hence does not confer authority to sell on credit, unless there is 56 N. W. 663, 48 Am. St. Rep. 400. See Wilkinson v. King, 2 Camp. 335. Plaintiff intrusted an article to a dealer in such articles, who also, as a known part of his business, sold such articles for others in his own name, having them in his possession. He was forbidden to sell without first obtaining authority. Held, that plaintiff could re- cover the article from an innocent purchaser. "The true test," said Wills, J., "is, I take it, whether the authority given in fact is of such a nature as to cover a right to deal with the article at all. If It does, and the dealing effected is of the same nature as the dealing contemplated by the authority, and the agent carries on a business in which he ordinarily effects for other people such a disposition as he does effect, what he has done is within the general authority con- ferred, and any limitations imposed as to the terms on which, or manner in which, he is to sell are matters which may give a right of action by the principal, but cannot affect the person who contracts with the agent It is within the scope of the authority that the agent should sell the goods on some terms, and it is not usual in the trade to inquire into the limits or conditions of an authority of that kind; and therefore the principal is supposed, as respects other peo- ple, to have clothed the agent with the usual authority. The foun- dation, however, of the whole thing is that the agent should be au- thorized to enter into some such transaction. If the principal has entrusted the goods to the agent for some other purpose, the agent is acting outside his authority in selling them at all; and the prin- cipal, whose goods have been disposed of without any authority at all so to do, is entitled to recover them in spite of the disposition." Biggs v. Evans, supra. Smith v. Clews, 105 N. Y. 283. 11 N. E. 632, 59 Am. Rep. 502. 10 Putnam v. French, 53 Vt. 402, 38 Am. Rep. 682; Daylight Bur- ner Co. v. Odlin, 51 N. H. 56, 12 Am. Rep. 45; Flanders v. Putney, 58 N. H. 358; United States School Furniture Co. v. Board (Ky.) 88 S. W. 864. 48) SCOPE OP PARTICULAR AGENCIES. 207 usage to that effect, 11 as in the case of a factor," or to accept paper in payment, 18 or to exchange or barter, 14 or to pledge or mortgage. 15 Authority to sell is not to be construed as authority to sell at auction. 16 The agent has implied author- ity to warrant the goods, if in the sale of such goods it is usual to give a warranty, 17 but not otherwise ; 18 and he may not give an unusual warranty, 19 or warrant if he belongs 11 State of Illinois v. Delafield, 8 Paige (N. Y.) 527; Burks v. Hub- bard, 69 Ala. 379; Payne v. Potter, 9 Iowa, 549; Graul v. Strutzel, 53 Iowa, 715, 6 N. W. 119, 36 Am. Rep. 250. See, also, Wiltshire v. Sims, 1 Camp. 258; Pelham v. Hilder, 1 Y. & Coll. 3. Cf. Daylight Burner Co. v. Odlin, 51 N. H. 56, 12 Am. Rep. 45. 12 Post, p. 222. i Harlan Y. Ely, 68 Cal. 522, 9 Pac. 947. i* Guerreiro v. Peile, 3 B. & Aid. 616 (factor); Taylor & Farley Organ Co. v. Starkey, 59 N. H. 142; Trudo v. Anderson, 10 Mich. 357, 81 Am. Dec. 795. "Voss v. Robertson, 46 Ala. 483; Wheeler & Wilson Mfg. Co. v. Glvan, 65 Mo. 89; Switzer v. Wilvers, 24 Kan. 384, 36 Am. Rep. 259; post, p. 223. i Towle v. Leavitt, 23 N. H. 3GO, 55 Am. Dec. 195. A power of attorney authorizing a public sale does not authorize a private sale. The G. H. Montague, 4 Blatchf. 461, Fed. Cas. No. 6,377. IT Dingle v. Hare, 7 C. B. (N. S.) 145; Nelson v. Cowing, 6 Hill (N. Y.) 336; Ahem v. Goodspeed, 72 N. Y. 108; Randall T. Kehlor. 60 Me. 37, 11 Am. Rep. 169; Reese v. Bates, 94 Va. 321, 26 S. E. 860; Dayton v. Hooglund, 39 Ohio St. 671; Talmage v. Bierhause, 103 Ind. 270, 2 N. E, 716; Pickert v. Marston, 68 Wis. 465, 32 N. W. 550, 60 Am. Rep. 876; Westurn v. Page, 94 Wis. 251, 68 N. W. 1003; Mc- Cormick v. Kelly, 28 Minn. 135, 9 N. W. 675; Case Threshing Mach. Co. v. McKinnon, 82 Minn. 75, 84 N. W. 646. is Some of the cases, however, declare the rule without qualifica- tion. Schuchardt v. Aliens, 1 Wall. (TJ. S.) 359, 17 L. Ed. 642. "Until the contrary is made to appear, It will be presumed that a warranty Is not an unusual incident to a sale by an agent for a dealer in a commodity or article, where the thing sold Is not present and subject to inspection." Talmage v. Bierhause, 103 Ind. 270, 2 N. E. 716. Cf. Pickert v. Marston, 68 Wis. 465, 32 N. W. 550, 60 Am. Rep. 876. i Upton v. Mills, 11 Cush. (Mass.) 583, 59 Am. Dec. 163; Smith Y. Tracy, 36 N. Y. 79; Angersinger v. McNaughton, 114 N.' Y. 535. 208 LIABILITY OF PRINCIPAL TO THIRD PERSON. (Ch. 8 to a class of agents, as auctioneers, not usually so author- ized. 20 If the sale is one usually attended with warranty, the principal will be bound although the agent was forbidden to warrant, unless the buyer had notice of the restriction ; 21 a warranty in such case being within the agent's apparent authority. The cases affirming the power to warrant are for the most part cases of so-called general agents, and it has sometimes been questioned whether a special agent can bind his principal even by a usual warranty, but upon principle the same rule applies to special agents. 22 An agent who is intrusted with the possession of goods which he is authorized to sell has implied authority to re- ceive payment. 28 So a clerk employed to sell over the 21 N. E. 1022, 11 Am. St. Rep. 087; Herring v. Skaggs, 62 Ala. 180, 84 Am. Rep. 4; Id., 73 Ala. 446; Palmer v. Hatch, 46 Mo. 585. 20 Payne v. Leconfield, 51 N. J. Q. B. 642; Dodd v. Farlow, 11 Allen (Mass.) 426, 87 Am. Dec. 726. 21 Howard v. Sheward, L. R. 2 C. P. 148; Boothby v. Scales, 27 Wis. 636; Murray v. Brooks, 41 Iowa, 45; Flatt v. Osborne, 33 Minn. 98, 22 N. W. 440; Stewart v. Cowles, 67 Minn. 184, 69 N. W. 695. Otherwise if buyer has notice. Wood Mowing Mach. Co. v. Crow, 70 Iowa, 340, 30 N. W. 609; Furneaux v. Esterly, 36 Kan. 539, 13 Pac. 824. 22 See Nelson v. Cowing, 6 Hill (N. T.) 336; Tice v. Gallup, 2 Hun (N. Y.) 446; Randall v. Kehlor, 60 Me. 37, 11 Am. Rep. 169; Deming V. Chase, 48 Vt. 382. The servant of a horse dealer authorized to sell has implied au- thority to warrant, a warranty on the part of horse dealers being usual. Howard v. Sheward, L. R. 2 C. P. 148. The servant of a person not a horse dealer when authorized to sell privately, has not such implied authority. Brady v. Todd, 9 C. B. (N. S.) 592. The servant of a person not a horse dealer, if authorized to sell at a fair, has such implied authority; a warranty by the seller at a fair, where stranger meets stranger, being in the usual course of business. Brooks v. Hassell, 49 L. T. 569; Alexander T. Gibson, 2 Camp. 555. 23 Butler v. Dorman, 68 Mo. 298, 30 Am. Rep. 795; Meyer v. Stone, 46 Ark. 210, 55 Am. Rep. 577. As to distinction between factor and broker, post, pp. 222, 224. 4:8) SCOPE OF PARTICULAR AGENCIES. 209 counter has ordinarily implied authority to receive payment at the time of sale, but not afterwards. 24 On the other hand, authority to sell, if the agent is not in possession, does not ordinarily carry with it the power to receive pay- ment. 25 A fortiori a traveling agent employed merely to solicit orders has not such power. 2 ' If it is within the apparent authority of an agent to receive payment, the buyer is, of course, not affected by limitations thereon of which he has not notice. 27 When, in such a case, the buyer receives from the seller a bill embodying a notification that payment must be made directly to the principal, it has been held that the buyer, although he fails to read the notification, is charged with constructive notice ; 28 but it seems that the question is properly one of fact, and depends upon whether the buyer, under the circumstances, failed to use reasonable care in not discovering the notification. 29 After a sale has * Kay* v. Brett, 5 Ex. 269; Hirshfleld v. Waldron, 54 Mich. 649, 20 N. W. 628; Law v. Stokes, 32 N. J. Law, 252, 90 Am. Dec. 655. 25 Higgins v. Moore, 34 N. Y. 417; Law v. Stokes, 32 N. J. Law, 252, 90 Am. Dec. 655; Seiple v. Irwin, 30 Pa. 513; Crosby v. Hill, 39 Ohio St 100; Clark v. Smith, 88 HI. 298; Butler v. Dorman, 68 Mo. 298, 30 Am. Rep. 795; Brown v. Lally, 79 Minn. 38, 81 N. W. 538; Kane v. Barstow, 42 Kan. 465, 22 Pac. 588, 16 Am. St Rep. 490; Simon v. Johnson, 101 Ala. 368, 13 South. 491. Where it was customary to pay traveling salesmen, and the con- tract made by the salesman provided for payment to him, payment held good. Putnam v. French, 53 Vt. 402, 38 Am. Rep. 682. See, also, Trainer v. Morison, 78 Me. 160, 3 Atl. 185, 57 Am. Rep. 790. 2 Kornemann v. Monaghan, 24 Mich. 36; McKindly v. Dunham, 55 Wis. 515, 13 N. W. 485, 42 Am. Rep. 740; Janney v. Boyd, 30 Minn. 319, 15 N. W. 308; Chambers v. Short, 79 Mo. 205 (canvassing agent for book); Crawford v. Whittaker, 42 W. Va. 430, 26 S. B. 516. 27 Putnam v. French, 53 Vt 402, 38 Am. Rep. 682. 28 McKindly v. Dunham, 55 Wis. 515, 13 N. W. 485, 42 Am. Rep. 740. See, also, Law v. Stokes, 32 N. J. Law, 249, 90 Am. Dec. 655. 2 Putnam v. French, 53 Vt 402, 38 Am. Rep. 682; Luckie v. Johnston, 89 Ga. 321, 15 S. E. 459. See, also, Trainer v. Morison, 78 Me. 160, 3 Atl. 185, 57 Am. Rep. 790; Kinsman v. Kersliaw, 119 Mass. 140. TIFF.P.& A. 14 210 LIABILITY OF PRINCIPAL TO THIRD PERSON. (Oh. 8 been made the agent has no power to rescind it. 80 Of course, authority to sell does not confer power to transfer in payment of the agent's own debt. 31 (b) Realty. Authority to sell implies power to convey, 82 and authority to execute a deed must necessarily be con- ferred by power under seal. 33 Authority to sell land is therefore subject to the rule of strict construction applicable to formal instruments, in the discussion of which the con- struction of powers to sell real estate has been already some- what illustrated. 84 As we have seen, however, a convey- ance executed by an agent authorized only by parol may take effect as a contract to convey. 88 An agent authorized merely to enter into a contract of sale, but not to convey, has no implied authority to receive payment, 8 " except such sum as may be payable upon execution of the contract. An agent authorized to convey has implied authority to receive any part of the purchase money which is payable at the time, 87 but not deferred payments. 88 It seems that there is no implied authority to sell except for cash, 89 although to give a reasonable credit, securing deferred payments by pur- 30 Nelson v. Albridge, 2 Starkie, 438; Diversy v. Kellogg, 44 111. 114, 92 Am. Dec. 154; Fletcher v. Nelson, 6 N. D. 94, 69 N. W. 53. See, also, Stilwell v. Insurance Co., 72 N. Y. 385. si Stewart v. Woodward, 50 Vt. 78, 28 Am. Rep. 488; Thompson v. Barnum, 49 Iowa, 392. See, also, Dowden v. Cryder, 55 N. J. Law, 329, 26 Atl. 941. a2 Ante, p. 170. 34 Ante, p. 1G8. 33 Ante, p. 20. Ante, p. 22. 6 Munn v. Joliffe, 1 M. & R. 326 (Of. Ireland v. Thompson, 4 C. B. 149); Mann v. Robinson, 19 W. Va. 49, 42 Am. Rep. 771; Alexander v. Jones, 64 Iowa, 207, 19 N. W. 913. si Peck. v. Harriott, 6 Serg. & R. 146, 9 Am. Dec. 415; Johnson T. McGruder, 15 Mo. 365; Carson v. Smith, 5 Minn. 78 (Gil. 58), 77 Am. Dec. 539; Dyer v. Duffy, 39 W. Va. 148, 19 S. E. 540, 24 L. R. A. 339. 8 Johnson v. Craig, 21 Ark. 533. 8 Dyer v. Duffy, 39 W. Va. 148. 19 S. E. 540, 24 L. R. A. 339; Henderson v. Beard, 51 Ark. 483, 11 S. W. 766 (not to sell on credit without retaining lien). 48) SCOPE OF PARTICULAR AGENCIES. 211 chase money mortgage, might be implied if a usage to that effect were shown, 40 and would be conferred by a grant of authority to sell "on such terms as shall seem meet." 41 Since authority to convey must be conferred by written in- strument, the apparent authority of such an agent is neces- sarily small. Agent to Purchase* Like an agent to sell, an agent to buy personal property has implied authority to fix the price, provided the price is reasonable, and to agree upon the terms of purchase, pro- vided they are usual. 42 If he is not supplied with funds, he has by implication authority to buy on credit ; 4 * but if he is supplied with funds, such implication does not arise, unless the custom of the trade is to buy on credit. 44 Neither may he execute negotiable paper in payment, unless the purpose of the agency cannot otherwise be accomplished. 45 But, if the agency is such that a purchase on credit is usual, the principal is bound notwithstanding undisclosed limitations upon that authority. 40 If authorized to buy on credit, he o Silverman v. Bullock, 98 111. 1L *i Carson v. Smith, 5 Minn. 78 (Gil. 58), 77 Am. Dec. 539. Owen v. Brockschmidt, 54 Mo. 285; Wishard v. McXeill, 85 Iowa, 474, 52 N. W. 474. 4s Sprague v. Gillett, 9 Mete. (Mass.) 91; Spear & Tierjen Supply Co. v. Van Riper (D. C.) 103 Fed. 689. Cf. Taft v. Baker, 100 Mass. 68. 4* Jaques v. Todd, 3 Wend. (N. T.) 83; Boston Iron Co. T. Hale, 8 N. H. 363; Temple v. Pomroy, 4 Gray (Mass.) 128; Wheeler v. Mc- Guire, 86 Ala. 398, 5 South. 190, 2 L. R. A. 808; Komorowski T. Krumdick, 56 Wis. 23, 13 N. W. 881. 4 Taber v. Cannon, 8 Mete. (Mass.) 456; Webber v. Williams Col- lege, 23 Pick. (Mass.) 302; Temple v. Pomroy, 4 Gray (Mass.) 128; Morris v. Bowen, 52 N. EL 416. See, also, Oberne Y. Burke, 30 Neb. 581, 46 N. W. 839. 6 Watteau v. Fenwick [1893] 1 Q. B. 346; Wheeler v. McGuire, 86 Ala. 398, 5 South. 190, 2 L. R. A, 808; Hubbard v. Tenbrook, 124 Pa. 291, 16 Atl. 817, 2 L. R. A. 823, 10 Am. St. Rep. 585; Liddell v. Sahline, 55 Ark. 627, 17 S. W. 705. 212 LIABILITY OP PRINCIPAL, TO THIRD PERSON. (Ch. 8 may make the necessary representations as to the solvency of the buyer. 47 He can have no implied authority to buy goods of a different kind, 48 or of greater amount, 48 or for a higher price, 80 or from persons with whom he is not authorized to deal. 81 If, however, he has been employed in a capacity in which an agent so employed would usually have power to make the purchase in question, he can bind his principal within the scope of such apparent or usual au- thority." Agent to Collect. Authority to receive payment will, of course, be implied whenever it is a necessary and usual incident to the business delegated, and may be implied from a course of dealing be- tween the parties or other circumstances. 53 The mere fact that an agent is intrusted with a note payable to his principal raises no implication of authority to collect it, nor is the mere possession ground to raise an estoppel. 54 Neither is authority to collect money payable under a contract to be im- 47 Hunter v. Machine Co., 20 Barb. (N. Y.) 493. *8 Hopkins v. Blane, 1 Call (Va.) 361; Davies v. Lyon, 36 Minn. 427, 31 N. W. 688. 4 Olyphaut v. McNair, 41 Barb. (N. Y.) 446. BO See Bryant v. Moore, 26 Me. 84, 45 Am. Dec. 96. i Peckham v. Lyon, 4 McLean (U. S.) 45, Fed. Cas. No. 10,899; Eckart v. Roehm, 43 Minn. 27, 45 N. W. 443. 62 Butler v. Maples, 9 Wall. (U. S.) 76G, 19 L. Ed. 822; Hill v. Miller, 76 N. Y. 32. And see Shrimpton & Son v. Brice, 102 Ala. 655, 15 South. 452, and cases cited, note 46. 63 Quinn v. Dresbach, 75 Cal. 159, 16 Pac. 762, 7 Am. St. Rep. 138; Luckie v. Johnston, 89 Ga. 321, 15 S. E. 459. The circumstances may be such as to estop the creditor to deny the authority. Howe Mach. Co. v. Ballwegg, 89 111. 315; Quinn v. Dresbach, supra. 6* Doubleday v. Kress, 50 N. Y. 410, 10 Am. Rep. 502; Wardrop v. Dunlop, 1 Hun (N. Y.) 325; Id., 59 N. Y. 634. The fact that a bill presented by an alleged agent was made out In the handwriting of the seller, and upon his billhead, is not evi- dence of authority to collect. Hirshfield Y. Waldron, 54 Mich. 649, 20 N. W. 628. 48) SCOPE OF PARTICULAR AGENCIES. 213 plied from the fact that the agent has negotiated it." An agent who has negotiated a loan and who is permitted to retain possession of the note or other securities, as a bond and mortgage, has, however, implied authority to collect the interest and the principal when they fall due; and payment to the agent under such circumstances will bind the creditor notwithstanding that the agent has not actual authority to collect, unless the debtor has notice of the limitation upon the apparent authority. 86 The debtor must satisfy himself at his peril that the agent has possession, for the implica- tion of authority ceases whenever the securities are with- drawn from his possession. 87 Ante, p. 209. See, also, Thompson v. Elliott, 73 111. 221; Tew T. Labiche, 4 La. Ann. 526. 66 Williams v. Walker, 2 Sandf. Ch. (N. Y.) 325; Hatfleld v. Reyn- olds, 34 Barb. (N. Y.) 612; Halnes v. Tohlmann, 25 N. J. Eq. 179. 67 Williams v. Walker, 2 Sandf. Ch. (N. Y.) 325; Smith v. Kldd, 68 N. Y. 130, 23 Am. Rep. 157; Brewster v. Carnes, 103 N. Y. 556, 9 X. E. 323; Gullford T. Stacer, 53 Ga. 618; Stiger v. Bent, 111 111. 328; Tappan v. Morseman, 18 Iowa, 499; Security Co. v. Graybeal, 85 Iowa, 543, 52 N. W. 497, 39 Am. St. Rep. 311; Whelan v. Reilly. 61 Mo. 565; Trull v. Hammond, 71 Minn. 172, 73 N. W. 642; Budd T. Broen, 75 Minn. 316, 77 N. W. 979; Thomas v. Swanke, 75 Minn. 326, 77 N. W. 981; Schenk v. Dexter, 77 Minn. 15, 79 N. W. 526. Of course actual authority may be shown, although there is not possession. General Convention of Congregational Ministers v. Tor- kelson, 73 Minn. 401, 76 N. W. 215; Hare v. Bailey, 73 Minn. 400, 76 N. W. 213; Dexter v. Berge, 76 Minn. 216, 78 N. W. 1111; Spring- field Sav. Bank v. Kjaer, 82 Minn. 180, 84 N. W. 752; Shane v. Palmer, 43 Kan. 481, 23 Pac. 594. It seems that the debtor is bound by payment to an agent who made the loan and is in possession of the securities, not by reason of an estoppel, but because authority to receive payment is a usual incident of an agent employed in that character; and hence that it is not necessary that the person making payment see the securi- ties, or even know that they are in possession, provided they in fact are in possession. Hatfield v. Reynolds, 34 Barb. (N. Y.) 614. And see dissenting opinion of Potter, J., in Crane v. Gruenewald, 120 N. Y. 274, 24 N. E. 456, 17 Am. St Rep. 643. In the latter case, however, the rule is by the court made to rest upon the ground of estoppel. 214 LIABILITY OF PRINCIPAL TO THIRD PERSON. (Ch. 8 Authority to collect means to receive payment in legal currency ; that is, in legal tender or what is by common con- sent considered and tendered as money and passes as such at par. 68 An agent employed to collect has not implied authority to receive payment in merchandise, 89 or by bill or note, 60 or even by check. 61 If authorized to receive paper in lieu of cash, he has no implied authority to indorse. 62 He may receive part payment on account of the debt, 88 but has no implied authority to discharge it for less than the whole amount, or to compromise, 64 or to extend the time of pay- ment. 65 He has no implied authority to receive payment before the obligation is due, 66 nor to collect the principal by reason of authority to collect interest. 67 Authority to collect implies authority to take all necessary and usual means therefor, and hence to bring suit and employ counsel. 68 es Ward v. Smith, 7 Wall. (U. S.) 447, 19 L. Ed. 207; Hurley v. Watson, 68 Mich. 531, 36 N. W. 726; Robinson v. Anderson, 106 Iiid. 152, 6 N. E. 12. BO Pitkin v. Harris, 69 Mich. 133, 37 N. W. 61; Mudgett v. Day, 12 Cal. 139. eo Sykes v. Giles, 5 M. & W. 645; Langdon v. Potter, 13 Mass. 319; Robinson v. Anderson, 106 Ind. 152, 6 N. E. 12; Drain v. Doggett, 41 Iowa, 682; Jackson v. Insurance Co., 79 Minn. 43, 81 N. W. 545, 82 N. W. 366; Scully v. Dodge, 40 Kan. 395, 19 Pac. 807. i Bridges v. Garrett, L. R. 5 C. P. 451; Broughton v. Silloway, 114 Mass. 71, 19 Am. Rep. 312. es Hogg v. Snaith, 1 Taunt. 347; Robinson v. Bank, 86 N. Y. 404; Graham v. Institution, 46 Mo. 186; Jackson v. Bank, 92 Tenn. 154, 20 S. W. 820, 18 L. R. A. 663, 36 Am. St. Rep. 81. Of. Na- tional Bank of the Republic v. Bank, 50 C. C. A. 443, 112 Fed. 726. es Williams r. Walker, 2 Sandf. Ch. (N. Y.) 325; Whelan v. Reilly, 61 Mo. 565. 64 Padfleld v. Green, 85 111. 529; Herring v. Hottendorf, 74 N. O. 588. es Ritch v. Smith, 82 N. Y. 627; Gerrish v. Maher, 70 111. 470. ee Breming v. Mackie, 3 F. & P. 197; Smith v. Kidd, 68 N. Y. 130, 23 Am. Rep. 157; Park v. Cross, 76 Minn. 187, 78 N. W. 1107, 77 Am. St. Rep. 630. 67 Smith v. Kidd, 68 N. Y. 130, 23 Am. Rep. 157; Brewster v. Games, 103 N. Y. 556, 9 N. E. 323. es Davis v. Waterman, 10 Vt. 526, 33 Am. Dec. 216; Scott v. 48) SCOPE OF PARTICULAR AGENCIES. 215 Agent to Ea&ecute Commercial Paper. Authority to draw, accept, make, or indorse bills, notes, and checks will not readily be implied as an incident to the ex- press authority of an agent. 69 It must ordinarily be con- ferred expressly. The authority may be implied if the exe- cution of the paper is a necessary incident to the business, 70 but it will not be deemed a necessary incident unless the purpose of the agency cannot otherwise be accomplished. 71 The rule has already been illustrated in discussing the pow- ers of agents employed to buy, 72 and will be further illustrat- ed in the next section. 73 Where the power is expressly conferred, it must be strictly pursued ; and, unless the -ap- parent authority of the agent exceeds his actual authority, paper executed by him will not bind the principal if the agent departs from the terms of his authority in regard to the amount 74 or time 7B of the paper or its character in other Elmerdorf, 12 Johns. (N. Y.) 317; Merrick v. Wagner, 44 111. 266; Moore v. Hall, 48 Mich. 145, 11 N. W. 844; Ryan v. Tudor, 31 Kan. 366, 2 Pac. 797. As to power to foreclose, see Burchard v. Hull, 71 Minn. 430, 74 N. W. 163. Paige v. Stone, 10 Mete. (Mass.) 160, 43 Am. Dec. 420; Web- ber v. Williams College, 23 Pick. (Mass.) 302; Rossiter v. Rossiter, 8 Wend. (X. Y.) 494, 24 Am. Dec. 62; Chicago Electric Light Rent- ing Co. v. Hutchinson, 25 111. App. 476. 70 Merchants' Bank v. Bank, 1 Ga. 418, 44 Am. Dec. 665 (power to Indorse a necessary incident to authority to discount); Yale v. Eames, 1 Mete. (Mass.) 486 (power to indorse without recourse a necessary incident to authority to sell note); Beaman v. Whitney, 20 Me. 413. " Temple v. Pomroy, 4 Gray (Mass.) 128; Jackson T. Bank, 92 Tenn. 154, 20 S. W. 822, 18 L. R. A. 663, 36 Am. St. Rep. 81. And Bee case cited, note 69. * 2 Ante, p. 211. As to power of collection agent to indorse, ante, p. 214. T Post, p. 217. T* King v. Sparks. 77 Ga. 285, 1 S. E. 260, 4 Am. St Rep. 85; Black well v. Ketcham, 53 Ind. 184. 7 e Batty v. Carswell, 2 Johns. (N. Y.) 48; New York Iron Mine Co. v. Bank, 44 Mich. 344, 6 N. W. 823; Tate v. Evans, 7 Mo. 419. 216 LIABILITY OF PRINCIPAL TO THIRD PERSON. (Ch. 8 respects. 7 * Where the power exists, however, it is of course confined to the business of the agency, and does not author- ize the making of paper for the benefit of the agent, 77 or the making of accommodation paper. 78 Agent to Manage Business. The implied authority of an agent intrusted with the gen- eral management of some particular business, like that of other agents, is prima facie coextensive with the business delegated to his care, and includes authority to do whatever is necessary and usual to carry into effect the principal power or powers, and whatever is within the scope of the authority usually confided to an agent employed in that capacity. 79 The powers of managing agents, therefore, while differing with the different nature of the business which they may be employed to manage, are necessarily very broad. Nixon v. Palmer, 8 N. Y. 398; Farmington Sav. Bank v. Buz- zell, 61 N. H. 612; Mechanics' Bank v. Schaumburg, 38 Mo. 228; Stainback v. Read, 11 Grat 281, 62 Am. Dec. 648. As to the liability of the principal npon paper delivered with au- thority to insert material terms in blank spaces left for that purpose, see Norton, B. & N. (3d Ed.) 258. " North River Bank v. Aymar, 3 Hill (N. Y.) 262; Camden Safe Deposit & Trust Co. v. Abbott, 44 N. J. Law, 257; Steinback v. Read, 11 Grat 281, 62 Am. Dec. 648. A power of attorney given by a corporation, authorizing an agent to draw checks on a bank "for the use of" the company, does not im- pose on the bank the responsibility of seeing that the money drawn on such checks is devoted to the use of the company; and it is protected in the payment of such a check, drawn payable to "Cash," to the agent himself, where made in good faith, and where money had usually been drawn by the agent In that manner. Warren-Scharf Asphalt Pav. Co. v. Bank, 38 C. C. A. 108, 97 Fed. 181. TS Gulick v. Grover, 33 N. J. Law, 463, 97 Am. Dec. 728; Wallace v. Bank, 1 Ala. 565. TO Smith v. McGuire, 3 H. & N. 554; Edmunds v. Bushell, L. R. 1 Q. B. 97; Watteau v. Fenwick [1893] 1 Q. B. 346; German Fire Ins. Co. v. Grunert, 112 111. 68, 1 N. E. 113; Roche v. Pennington, 90 Wis. 107, 62 N. W. 946; Collins v. Cooper, 65 Tex. 460; Lowenstein v. Lombard, Ayres & Co., 164 N. Y. 324, 58 N. E. 44. 48) SCOPE OF PARTICULAR AGENCIES. 217 Thus, the manager of a store, 80 a hotel, 81 a farm, 8 * or a mine 8S has implied authority to buy upon his principal's credit whatever goods or supplies are needful to conduct the business, and to make whatever other contracts, such as contracts of employment, are needful to that end. 84 Beyond what is necessary and usual his powers cease. 85 The man- ager of a store or farm has implied authority to sell what- ever it is necessary or usual in the conduct of the business to sell ; 86 but he may not sell the business, 87 or mortgage it, 88 or engage in a different business. 89 He has no im- o Watteau v. Fen wick [1893] 1 Q. B. 346; Hubbard v. Ten Brook, 124 Pa. 291, 16 Atl. 817, 2 L. R. A. 823, 10 Am. St. Rep. 585; Louis- ville Coffin Co. v. Stokes, 78 Ala. 372; National Furnace Co. v. Manu- facturing Co., 110 111. 427; Banner Tobacco Co. v. Jenison, 48 Mich. 459, 12 N. W. 655. si Cummings v. Sargent, 9 Mete. (Mass.) 172; Beecher v. Venn, 85 Mich. 466. sz He may not contract for supplies to hands, Carter v. Burnham, 81 Ark. 212; nor for medical services, Malone v. Robinson (Miss.) 12 South. 709. Cf. Burley v. Kitchell, 20 N. J. Law, 305. ss Stuart v. Adams, 89 Cal. 367, 26 Pac. 971. When necessary to operation of mine that provisions be furnished to keeper of boarding house where miners live, superintendent may bind operator for such supplies. Heald v. Hendy, 89 Cal. 632, 27 Pac. 67. * Taylor v. Labeaume, 17 Mo. 338; Roche v. Pennington, 90 Wis. 107, 62 N. W. 946. ss Brock way v. Mullin, 46 N. J. Law, 448, 50 Am. Rep. 442; Vic- toria Gold Min. Co. v. Fraser, 2 Colo. App. 14, 29 Pac. 667; Fisk v. Light Co., 3 Colo. App. 319, 33 Pac. 70. The burden is on plaintiff to show that the goods are such as the nature of the business justified. Wallis Tobacco Co. v. Jackson, 99 Ala. 460, 13 South. 120. See Johnston v. Investment Co., 46 Neb. 480, 64 N. W. 1100. He may sell other personal property. Scudder v. Anderson, 54 Mich. 122, 19 N. W. 775. But see Holbrook v. Oberne, 56 Iowa, 324, 9 N. W. 291. 7 Vescelius v. Martin, 11 Colo. 391, 18 Pac. 338. ss Despatch Line of Packets v. Manufacturing Co., 12 N. H. 205, 228, 37 Am. Dec. 203; Henson v. Mercantile Co., 48 Mo. App. 214. ss Hazeltine v. Miller, 44 Me. 177; Campbell v. Hastings, 29 Ark. 612. 218 LIABILITY OF PRINCIPAL TO THIRD PERSON. (Ch. 8 plied authority to borrow unless the power to borrow is necessarily to be implied from the nature of the business, 90 and the mere existence of a sudden emergency is not enough to justify borrowing. 91 Subject to the same limitations, he has no implied authority to make negotiable paper. 92 Insurance Agent. It is customary for insurance companies to appoint agents at a distance from the principal place of business of the com- pany for the purpose of soliciting insurance and conducting matters of business between the company and the insured. Sometimes the authority of such agents extends simply to procuring and forwarding applications for insurance to the company for acceptance; sometimes the authority extends to accepting applications, fixing the rate of insurance, filling up, countersigning, and issuing policies which they have re- ceived from the company signed by its general agents, col- lecting premiums, and performing further duties. Insur- ance agents are frequently inaccurately classified as "local" and "general," but the extent of the territory which is to be field of his agency is no test of an agent's authority within that field. 98 In conformity with the fundamental principles of agency, whether the agent is authorized merely to procure and forward applications, 94 or is authorized to accept appli- o Perkins v. Boothby, 71 Me. 91; Bickford v. Merrier, 107 N. Y. 490, 14 N. E. 438; Heath v. Paul, 81 Wis. 532, 51 N. W. 876; Con- solidated Nat Bank v. Steamship Co., 95 Cal. 1, 30 Pac. 96, 29 Am. St. Rep. 85. si Hawtayne v. Bourne, 7 M. & W. 595. 02 Temple v. Pomroy, 4 Gray (Mass.) 128; Perkins v. Boothby, 71 Me. 91; Fairly v. Nash, 70 Miss. 193, 12 South. 149; ante, p. 215. Where the agent is held out as principal, such power is within the apparent authority. Edmunds v. Bushell, L. R. 1 Q. B. 97. 3 Ermentrout v. Insurance Co., 63 Minn. 305, 310, 65 N. W. 635, 30 L. R. A. 346, 56 Am. St. Rep. 481. * Union Mut. Life Ins. Co. v. Wilkinson, 13 Wall. (U. S.) 222, 20 L. Ed. 617; Malleable Iron Works v. Insurance Co., 25 Conn. 465; Woodbury Sav. Bank & Building Ass'n v. Insurance Co., 31 Conn. 517; Brandup v. Insurance Co., 27 Minn. 393, 7 N. W. 735; Kausal v. Insurance Ass'n, 31 Minn. 17, 16 N. W. 430, 47 Am. Rep. 776. 48) SCOPE OF PARTICULAR AGENCIES. 219 cations, issue policies, and perform other duties, 95 the dele- gation of the powers expressly conferred, unless their ex- tent is expressly limited, carries with it by implication au- thority to do all things which are reasonably necessary or usual to effect the principal powers, and the authority thus prima facie to be implied is the apparent authority of the agent in dealing with persons who have not notice of any limitations. Within the scope of his apparent authority the acts of the agent are binding upon the company, and beyond its scope the company is not bound. 88 Notice of limitations upon the agent's authority may be actual or constructive. 91 Frequently provisions limiting the authority of the agent are inserted in the policy, and, so far as concerns his authority to bind the company by acts to be performed after the is- suance of the policy, such provisions operate as constructive notice to the insured of the limitations imposed, and it is immaterial whether or not he reads the policy or has actual knowledge of the limitations.* 8 B Pitney v. Insurance Co., 65 N. T. 6; Ruggles v. Insurance Co., 114 N. Y. 415, 21 N. E. 1000, 11 Am. St. Rep. 674; Forward v. Insurance Co., 142 N. Y. 382, 37 N. E. 615, 25 L. R. A. 637; Hart- ford Fire Ins. Co. y. Fairish, 73 I1L 166; Viele v. Insurance Co., 26 Iowa, 9, 96 Am. Dec. 83. 96 Bush v. Insurance Co., 63 N. Y. 531; Lohnes v. Insurance Co., 121 Mass. 439; Kyte v. Assurance Co., 144 Mass. 43, 10 N. E. 518; Smith v. Insurance Co., 60 Vt. 682, 15 Atl. 353, 1 L. R. A. 216, Am. St. Rep. 144; Ermentrout v. Insurance Co., 63 Minn. 305, 65 N. W. 635, 30 L. R. A. 346, 56 Am. St. Rep. 481; Strickland v. In- surance Co., 66 Iowa, 466, 23 N. W. 926; Hall v. Insurance Co., 23 Wash. 610, 63 Pac. 505, 51 L. R. A. 288, 83 Am. St. Rep. 844. 7 Fleming v. Insurance Co., 42 Wis. 616; Baines v. Ewing, 4 H. & C. 511. os Quinlan v. Insurance Co., 133 N. Y. 356, 31 N. E. 31, 28 Am. St. Rep. 645; Walsh v. Insurance Co., 73 N. Y. 5; Cleaver v. In- surance Co., 65 Mich. 527, 33 N. W. 660, 8 Am. St. Rep. 908; Bur- lington Ins. Co. v. Gibbons, 43 Kan. 15, 22 Pac. 1010, 19 Am. St. Rep. 118. See, also, New York Life Ins. Co. v. Fletcher, 117 U. S. 519, 6 Sup. Ct. 837, 29 L. Ed. 934. Restrictions in the policy upon the agent's power to waive condi- 220 LIABILITY OF PRINCIPAL TO THIRD PERSON. (Ch. 8 Bank Cashier. The cashier of a bank is its chief executive officer. It is customary for him to be intrusted with the funds and securi- ties of the bank, and, directly or through its subordinate officers under his direction, to conduct its financial opera- tions. 98 His implied authority is very large. "Ordinarily the cashier, being the ostensible executive officer of a bank, is presumed to have, in the absence of positive restrictions, all the powers necessary for such an officer in the transac- tion of the legitimate business of banking." 10 Thus, by virtue of his office, he usually has authority to collect debts x due the bank ; 101 to receive payment and give certificates of deposit and other proper vouchers, and when the money is in bank to certify a check to be good ; 102 to draw checks and bills upon the funds of the bank deposited elsewhere ; 103 to buy and sell bills of exchange ; 10 * to indorse and transfer negotiable paper in the regular course of business; 105 as well as to do many other acts necessary or usual in the tions of the policy cannot be construed to refer to any act or knowl- edge of the agent that occurred before the policy issued. Grouse v. Insurance Co., 79 Mich. 249, 44 N. W. 496. See, also, Mutual Ben. Life Ins. Co. v. Robison, 7 C. C. A. 444, 58 Fed. 723, 22 L. R. A. 325; Kausal v. Insurance Ass'n, 31 Minn. 17, 16 N. W. 430, 47 Am. Rep. 776. There is much conflict as to the construction and effect of such provisions. See Joyce, Ins. 430-439. Merchants' Nat. Bank v. Bank, 10 Wall. (U. S.) 604, 19 L. Ed. 1008. 100 West St. Louis Sav. Bank v. Bank, 95 U. S. 557, 24 L. Ed. 490. 101 Merchants' Nat Bank v. Bank, 10 Wall. (U. S.) 604, 19 L. Ed. 1008; Badger v. Bank, 26 Me. 428. 102 Merchants' Nat. Bank v. Bank, 10 Wall. (U. S.) 604, 19 L. Ed. 1008; Cooke v. Bank, 52 N. Y. 96, 11 Am. Rep. 667. 108 Merchants' Nat. Bank v. Bank, 10 Wall. (U. S.) 604, 19 L. Ed. 1008; Morse, Banks & B. f 159. io4Fleckner v. Bank, 8 Wheat. (U. S.) 338, 360, 5 L. Ed. 631; Wild v. Bank, 3 Mason (U. S.) 505, Fed. Gas. No. 17,646. ion wild v. Bank, 3 Mason (U. S.) 505, Fed. Gas. No. 17,646; City Bank v. Perkins, 29 N. Y. 554, 86 Am. Dec. 332. 48) SCOPE OF PARTICULAR AGENCIES. 221 conduct of the business. 106 Within the scope of the authority ordinarily confided to cashiers, as determined by usage, his acts are binding upon the bank, in favor of third persons, notwithstanding unusual restrictions upon his authority, of which they have not notice. 107 Thus if, in disobedience to his instructions, he certifies a check, the bank is bound by the certification, unless the person to whom it is issued has notice that the cashier was forbidden to certify. 108 And if he certifies without funds in bank, the person in whose favor the check is certified being ignorant of the fact, the bank is liable thereon to him or to a subsequent innocent holder. 109 His apparent authority is, of course, confined to transactions for the benefit of the bank, and does not ex- tend to making accommodation paper. 110 Shipmaster. A shipmaster is an agent appointed for the purpose of conducting the voyage on which the ship is engaged, and his implied authority, arising from the nature of his duties and from usage, is very broad. 111 "The master is a general agent to perform all things relating to the usual employment of his ship, and the authority of such an agent to perform all things usual in the line of business in which he is em- io As to his authority generally, see Morse, Banks & B. 152, 160. lor Fleckner v. Bank, 8 Wheat. (U. S.) 360, 5 L. Ed. 631; Minor Y. Bank, 1 Pet. (U. S.) 46, 70, 7 L. Ed. 47; Case v. Bank, 100 U. S. 446, 454, 25 L. Ed. 695; Matthews v. Bank, 1 Holmes (U. S.) 396. Fed. Cas. No. 9,286; Cooke v. Bank, 52 N. Y. 96, 11 Am. Rep. 667; City Bank v. Perkins, 29 N. Y. 554, 86 Am. Dec. 332; Clarke Nat. Bank v. Bank, 52 Barb. 592; Settle v. Insurance Co., 7 Mo. 379. ins Merchants' Nat. Bank v. Bank, 10 Wall. (U. S.) 604, 19 L. Ed. 1008; Cooke v. Bank, 52 N. Y. 96, 11 Am. Rep. 667. 109 Farmers' & Mechanics' Bank v. Bank, 14 N. Y. 623; Id., 16 N. Y. 125, 69 Am. Dec. 678; Meads v. Bank, 25 N. Y. 143, 82 Am, Dec. 331. See, also, cases cited in last note. no West St. Louis Sav. Bank v. Bank, 95 U. S. 557, 24 L. Ed. 490. in Arthur v. Barton, 6 M. & W. 138; Beldon v. Campbell, 6 Ex. 886. See Story, Ag. 116 et seq. 222 LIABILITY OF PRINCIPAL TO THIRD PERSON. (Oh. 8 ployed cannot be limited by any private order or direction not known to the party dealing with him." 112 He is agent of the shipowner, and ordinarily has nothing to do with the cargo except to fulfill, as agent of the shipowner, the con- tract to carry the cargo to its destination, but in cases of emergency he may act as agent of the owner of the goods. 11S For a discussion of the peculiar powers of the master of a ship, the student is referred to the special works upon maritime law. Factor. A factor is an agent whose ordinary business is to sell goods of which he is intrusted with possession by his principal for a commission. He is often called a commission merchant or consignee. 114 When, in consideration of additional com- pensation, he guaranties the payment of the price, he is called a del credere agent. 115 Unless his authority is ex- pressly limited, a factor has implied authority to sell the goods intrusted to him in his own name, 116 to sell at such times and for such prices as he thinks best, 117 to sell on reasonable credit, 118 to warrant the goods if it is usual to 112 Smith's Mercantile Law, 59, quoted in Grant v. Norway, 10 C. B. 665. As to his power to bind the shipowner by a bill of lading for goods not on board, ante, 200. us Ante, p. 41. IK Story, Ag. 33, 34. Where, in a voyage, he accompanies the cargo, with authority to sell it and to purchase a return cargo, he is termed a "supercargo." us Post, p. 437. ii Baring v. Corrie, 2 B. & Aid. 137; Smart v. Slanders, 3 G. B. 380; Ex parte Dixon, 4 Ch. D. 133; Graham v. Duckwall, 8 Bush (Ky.) 12. See Bowstead, Dig. Ag. 68. 117 Smart v. Sanders, 3 C. B. 380. us Scott v. Surman, Willes, 406; Houghton v. Matthews, 3 B. & P. 489; Goodenow v. Tyler, 7 Mass. 36, 5 Am. Dec. 22; Van Alen v. Vanderpool, 6 Johns. (N. Y.) 69, 5 Am. Dec. 192; Daylight Burner Co. v. Odlin, 51 N. H. 56, 12 Am. Rep. 45; Burton v. Goodspeed, 69 111. 237. On a sale for credit he may take a bill or note in payment Goode- 48) SCOPE OF PARTICULAR AGENCIES. 223 warrant that class of goods, 119 and to receive payment. 120 A factor has no implied authority to delegate his author- ity; 121 to barter; 128 or to pledge, 123 unless for charges on the goods themselves, 124 although in many jurisdictions in this respect changes have been made by the factors' acts. 125 Like other agents, a factor is bound to exercise skill, care, and diligence, to exercise good faith, to account, and to obey the instructions of his principal. 128 He may depart from his instructions, however, if such a course is justified by the oc- currence of an unforeseen emergency, or if obedience would impair his security for advances. 127 As between himself and third persons, the principal is bound by the acts of the factor within the scope of the authority which is usually confided to now v. Tyler, supra; Greely v. Bartlett, 1 Greenl. (Me.) 172, 10 Am. Dec. 54. ii Randall v. Kehlor, 60 Me. 37, 11 Am. Rep. 169 (semble). Of. Argersinger v. Macnaughton, 114 N. Y. 535, 21 N. E. 1022, 11 Am. St Rep. 687. See, also, Dingle v. Hare, 7 C. B. (N. S.) 145; Schne- hardt v. Aliens, 1 Wall. (U. S.) 359, 17 L. Ed. 642. Ante, p. 207. 120 Drink water v. Goodwin, Cowp. 251; Daylight Burner Co. v. Odlin, 51 N H. 56, 12 Am. Rep. 45; Rice v. Groffrnaiin, 56 Mo. 434. 1*1 Cochran v. Irlam, Cowp. 251; Solly v. Rathbone, 2 M. & S. 298; Warner v. Martin, 11 How. (U. S.) 209, 13 L. Ed. 667. Unless justified by usage, Trueman v. Loder, 11 Ad. & E. 589; Warner v. Martin, supra. Ante, p. 207. i Guerreiro v. Peile, 6 B. & Aid. 616; Wing v. Neal (Me.) 2 Atl. 881. Ante, p. 207. us Paterson v. Tash, Str. 1178; Martini v. Coles, 1 M. & S. 140; Guichard v Morgan, 4 Moore, 36; Warner v. Martin, 11 How. (U. S.) 209, 13 L. Ed. 667; Allen v. Bank, 120 U. S. 20, 7 Sup. Ct. 460. 30 L. Ed. 573: Kinder v. Shaw, 2 Mass. 397; Michigan State Bank v. Gardner, 15 Gray (Mass.) 362; Rodriguez v. Hefferman, 5 Johns. Cb. (N. Y.) 417; Gray v. Agnew, 95 111. 315; Wright v. Solomon, 19 Cal. 64, 79 Am. Dec. 196. "* Evans v. Potter, 2 Gall. 12, Fed. Cas. No. 4,569 (duties). Ac- cepting bills drawn by the principal to be provided for out of pro- ceeds does not authorize pledging the goods. Gill v. Kyiner, 5 Moore, 503; Fielding v. Kymer, 2 B. & B. 639. But see Boyce v. Bank (C. C.) 22 Fed. 53. 125 Post, pp. 316, 317. i2 Post, p. 396. ? Post. p. 40.,. 224 LIABILITY OF PRINCIPAL TO THIRD PERSON. (Ch. 8 such an agent, unless they have notice of special instructions imposing restrictions. 18 ' Broker. A broker is an agent whose ordinary business is to nego- tiate or make contracts with third persons on behalf of per- sons by whom he may be employed, for a commission. He is a middleman or intermediate negotiator between the par- ties. 129 The implied authority of a broker depends largely upon the kind of brokerage in which he is engaged, the usages in the different species of brokerage agencies being necessarily diverse. Thus, a broker has, as a rule, no authority to con- tract in his own name 18 or to delegate his authority, 131 but, in conformity with the usage of the stock exchange, a stock broker has in many transactions implied authority to buy and sell in his own name 182 and to act by a substitute. 133 When a broker is employed to buy or sell, he differs from a factor, in that he is not intrusted with possession. He has therefore no implied authority to sell in his own name or to receive payment. 184 He has no implied authority to sell on credit unless there is usage to that effect. 185 It seems that he has implied authority to warrant the goods if in the sale of such goods a warranty is usual. 188 He has implied izs EX parte Dixon, 4 Ch. D. 133; Pickering v Busk, 15 East, 38; Daylight Burner Co. v. Odlin, 51 N. H. 56, 12 Am. Rep. 45. 120 See Story, Ag. 28-32. iso Baring v. Corrie, 2 B. & Aid. 137; Saladin v. Mitchell, 45 111. 79. 131 Henderson v. Barnwell, 1 Y. & J. 387; Cochran v. Irlam, 2 M. & S. 301. 132 Markham v. Jaudon, 41 N. Y. 239; Skiff v. Stoddard, 63 Conn. 198, 26 Atl. 874, 28 Atl. 104, 21 L. R. A. 102; Brewster v. Van Liew, 119 111. 554, 8 N. E. 842. iss Rosenstock v. Tormey, 32 Md. 169, 3 Am. Rep. 125. is* Baring v. Corrie, 2 B. & Aid. 137; Higgins v. Moore, 34 N. Y. 417; Graham v. Duckwall, 8 Bush (Ky.) 12; Saladin v. Mitchell, 45 111. 79. i3G Wiltshire v. Sims, 1 Camp. 258; Boorman v. Brown, 3 Q. B. 611. - ise Schuchardt v. Aliens, 1 Wall. (U. S.) 359, 17 L. Ed. 642; The 4:8) SCOPE OF PARTICULAR AGENCIES. 225 authority to make a note or memorandum to satisfy the statute of frauds. 137 Within the scope of the authority or- dinarily confided to a broker employed to perform the busi- ness delegated to him, the acts of a broker are binding upon his principal in favor of persons dealing with him in igno- rance of unusual limitations. 138 Auctioneer. An auctioneer is an agent whose ordinary business is to sell goods or other property to the highest bidder at public sale, for a commission. Although he is the agent of the seller, and is exclusively his agent until the knocking down of the goods, he is deemed to be the agent of, and has implied authority to sign a note or memorandum on behalf of, both seller and buyer to satisfy the statute of frauds. 139 His agency extends only to making sale, and ceases as soon as it is made. 140 The principal may, of course, direct the man- Monte Allegre, 9 Wheat. (U. S.) G16, 644, 6 L. Ed. 174; Andrews v. Kneeland, 6 Cow. (N. Y.) 354. See, also, ante, p. 207. But see Dotld v. Farlow, 11 Allen (Mass.) 426, 87 Am. Dec. 726, where it was held that a merchandise broker can have no implied authority from the usage of trade to warrant goods to be merchantable, and that evi- dence to prove such usage is inadmissible. "7 Parton v. Crofts, 16 C. B. (N. S.) 11; Thompson v. Gardner, 1 C. P. D. 777. las Lobdell v. Baker, 1 Mete. (Mass.) 193, 35 Am. Dec. 358. i8 Simon v. Metivier, 1 Wm. Bl. 599; Hinde v. Whitehouse, 7 East, 558; Morton v. Dean, 13 Mete. (Mass.) 385; McComb v. Wright, 4 Johns. Ch. (N. Y.) 659. "The technical ground is that the purchaser, by the very act of bidding, connected with the usage and practice of auction sales, loudly and notoriously calls on the auctioneer or his clerk to put down his name as the bidder, and thus confers on the auctioneer or his clerk authority to sign his" name." Per Shaw, C. J., hi Gill v. Bicknell, 2 Gush. (Mass.) 355. See Tiffany, Sales, 77. "0 Seton v. Slade, 7 Ves. 276. The authority to sign the memo- randum ends with the sale. Horton v. McCarty, 53 Me. 394; Bam- ber v. Savage, 52 Wis. 110, 8 N. W. 609, 38 Am. Rep. 723. A recent English case holds, however, that the vendee cannot revoke the auc- TIFT.P.& A. 15 226 LIABILITY OF PRINCIPAL TO THIRD PERSON. (Ch. 8 ner and terms of sale, and it is the duty of the auctioneer to obey his instructions. 141 The conditions of sale are ordina- rily published or announced at the time of sale, and when the conditions as stated are in conformity with the instructions of the principal they are binding upon seller and buyer. 142 Evidence of verbal declarations on the part of the auctioneer to vary the printed conditions of sale is inadmissible. 143 When the principal places some unusual limitation upon the authority of the auctioneer, who fails to give notice of the limitation and sells in disregard of his instructions, it would seem that the sale, being within the apparent authority of the auctioneer, would be binding upon the principal; but it has been held that if the auctioneer is not authorized to sell for less than a certain amount and sells for less, although he does not give notice of the limitation, the principal is not bound by the sale. 144 The implied authority of an auctioneer is necessarily narrow. He has implied authority to receive payment of so much of the price as by the terms of sale is to be paid down, 145 and in the case of personal property may maintain an action in his own name for the price or for the goods, if the conditions are not complied with ; this doc- trine standing upon his right to receive, and his responsi- bility to the principal for, the price, and his lien upon the tioneer's authority to sign. Van Praagh v. Everidge [1902] 2 Ch. 266. 1*1 Williams v. Poor, 3 Cranch, C. C. (U. S.) 251, Fed. Gas. No. 17,732; Steele v. Ellmaker, 11 Serg. & R. (Pa.) 86. 142 Sykes v. Giles, 5 M. & W. 645; Farr v. John. 23 Iowa, 286, 92 Am. Dec. 426; Morgan v. East, 126 Ind. 42, 25 N. E. 867, 9 L. R. A. 558. 14 Gunnls v. Erhart, 1 H. Bl. 290; Shelton v. Llvlus, 2 C. & J. 411. *4 Bush v. Cole, 28 N. Y. 261, 84 Am. Dec. 343. The court said that the auctioneers "were constituted agents for a particular pur- pose and under a limited and circumscribed authority, and could not bind their principals beyond their authority" apparently resting the decision upon the ground that the agency was special. 1*5 Williams v. Millington, 1 H. Bl. 81; Thompson v. Kelly, 101 Mass. 291, 3 Am. Rep. 353. Of. Coppin v. Walker, 7 Taunt 237. 48) SCOPE Or PAETICULAB AGENCIES. 227 goods for his commission. 149 An auctioneer has no im- plied authority to sell at private sale ; 14T to sell on credit ; 148 or to take a bill or note or check in payment when it is provided that the whole or any part of the price is to be paid down; 149 to warrant the goods; 160 to deliver the goods without payment or to allow a set-off; 1 " 1 to rescind a sale once made; 18S or to delegate his authority. 18 * Attorney at Law. An attorney at law is an agent whose ordinary business is to conduct suits and controversies in courts of law and other judicial tribunals. He is an officer of court, and must be duly qualified by the court in which he appears. In England the business of litigation is divided between bar- risters, or counsel, who represent their clients when speak- ing for them in court, and solicitors, who represent them throughout the cause; but in this country these functions t* Hulse v. Young, 16 Johns. 1; Johnson v. Buck, 35 N. J. Law, 338, 10 Am. Rep. 243; Flanigan v. Crull, 53 111. 352, and cases cited In preceding note. "In case of real estate, he can have no such special property, and would not ordinarily be held entitled to receive the price. But when the terms * * * contemplate the payment of a deposit he may receive and receipt for the deposit," and, it seems, may sue for It. Per Wells, J., Thompson v. Kelly, 101 Mass. 291, 3 Am. Rep. 853. T Daniel v. Adams, Ambl. 495; Marsh v. Jelf, 3 P. & P. 234, Williams v. Evans, L. R. 1 Q. B. 352; Sykes v. Giles, 5 M. & W. 695. "Williams v. Evans, L. R. 1 Q. B. 352; Sykes v. Giles, 5 M. & W. 695; Broughton v. Silloway, 114 Mass. 71. May accept check, If usage, Farrer v. Lacy, 25 Ch. D. 636. iso Payne v. Leconfleld, 51 L. J. Q. B. 642; Blood v. French, 9 Gray (Mass.) 197. ii Brown v. Staton, 2 Chit 353. 152 Nelson v. Albridge, 2 Starkie, 435; Boinest v. Leignez, 2 Rich. Law (S. C.) 464. 158 Com. v. Harnden, 19 Pick. (Mass.) 482; Stone v. State, 12 Mo. 400. 228 LIABILITY OF PRINCIPAL TO THIRD PERSON. (Ch. 8 are usually exercised by one and the same person. 154 Broadly speaking, an attorney has implied authority "to do all acts, in or out of court, necessary or incidental to the prosecution or management of the suit, and which affect the remedy only, and not the cause of action." 155 It is im- possible, however, by a general statement to indicate the line between the acts which he may and may not do. Thus, for example, he may make admissions of fact; 1B8 submit a cause to arbitration; 1B7 stipulate that the judgment shall be the same as in another pending action; 158 dismiss or con- tinue the action ; 159 or release an attachment before judg- ment. 160 On the other hand, he may not confess judg- ment; 181 release the cause of action; 162 release property of the defendant from the lien of a judgment or execu- tion; 168 or, according to the weight of authority in the United States, compromise the claim. 16 * 164 Wright, Prin. & Ag. 101. As to implied authority of counsel and solicitors, see Bowstead, Dig. Ag. 72-74. 165 Moulton v. Bowker, 115 Mass. 40, 15 Am. Rep. 72, per Gray, C. J. See, also, Halliday v. Stuart, 151 U. S. 229, 14 Sup. Ct. 302, 38 L. Ed. 141. i5 Lewis v. Sumner, 13 Mete. (Mass.) 269; Pike v. Emerson, 5 N. H. 393, 22 Am. Dec. 468; Farmers' Bank v. Sprigg, 11 Md. 389. 157 Holker v. Parker, 7 Cranch (U. S.) 436, 3 L. Ed. 396; In- habitants of Buckland v. Inhabitants of Conway, 16 Mass. 396; Brooks v. Town of New Durham, 55 N. H. 559; Sargeant v. Clark, 108 Pa. 588. IBS North Missouri R. Co. v. Stephens, 36 Mo. 150, 88 Am. Dec. 138; Ohlquest v. Farwell, 71 Iowa, 231, 32 N. W. 277. 158 Gaillard v. Smart, 6 Cow. (N. Y.) 385; Barrett v. Railroad Co., 45 N. Y. 628; Rogers v. Greenwood, 14 Minn. 333 (Gil. 256). loo Moulton v. Bowker, 115 Mass. 36, 15 Am. Rep. 72; Benson v. Carr, 73 Me. 76. ii Wadhams v. Gay, 73 111. 415; Pfister v. Wade, 69 Cal. 133, 10 Pac. 369. 162 Mandeville v. Reynolds, 68 N. Y. 528; Wadhams v. Gay, 73 111. 415. IBS Benedict v. Smith, 10 Paige (N. Y.) 126; Phillips v. Dobbins, 56 Ga. 617. is* Mandeville v. Reynolds, 68 N. Y. 528; Granger v. Batch elder, 49) COLLUSION or OTHER PARTY AND AGENT. 229 CONTRACT INDUCED BY COLLUSION OF OTHER PARTY AND AGENT. 49. A contract made by an agent under the influence of brib- ery, or, to the knowledge of the other party, in fraud of the principal, is voidable by the principal.* An agent cannot be allowed to put himself into a position in which his interest and his duty will be in conflict ; 2 and, if a person who contracts with an agent so deals with him as to give the agent an interest against the principal, the latter, on discovering the fact, may rescind the contract, notwith- standing that it was within the scope of the agent's author- ity. Thus, a gratuity given, or promise of commission or re- ward made, to an agent for the purpose of influencing the execution of the agency, vitiates a contract subsequently made by him, as being presumptively made under that in- fluence. 8 It is enough that a gratuity is given in order to 54 Vt. 248, 41 Am. Rep. 846; Maddox v. Bevan, 39 Md. 485; Watt v. Brookover, 35 W. Va. 323, 13 S. E. 1007, 29 Am. St. Rep. 8J1; Wetberbee v. Fitch, 117 111. 67, 7 N. E. 513; Jones v. Inness, 32 Kan. 177, 4 Pac. 95; Preston v. Hill, 50 Cal. 43, 19 Am. Rep. 647.' It is otherwise in England. Prestwick v. Poley, 18 C. B. (N. S.) 806. Accord: Bonney v. Morrill, 57 Me. 368. "Although an attorney at law, merely as such, has, strictly speak- ing, .no right to make a compromise, yet a court would be disin- clined to disturb one which was not so unreasonable In itself as to be exclaimed against by all, and to create an impression that the judgment of the attorney has been imposed on or not fairly exer- cised in the case." Holker v. Parker, 7 Cranch (TJ. S.) 436, 452, 3 L. Ed. 396, per Marshall, C. .7. Cf. Jeffries v. Insurance Co., 110 U. S. 305, 4 Sup. Ct. 8, 28 L. Ed. 156. 49. i Bowstead, Dig. Ag. art. 105. 2 Post, p. 415. Panama Tel. Co. v. India R. Co., L. R. 10 Ch. 515; Odessa Tramways Co. v. Mendel, 8 Ch. D. 235; City of Findlay v. Pertz, 13 C. C. A. 559, 66 Fed. 427, 29 L. R. A. 188; Alger v. Keith, 44 C. C. A. 371, 105 Fed. 105; Young T. Hughes, 32 N. J. Eq. 372; United States Rolling Stock Co. v. Railroad Co., 34 Ohio St 450-460, 32 Am. Rep. 380; Yeoman v. Lasley. 40 Ohio St. 190. 230 LIABILITY OF PRINCIPAL TO THIRD PERSON. (Oh. 8 influence the agent generally, and the contract is voidable although the gratuity was not given in relation to the par- ticular contract.* The principal may, at his option, rescind ; or he may stand by the contract, and recover from the agent the amount of the bribe which he has received, and may also recover from the agent and the other party, jointly and sev- erally, any damages which he has sustained by having en- tered into the contract. 8 In conformity with the general principle, if an agent employed to sell, sells ostensibly to a third person, but really to that person and himself, 6 or if in making the sale the agent withholds information good faith requires him to communicate, and the purchaser is cognizant of the fraud, 7 the sale is voidable, at the option of the prin- cipal. * Smith v. Sorby, 3 Q. B. D. 552, n. Post, p. 828. Ex parte Huth, Mont & G. 667. See, also, Donovan y. Campion, 29 C. A. 30, 85 Fed. 71. Post, p. 416L 7 Hegenmyer v. Marks, 37 Minn. 6, 32 N. W. 785, 5 Am. St Rep. 808. 50-61) LIABILITY UPON CONTRACT. 281 CHAPTER IX. LIABILITY OP PRINCIPAL TO THIRD PERSON- CONTRACT (CONTINUED). 50. Liability upon Contract Undisclosed Principal In General. 51. Parol Evidence. 52. Liability of Undisclosed Principal. 53. Election to Hold Agent 54. Settlement with Agent. 55. Contract under Seal. 56. Negotiable Instrument. LIABILITY UPON CONTRACT UNDISCLOSED PRINCIPAL IN GENERAL. 50. A principal may sue or be sued upon a contract (not un- der seal or a negotiable instrument) made on his be- half by his agent, although the existence of the prin- cipal was undisclosed, and the other party contracted in the belief that he was dealing with the agent as principaL SAME PAROL EVIDENCE. 51. When an agent enters into a contract in writing (not under seal or a negotiable instrument) in his own name, parol evidence is admissible to show that he acted as agent for an undisclosed principal in making the con- tract, so as to charge the principal or entitle him to sue upon the contract. In General. The liability of the principal for contracts duly made on his behalf by his agent, where the agency is disclosed and the other party intends to contract with the principal, is in ac- cordance with the ordinary principles of contract. The rule that the principal is bound by the contracts made by his agent on his behalf, where the principal, and even the agency, is undisclosed, and may not only be sued but may sue on the 232 ! LIABILITY OF PRINCIPAL TO THIRD PERSON. . (Ch. 9 contract, is an anomaly introduced by agency into the sphere of contract, which is difficult of explanation. It is fundamental that no one but the parties to a contract can be bound by it or entitled to sue under it. Where an agent contracts in the name of his principal, becoming his mouthpiece or medium of communication, and the other party intentionally contracts with the principal, there is no difficulty in holding that the principal is a party. 1 But where the agency is not disclosed, and the other party intends to contract solely with the agent, whom he believes to be acting on his own behalf, to allow the principal, whose existence is undisclosed, to be treated as such, is to introduce a third party into the contract. If the principal has received the benefit of the contract, as in the case of a contract of sale where the goods purchased by the agent have come to the use of the principal, it is not strange that the courts should have found some fiction to hold him liable to pay for them in an action of contract ; and it was in fact in cases of this nature that the doctrine of the liability of an undisclosed principal had its in- ception. It is at a later date that we find the liability of the other party to the undisclosed principal expressly recognized, and the rule finally extended to other contracts. The rule, whatever its origin, is an illustration of the identification of principal and agent 2 which runs through this branch of the law. As we shall see, the other party is not debarred of his right of action against the person with whom he intended to contract, but he has his election to sue the real principal; and the principal, as well as the agent, may sue upon the con- tract. "If an agent makes a contract in his own name, the principal may sue and be sued upon it; for it is a general rule that whenever an express contract is made an action is maintainable upon it, either in the name of the person with whom it was actually made, or in the name of the person with whom, in point of law, it was made." * We are con- 50-51. lAnson, Contr. pt 3, c. 1; Clark, Contr. 508-510. a 5 Harvard Law Rev. 1-6. Cothay V. Fennell, 10 B. & C. G71. 50-51) LIABILITY UPON CONTRACT. 233 cerned at present with the second branch of the rule the lia- bility of the undisclosed principal. Contract m Writing Parol Evidence. It might also be expected that the so-called parol evi- dence rule would render impossible a suit by or against an undisclosed principal when the contract is in writing and purports to be made with or by the agent on his own be- half. Certainly the effect of such evidence appears to be to vary the terms of the written instrument, to which the prin- cipal does not purport to be a party, yet this view" has not prevailed. "There is no doubt," said Parke, B., "that where such an agreement is made, it is competent to show that one or both of the contracting parties were agents for other per- sons, and acted as such agents in making the contract, so as to give the benefit of the contract on the one hand to, and charge with liability on the other, the unnamed principals : and this, whether the agreement be or be not required to be in writing by the statute of frauds ; and this evidence in no way contradicts the written agreement. It does not deny that it is binding on those whom, on the face of it, it pur- ports to bind; but it shows that it also binds another, by reason that the act of the agent, in signing the agreement, in pursuance of his authority, is in law the act of the prin- cipal." 4 Whatever the merits of the reasoning, the rule is firmly established, both in respect to agreements required by the statute of frauds B to be in writing and those which are not. 6 But, as intimated in the passage quoted, the converse of the proposition does not hold true, and an agent so con- Higgins v. Senior, 8 M. & W. 834. B Bateman v. Phillips, 15 East, 272; Higgins v. Senior, 8 M. & W. 834; Trueman v. Loder, 11 Ad. & E. 589; Lerned v. Johns, 9 Allen (Mass.) 419; Kingsley v. Siebrecht, 92 Me. 23, 42 Ati. 249, 69 Am. St. Rep. 486. Ford v. Williams, 21 How. (U. S.) 287, 16 L. Ed. 36; Darrow v. Produce Co. (C. C.) 67 Fed. 463; Huntington v. Knox, 7 Cush. (Mass.) 234 LIABILITY OP PRINCIPAL TO THIRD PERSON. (Oh. 9 tracting cannot show by parol that it was not the intention of the parties to bind him personally, and so relieve himself from liability; for that, it is said, would be to allow parol evidence to contradict the written instrument. 7 Nor is the principal in every case allowed to introduce evidence to show that he was the real principal, for the instrument may be so drawn that the effect of the evidence would be to vary its terms. Thus, where an agent executed a charter party in his own name, and was described therein as the owner of the vessel, it was held that the real owner could not show that the agent contracted on her behalf, so as to maintain an action on the charter party, because such evidence would contradict the statement that the agent was owner. 8 The rule that where the contract is made in the name of the agent parol evidence is admissible to charge the real principal applies also if the name of the principal is disclosed at the time, although the acceptance of the writing in that form with knowledge of the facts may be evidence of an election to give credit to the agent and to resort solely to him as 374; Byington v. Simpson, 134 Mass. 160, 45 Am. Rep. 314; Cole- man v. Bank. 53 N. Y. 394; Lindeke Land Co. v. Levy, 76 Minn. 364, 79 N. W. 314; and cases cited in preceding note. "Among the ingenious arguments * * * there was one which It may be fit to notice; the supposition that parol evidence was in- troduced to vary the contract, showing it not to have been made by Higginbotham, whose name Is inserted in it, but by the defendant, who gave him the authority. Parol evidence is always necessary to show that the party sued is the person making the contract and bound by it. Whether he does so in his own name or in that of another, or In a feigned name, and whether the contract is signed by his own hand or by that of an agent, are inquiries not different In their nature from the question, who Is the person who has just ordered goods in a shop. If he is sued for the price, and his identity made out, the contract is not varied by appearing to have been made by him in a name not his own." Per Lord Denman, In Trueman V. Loder, 11 Ad. & E. 589. i Higgins v. Senior, 8 M. & W. 834; post, p. 856. Humble v. Hunter, 12 Q. B. 310. 52-56) LIABILITY OF UNDISCLOSED PRINCIPAL. 235 principal." The rule that parol evidence is admissible to show who was the real principal does not apply to instru- ments under seal 10 or to negotiable instruments. 11 LIABILITY OF UNDISCLOSED PRINCIPAL. 52. Subject to the qualifications and exceptions stated In sec- tions 53-56, an undisclosed principal is liable to the other party upon a contract made on his behalf by his agent acting within the scope of his actual authority, or within the scope of the authority usually confided to an agent employed to transact the business del- egated. SAME ELECTION TO HOLD AGENT. 63. The principal is no longer liable when the other party, after discovery of the real principal, has elected to hold or give exclusive credit to the agent* SAME SETTLEMENT WITH AGENT. 54. The principal is no longer liable when, before being called upon by the other party for performance, he has in good faith settled with the agent, or made such change in the state of the account between himself and the agent that he would be prejudiced if compelled to set- tle with the other party [provided that he made such settlement or change of account in the belief, reason- ably induced by the conduct of the other party, that the agent had already settled with him or that he had elected to give exclusive credit to the agent] * SAME CONTRACT UNDER SEAL. 55. An undisclosed principal is not liable upon a deed or other instrument under seal executed on his behalf. Calder v. Dobell, L. R. 6 C. P. 486; Byiugton v. Simpson, 134 Mass. 169, 45 Am. Rep. 314. Contra, Chandler v. Coe, 54 N. H. 561. i Post, p. 240. 11 Post, pp. 243, 337. 52-56. i As to the qualification made by the proviso, post, pp. 244, 332. 236 LIABILITY OF PRINCIPAL. TO THIRD PERSON. (Ch. 9 SAME NEGOTIABLE INSTRUMENT. 56. An undisclosed principal is not liable upon a negotiable instrument made on his behalf. Liability of Undisclosed Principal. An undisclosed principal is liable upon contracts made by his agent acting within the scope of the authority conferred upon him. The other party, upon discovering that the per- son with whom he dealt as principal was in fact the agent of another, may sue the principal ; * and this, whether the prin- cipal -has had the benefit of the contract, as in the case of a sale of goods of which he has enjoyed the use, 8 or whether the contract is executory. 4 And the rule is the same if the existence of the agency is disclosed, but the name of the principal is undisclosed. 8 It might well be expected that the liability of an undis- closed principal would be confined to cases where the con- tract was within the actual authority of the agent, and would not be extended to cases where the contract, although with- in the ordinary authority of an agent to whom the particular business has been delegated, is in violation of his special Thomson v. Davenport, 9 B. & C. 78; Levitt v. Hamblet [1901J 2 Q. B. 53 (customer of stockbroker who buys shares in accordance with regulations of stock exchange in his own name); Hunter v. Giddings, 97 Mass. 41, 93 Am. Dec. 54; Schendel v. Stevenson, 153 Mass. 351, 26 N. E. 689; Upton v. Gray, 2 Me. 373; Meeker v. Clag- horn, 44 N. Y. 349; Cobb v. Knapp, 71 N. Y. 348, 27 Am. Rep. 51; Waddill v. Sebree. 88 Va. 1012, 14 S. E. 849, 29 Am. St. Rep. 766; Lamb v. Thompson, 31 Neb. 448, 48 N. W. 58; Edwards v. Gilde- meister, 61 Kan. 141, 59 Pac. 259; Belt v. Power Co., 24 Wash. 387, 64 Pac. 525; Lindeke Land Co. v. Levy, 76 Minn. 364, 79 N. W. 314; Simmons Hardware Co. v. Todd, 79 Miss. 163, 29 South. 851. Cases cited in preceding note. Episcopal Church v. Wiley, 2 Hill, Eq. (S. C.) 584, 30 Am. Dec. 386; Violert v. Powell, 10 B. Mon. (Ky.) 347, 52 Am. Dec. 548. See, also, Schmaltz v. Avery, 16 Q. B. 655; Calder v. Dobell, L. K. 6 C. P. 486. Thompson v. Davenport, 15 B. & C. 78. 52-56) LIABILITY OF UNDISCLOSED PRINCIPAL. 237 instructions ; in other words, that the rule of so-called "ap- parent" or "ostensible" authority could have no application. But, as has been explained, the latter rule rests upon a doc- trine of agency which is broader than estoppel, and which renders the principal liable, notwithstanding that the agency is unknown to the other party, provided the contract is a usual one to be made by an agent employed in that capacity.' Thus, where the defendants carried on the business of a beer house by means of an agent, who conducted it in his own name, it was held that they were liable to the plaintiff for cigars and other articles such as would usually be supplied to and dealt in at such an establishment, supplied to the agent, although the plaintiff gave credit only to him, and he had been forbidden tc buy such articles on credit. "Once it is established," said Wills, J., "that the defendant was the real principal, the ordinary doctrine as to principal and agent applies that the principal is liable for all the acts of the agent which are within the authority usually confided to an agent of that character, notwithstanding limitations, as between the principal and the agent, put upon that authority. It is said that it is only so where there has been a holding out of authority, which cannot be said of a case where the person supplying the goods knew nothing of the existence of a principal. But I do not think so. Otherwise, in every case of undisclosed principal, or, at least, in every case where the fact of there being a principal was undisclosed, the secret limitation of the authority would prevail and de- feat the action of the person dealing with the agent, and then discovering that be was an agent and had a principal. But in case of a dormant partner it is clear law that no limitation as between the dormant and active partner will avail the dormant partner as to things within the ordinary Watteau r. Fenwick [1893] 1 Q. B. 346. See, also, Hubbard v. Tenbrook, 124 Pa. 291, 16 Atl. 817, 2 L. R. A. 823, 10 Am. St Rep. 585; Hatch v. Taylor, 10 N. H. 538. Of. Edmunds v. Bushell, L. B. 1 Q. B. 97; Ex parte Dixon, 4 Ch. D. 133. 238 LIABILITY OP PRINCIPAL TO THIRD PERSON. (Oh. 9 authority of a partner. The law of partnership is, on such a question, nothing but a branch of the general law of prin- cipal and agent, and it appears to me to be undisputed and conclusive on the point now under discussion." T Election to Resort to Agent. Where an agent makes a contract in his own name, with- out disclosing the fact that he is acting for a principal, the other party, on discovering the principal, may resort to the principal or to the agent, at his election. 8 And the same right of election exists upon discovering the name of the principal, where the name, but not the existence of an agency, is undisclosed at the time the contract is made." When, however, the other party has once, with knowledge of all the facts, elected to hold the agent, he is irrevocably bound by the election, and cannot afterwards resort to the principal. 10 What constitutes an election is a question of fact for the jury, though the evidence of an election may .be so conclu- sive as to preclude any other finding. 11 It has been held in England and Massachusetts that the recovery of judg- ment against the agent is conclusive evidence of an election to resort to him ; 12 but in other jurisdictions it has been held i Watteau v. Penwick [1893] 1 Q. B. 346. Curtis v. Williamson, L. R. 10 Q. B. 57; Klngsley v. Davis, 104 Mass. 178; Elliott v. Bodine, 59 N. J. Law, 567, 36 Atl. 1038; Yates v. Reperto, 65 N. J. Law, 294, 47 Atl. 632. He cannot divide the claim and hold each for a part. Booth v. Barren, 29 App. Dlv. 66, 51 N. Y. Supp. 391. See, also, cases cited ante, p. 2, note. Patterson v. Gandesqui. 9 B. & C. 78; Nelson v. Powell, 3 Doug. 410; Thomson v. Davenport, 9 B. & O. 78; Raymond v. Crown & Eagle Mills, 2 Mete. (Mass.) 319; Merrill v. Kenyon, 48 Conn. 314. 40 Am. Rep. 174. 10 Curtis v. Williamson, L. R. 10 Q. B. 57; Kingsley v. Davis, 104 Mass. 178. 11 Curtis v. Williamson, L. R. 10 Q. B. 57; Calder v. Dobell, L. R. 6 C. P. 486. 12 Priestlie v. Fernie, 3 H. & C. 977; Kingsley v. Davis, 104 Mass. 178. See, also, Kendall v. Hamilton, 4 App. Gas. 504, 515. See, also, Jones v. Johnson, 86 Ky. 530, 6 S. W. 582. 52-56) LIABIUTT OF UNDISCLOSED PRINCIPAL. 239 that the principal is not discharged by a judgment without satisfaction of it. lf Merely bringing suit against the agent 1 * or filing a claim against his estate in bankruptcy 10 is not conclusive, though it may, with other facts, be evi- dence of an election. It seems that the right to hold the principal upon his discovery must be exercised within a rea- sonable time, or it will be deemed to be waived. 1 * To constitute an election, the other party must have knowl- edge not merely of the agency, but as to who is the principal ; for although the other party at the time of the contract knows that he is dealing with an agent, if he does not know whose agent he is he has not the power of choosing between them, and consequently the same rule applies as if he did not know he was an agent at all. Therefore, under such cir- cumstances, and before discovering who the principal is, he does not make an election by taking the agent's note, 17 or charging the goods to him, 18 or sending a statement made out in his name. 19 Beymer v. Bonsall, 79 Pa. 298; Brown v. Reiman, 48 App. Div. 295, 62 N. Y. Supp. 663. Cf. Maple v. Railroad Co., 40 Ohio St. 313. 48 Am. Rep. 685. They may be sued jointly. McLean v. Sexton. 44 App. Div. 520, 60 N. Y. Supp. 871. i* Cobb v. Knapp, 71 N. Y. 348, 27 Am. Rep. 51; Ferry v. Moore. 18 111. App. 135; Steele-Smith Grocery Co. .v. Potthast, 109 Iowa. 413, 80 N. W. 519. IB Curtis v. Williamson, L. R. 10 Q. B. 57. i Smethhurst v. Mitchell, 1 E. & E. 622. See, also, Curtis v. Wil- liamson, L. R. 10 Q. B. 57; Irvine v. Watson, 5 Q. B. D. 623, 628. But see Davison v. Donaldson, 9 Q. B. Div. 623. IT Pentz v. Stanton, 10 Wend. (N. Y.) 271, 25 Am. Dec. 558; Mer- rill v. Kenyon, 48 Conn. 314, 40 Am. Rep. 174; Harper v. Bank, 54 Ohio St. 425, 44 N. E. 97. Taking the agent's note with knowledge and without taking steps to hold the principal discharges him. Paige v. Stone, 10 Mete. (Mass.) 160, 43 Am. Dec. 420; Perkins v. Cady. Ill Mass. 318. is Raymond v. Crown & Eagle Mills, 2 Mete. (Mass.) 319. i Henderson v. Mayhew, 2 Gill (Md.) 393, 41 Am. Dec. 434. 240 LIABILITY OP PRINCIPAL TO THIRD PERSON. (Oh. 9 Settlement with Agent State of Account. While the other party to the contract may, as a rule, upon discovering the existence of a principal, resort to him for performance of the contract, it is obvious that the strict ap- plication of the rule will result in hardship, if not injustice, to the principal if he has in the meantime settled with the agent and is compelled again to settle with the other party. The cases are in conflict as to whether settlement with the agent under such circumstances is a defense when the prin- cipal is subsequently called upon by the other party for per- formance, or whether it is a defense only provided the prin- cipal has made the settlement in the belief, induced by the words or conduct of the other party, that a settlement has already been made by the agent; in other words, whether or not the defense rests upon the ground of estoppel. The question usually arises where a contract of purchase has been made on behalf of an undisclosed principal, who when called upon by the seller for payment has already paid the agent for the goods. In Thomas v. Davenport * the judges gave expression to certain dicta, the correctness of which has been the subject of much subsequent discussion. "I take it to be the general rule," said Lord Tenterden, "that if a person sells goods (supposing at the time he is dealing with a principal), but afterwards discovers that the person with whom he has been dealing is not the principal in the transaction, but agent for a third person, though he may in {he meantime have debited the agent with it, he may afterwards recover the amount from the real principal ; subject, however, to this qualification : that the state of the account between the principal and the agent is not altered to the prejudice of the principal." And Bailey, J., with more elaboration, said: "If the agent does make himself personally liable, it does not follow that the principal may not be liable also, subject to this qualification : that the principal shall not be prejudiced by being made per- 20 9 B. & C. 78 (1829). 52-56) LIABILITY OF UNDISCLOSED PRINCIPAL. 241 sonally liable if the justice of the case is that he should not be personally liable. If the principal has paid the agent, or the state of the accounts between the agent here and the principal would make it unjust that the seller should call on the principal, the fact of payment, or such a state of ac- counts, would be an answer to the action brought by the seller where he had looked to the responsibility of the agent." In Heald v. Ken worthy, 21 however, the foregoing dicta were disapproved, and Parke, B., said : "The expression 'make it unjust,' is very vague; but, if rightly understood, what the learned judge said is, no doubt, true. If the conduct of the seller would make it unjust for him to call upon the buyer for the money; as, for example, where the principal is induced by the conduct of the seller to pay his agent on the faith that the agent and the seller have come to a settlement on the matter, or if any representation to that effect is made by the seller either by words or conduct, the seller cannot after- wards throw off the mask and sue the principal. * * * I think that there is no case of this kind where the plaintiff has been precluded from recovering, unless he has in some way contributed either to deceive the defendant or to induce him to alter his position." The reasoning is, in short, that the principal, having originally authorized his agent to create a debt, cannot be discharged from it except by payment, un- less the seller has estopped himself by his conduct from en- forcing it against the principal. In this case it did not dis- tinctly appear that the seller was ignorant of the existence of a principal, although the language of the judges is broad enough to cover the case where the agency is undisclosed as well as the case where merely the name of the principal is undisclosed. In Armstrong v. Stokes, 22 however, it was held that where the seller sells the goods to the agent, supposing at the time he is dealing with him as principal, and ignorant of the existence of any agency, payment by the principal to i 10 Ex. 739 (1855). L. R. 7 Q. B. 598 (1872). TIFF.P.& A. 16 242 LIABILITY OF PRINCIPAL TO THIRD PERSON. (Ch. 9 the agent is a defense notwithstanding the absence of facts creating an estoppel against the seller ; the court thus giving preference to the earlier statement of the exception, while disclaiming to decide whether it would apply if the agency were avowed, but the principal unnamed. Finally, in Irvine v. Watson, 28 which was a case where the existence of the agency, but not the name of the principal, was disclosed to the seller, the statement of the exception as made by Parke, B., was approved, and it was held that payment by the prin- cipal in good faith to the broker was no defense to an action by the seller for the price. In this case the facts did not render it necessary to pass upon the correctness of the de- cision in Armstrong v. Stokes, the court reserving the right to reconsider that case should it arise again ; but the distinc- tion there taken between the case of an undisclosed agency and that of a disclosed agency, where the name of the prin- cipal is undisclosed, was disapproved. The result of the decisions in England is, therefore, that in the latter case, and probably in both cases, settlement with the agent on the part of the principal is a defense only when he has been induced, by words or conduct of the 5 Q. B. D. 414 (1880). See, also, Davison v. Donaldson, 9 Q. B. D. 623. In Irvine v. Watson, 5 Q. B. D. 623, a broker, employed by defend- ants to buy oil, bought from plaintiffs, telling them that he was act- Ing for a principal, the terms being that the oil should be paid for by cash "on or before delivery." Plaintiffs delivered without payment, and defendants, not knowing that the broker had not paid, in good faith paid him. The broker soon after became insolvent. In an ac-i tion for the price, it appeared that it was not the invariable custom of the oil trade to insist on prepayment in such sales, and it was held that, in the absence of such custom, the mere omission to insist on prepayment was not such conduct as would reasonably induce de- fendants to believe that the broker had paid for the oil, and that they were hence liable for the price. Whether mere delay on the part of the seller might not, In special cases, be sufficiently misleading con- duct, as amounting to a representation that he had been paid, quaere. See remarks of Jessel, M. R., in Davison v. Donaldson, 9 Q. B. D., at page 628. 52-56) INABILITY OP UNDISCLOSED PRINCIPAL. 243 other party, sufficient to create an estoppel, to believe that a settlement has already been made by the agent, or, it would seem, to believe that the other party has elected to give exclusive credit to the agent,* 4 and has himself settled with the agent in that belief. In this country the question has been little considered, and the earlier statement of the exception has generally been ap- proved without discussion.** Contract under Seal. While an unnamed principal may sue or be sued upon a simple contract, 26 except in the case of commercial paper, 27 it is a technical rule of the common law that no one who is not named in or described as a party to an instrument under seal can maintain an action or be charged upon it. If, there- fore, a deed or other instrument to whose validity a seal is essential is made by an agent, it must be made in the name ** "It surely must, at all events, be the law that In the case of sale of goods to a broker the principal known or unknown cannot, by paying or settling before the time of payment comes with his own agent, relieve himself of responsibility to the seller, except in the one case where exclusive credit was given by the seller to the agent. But may the payment or settlement to or with the agent be safely made in such a case after the day of payment has arrived, and, if so, within what time? It seems to me that it can only safely be made If a delay has intervened which may reasonably lead the principal to Infer that the seller no longer requires to look to the principal's credit; guch a delay, for example, as leads to the Inference that the debt is paid by the agent, or to the inference that, though the debt is not paid, the seller elects to abandon his recourse to the principal and to look to the agent alone." Per Bowen, J., In Irvine v. Watson, 5 Q. B. D. 102. See, also, remarks of Bramwell, L. J., and Brett, L. J., commenting upon Armstrong v. Stokes, in Irvine v. Watson, 5 Q. B. D. 414. And see Bowstead, Dig. Ag. art. 93. 25 Fradley v. Hyland (C. C,) 37 Fed. 49, 2 L. R. A. 749; Thomas v. Atkinson, 38 Ind. 248; Laing v. Butler, 37 Hun (N. Y.) 144; Knappv. Simon, 96 N. Y. 284, 289; Ketchum v. Verdell, 42 Ga. 534. Contra, York County Bank v. Stein, 24 Md. 447. For a review of the de- cisions, see 23 Am. Law Rev. 565. *e Ante, p. 231; post, p. 303. * Post, pp. 244, 303, 336, 244 LIABILITY OF PRINCIPAL TO THIRD PERSON. (Oh. 9 of the principal, or he will not be bound. 18 It follows that the doctrine of undisclosed principal can have no application to this class of contracts. 29 The questions, what form of execution is sufficient to bind the principal, and what form though insufficient to bind him will bind the agent, will be considered hereafter. 80 If a seal is affixed to a contract not required to be sealed, the seal may be disregarded; and in such case, if the contract is made in the name of the agent, parol evidence would be admissible, as in the case of ordinary contracts in writing, to charge the real principal or to en- able him to sue. 81 But the decisions are conflicting. 82 Negotiable Instrument. Although bills of exchange, promissory notes, and oth- er negotiable instruments are classed as simple contracts, they partake in many respects of the nature of specialties. 83 It is the rule of the law merchant that no one who is not *s Schack v. Anthony, 1 M. & S. 573; Berkeley v. Hardy, 8 D. & R. 102; Machesney v. Brown (C. C.) 29 Fed. 145; Guyon v. Lewis, 7 Wend. (N. Y.) 26; Stone v. Wood, 7 Cow. (N. Y.) 453; Kiersted v. Orange, 69 N. Y. 343, 25 Am. Rep. 199; El well v. Shaw, 16 Mass. 42, 8 Am. Dec. 126; Fullam v. Inhabitants of West Brookfleld, 9 Allen (Mass.) 1. 2 Badger Silver Min. Co. v. Drake, 31 C. C. A. 378, 88 Fed. 48; Briggs v. Partridge, 64 N. Y. 357, 21 Am. Rep. 617; Tuthill v. Wil- son, 90 N. Y. 423; Henricus v. Englert, 137 N. Y. 488, 33 N. E. 550; Farrar v. Lee, 10 App. Div. 130, 41 N. Y. Supp. 672; Borcherling v. Katz, 37 N. J. Eq. 150; Haley v. Belting Co., 140 Mass. 73, 2 N. E. 785; Sanger v. Warren, 91 Tex. 472, 44 S. W. 477, 66 Am. St. Rep. 913 (the rule not changed by statute providing that no seal is neces- sary to validity of any instrument in writing, and that addition or omission of seal shall not affect the same). o Post, p. 330. i Lancaster v. Ice Co., 153 Pa. 427, 26 Atl. 251; Stowell v. Eldred, 89 Wis. 614. See, also, Blanchard v. Inhabitants of Blackstone, 102 Mass. 343; Cook v. Gray, 133 Mass. 106. sz An undisclosed principal cannot sue on a sealed contract, exe- cuted by the agent as such, though the seal is not essential to its validity. Smith v. Pierce, 45 App. Div. 628, 60 N. Y. Supp. 1011. 2 Ames, Cas. B. & N. 872. 52-56) LIABILITY OP UNDISCLOSED PRINCIPAL. 245 named in or described as a party to the instrument can main- tain an action 34 or be charged upon it. 85 Parol evidence to show who is the real principal is inadmissible. If, therefore, a bill or a note is made by an agent, the principal must ap- pear thereon to be a party, or he will not be bound. The doctrine of undisclosed principal does not extend to such instruments. If the signature be "C. D.," although he was in fact the agent of "A. B.," evidence is not admissible to show that he intended to bind A. B. And even if, under the same circumstances, the signature was written "C. D., Agent," the name of the principal being undisclosed, the word "Agent" is to be regarded as descriptio personae, and C. D. only is bound. 88 There are, indeed, many conflicting decisions re- garding the construction of such instruments, and the ques- tions what form is sufficient to bind the principal, and what to bind the agent, and under what circumstances, if at all, parol evidence is admissible to solve an ambiguity, will be considered later. 8 * Post, p. 808. 8 Laffkin v. Walker, 2 Camp. 308; In re Ansonla Co., L. R. 9 Ch. 635; Pentz v. Stanton, 10 Wend. (N. Y.) 271, 25 Am. Dec. 558; Stack- pole v. Arnold, 11 Mass. 27, 6 Am. Dec. 150; Williams v. Bobbins, Id Gray (Mass.) 77, 77 Am. Dec. 396; Arnold v. Sprague, 34 Vt. 409: Pease v. Pease, 35 Conn. 131, 95 Am. Dec. 225; Cragin v. Lovell, 109 U. S. 194, 3 Sup. Ct 132, 27 L. Ed. 903. But if the name of the principal is not disclosed, and the seller does not rely exclusively upon the credit of the agent, he may, upon the dishonor of the paper, charge the principal for goods sold and de- livered. Pentz v. Stanton, supra. See, also, Harper v. Bank, 54 Ohio St. 425, 44 N. E. 97. 3 Pentz v. Stanton, 10 Wend. (N. Y.) 271, 25 Am. Dec. 558; Wil- liams v. Bobbins, 16 Gray (Mass.) 77, 77 Am. Dec. 396; Anderton v. Shoup, 17 Ohio St. 125; Anderson v. Pearce, 36 Ark. 293, 38 Am. Bep. 39; Stinson v. Lee, 68 Miss. 113, 8 South. 272, 9 L. B. A. 830. 24 Am. St. Bep. 257; Cortland Wagon Co. v. Lynch, 82 Hun, 173, 31 N. Y. Supp. 325. Post, p. 332. 246 LIABILITY OP PRINCIPAL TO THIRD PERSON. (Gh. 9 Foreign Principal. In England, no foreign principal may sue or be sued on a contract made by his agent in that country, unless it is proved that the agent was authorized to make the principal a con- tracting party, and it appears, either from the terms of the contract or from the surrounding circumstances, that the principal, and not the agent, was intended to be the con- tracting party. 88 For this reason it seems that an undis- closed foreign principal cannot sue or be sued. In the United States there is no presumption that the agent of a foreign principal is exclusively liable, 89 and apparently an undis- closed foreign principal can sue or be charged upon the con- tract. s Bowstead, Dig. Ag. art 87; post, p. 365. Post, p. 866L jjjj 57-58) ADMISSIONS BY AGENT NOTICE TO AGENT. 247 CHAPTER X. ADMISSIONS BY AGENT NOTICE TO AGENT. 57. Admissions by Agent When Competent. 58. Incompetent to Prove Authority. 69. Notice to Agent Imputed Notice Notice in Course of Employ- ment. 60. Knowledge Acquired in Other Transaction. 61. General Exception Adverse Interest of Agent. ADMISSIONS BT AGENT WHEN COMPETENT. 57. The statement of an agent is evidence against Ms prin- cipal, as an admission (a) When it -was made with his authority; or (b) When it was made by the agent in the transaction for his principal of some authorized business, to which it had reference and with -which it was connected, mo a* to be a part of that transaction. SAME INCOMPETENT TO PROVE AUTHORITY. 58. The statement of an agent is not evidence against his principal, as an admission, to prove the existence of the agency or the extent of the authority. In General. An admission is a statement, or an act which amounts to a statement, of a fact material to the issue and adverse to the interest of the party who made it. 1 The admission of a party to an action is always admissible against him, and con- sequently the admission of his agent, if made under such circumstances that he must be deemed to be speaking through the lips of his agent, is also admissible against him. Admissions by agents must be distinguished from statements by agents which are themselves the very facts to be proved. "What the agent has said may be what constitutes the agree- 57-58. i McKelvey, Ev. 90. 248 ADMISSIONS BY AGENT NOTICE TO AGENT. (Ch. 10 ment of the principal : or the representations or statements made may be the foundation of, or the inducement to, the agreement. Therefore, if writing is not necessary by law, evidence must be admitted to prove the agent did make that statement or representation." 2 An admission, however, is merely a substitute for other proof, or an additional means of proving the fact of which it is a statement, and which may be otherwise proved. Admission by Agent When Admissible against Principal. In order that the statement of an agent may be evidence against the principal as an admission, the relation of principal and agent must first be proved. It is not enough, however, to show that the relation existed when the statement was made. It must appear that the agent was acting as such in making the statement. Of course, if it could be shown that the speaker had authority to make that particular statement, the proof would be sufficient. And, if A. refers B. to C. for information upon a particular matter, C.'s statements respecting such matter are evidence against A., 8 the agency being for the purpose of making statements. In other cases it must appear that the statement was made while the agent was engaged in transacting some authorized business for his principal, and had reference to, and was connected with, that business, so as to be a part of the pending transac- tion. 4 2 Fairlie v. Hastings, 10 Ves. Jr. 123. Williams v. limes, 1 Camp. 364; Hood y. Reeve, 3 C. & P. 532; Burt v. Palmer, 5 Esp. 145; Chapman v. Twitchell, 37 Me. 59, 58 Am. Dec. 773; Chadsey v. Greene, 24 Conn. 562, 572; Over v. Schiffling, 102 Ind. 191, 26 N. E. 91. It must appear that the reference was for that purpose. Proctor V. Railroad Co., 154 Mass. 251, 28 N. E. 13. See McKelvey, Ev. 103. * Fairlie v. Hastings, 10 Ves. Jr. 123; Garth v. Howard, 8 Bing. 451; United States v. Gooding, 12 Wheat. (U. S.) 460, 6 L. Ed. 693; Northwestern Union Packet Co. v. Clough, 20 Wall. (U. S.) 528, 22 L. Ed. 406; Fogg v. Pew, 10 Gray (Mass.) 409, 71 Am. Dec. 662; White v. Miller, 71 N. Y. 134, 27 Am. Rep. 13; McPherrin v. Jen- nings, 66 Iowa, 622, 24 N. W. 242. 57-58) ADMISSIONS BY AGENT. 249 It is commonly said that the statement must be made while the agent is engaged in transacting some authorized busi- ness, and must be so connected with it as to constitute part of the res gestae. 5 But "the Latin phrase adds nothing;" it is used here as an equivalent expression for the business on hand, or the pending transaction, as regards which for cer- tain purposes the law identifies the principal and the agent. 6 The use of "res gestae" in this connection tends to confusion, by reason of its use in connection with declarations which are admissible as a part of the res gestae; meaning thereby the surrounding circumstances or circumstantial facts, where no question of agency is necessarily involved. 7 Provided the requirement that the statement be made as part of a pending transaction, as explained, be fulfilled, the nature of the transaction is immaterial, and the admission may be of a present or of a past fact. While the statement of an agent in negotiating a contract may constitute the agreement of the principal, or an inducement to the contract, and thus form the basis of an action upon the contract or for deceit, a statement made by the agent in the negotiation in regard to the subject-matter may also be used against the principal as an admission in an action not based upon the contract or the statement. 8 Thus, in an action upon a state- ute to recover a penalty for selling coals short measure, it was held that what the defendant's agent, who made the sale, said bearing upon that issue, in respect to the sale about to take place and in respect to the coals which were the subject of the sale, was evidence against the defend- ant. 8 And upon an indictment against the owner of a ves- United States v. Gooding, 12 Wheat (U. S.) 460, 6 L. Ed. 693; Northwestern Union Packet Co. v. Clough, 20 Wall. (U. S.) 528, 22 L. Ed. 406; White v. Miller, 71 N. Y. 134, 27 Am. Rep. 13. See 15 Am. Law Rev. 80. i Thayer, Cas. on Ev. 630; McKelvey, Ev. 280; post, p. 252. Peto v. Hague, 5 Esp. 134; United States v. Gooding, 12 Wheat (U. S.) 460, 6 L. Ed. 693. Peto v. Hagne, 5 Esp. 134. 250 ADMISSIONS BY AGENT NOTICE TO AGENT. (Ch. 10 sel for being engaged in the slave trade, the appointment of the master and his general authority as such having been established, and evidence to show the nature of the voyage and the defendant's complicity having been introduced, it was held that declarations of the master, made when at- tempting to hire the witness as mate for the voyage then in progress, describing the same to be a voyage to the coast of Africa for slaves, were admissible as confirmatory of the proof against the defendant. 10 The question of the agent's power to bind his principal by an admission is usually raised when the statement con- cerns a past fact. An agent, as such, has not power to made admissions, even in respect to a transaction in which he was himself concerned; 11 yet if, in the course of his employment, it becomes his duty or he has authority to deal with a person who asserts, 12 or against whom his principal asserts, 18 rights based upon a past transaction, or to answer 10 United States v. Gooding, 12 Wheat (U. S.) 460, 6 L. Ed. 693: "The evidence here offered," said Story, J., "was not the mere decla- rations of the master upon other occasions totally disconnected with the objects of the voyage. These declarations were connected with acts in furtherance of the objects of the voyage, and within the gen- eral scope of his authority as conductor of the enterprise. He had an implied authority to hire a crew. * * * ' The testimony went to establish that he endeavored to engage Captain Coit to go as mate for the voyage then in progress, and his declarations were all made with reference to that object. * * * They were, therefore, in the strictest sense, a part of the res gestae the necessary explanations attending the attempt to hire." 11 White v. Miller, 71 N. Y. 134, 27 Am. Rep. 13; Phelps v. James, 86 Iowa, 398, 53 N. W. 274, 41 Am. St. Rep. 497; Idaho Forwarding Co. v. Insurance Co., 8 Utah, 41, 29 Pac. 826, 17 L. R. A. 586. See Luby v. Railroad Co., 17 N. Y. 131, and other cases cited note 32, infra. 12 See cases cited notes 16-18, infra. is Where an attorney is retained, not only to sue a railroad com- pany for damages caused by an accident, but also to present the plaintiff's claim and obtain settlement without suit, if possible, a letter written by his clerk, under his directions, to the company, 57-58) ADMISSIONS BT AGENT. 251 questions 14 or to make statements to any person about it/" what he then says while acting within the scope of his au- thority concerning it is evidence against his principal. On this ground the acknowledgment of an indebtedness upon demand for payment made by an agent who is the proper per- son from whom to demand payment is evidence against the principal as an admission of the debt, 16 and may be used against him to take the case out of the statute of limita- tions. 17 So, in an action against a railway company for the loss of a trunk, the declaration of the company's station master, made the next morning after the loss in accounting for the trunk to the plaintiff, was admissible; it being part of his duty to deliver the baggage of passengers and to ac- count for the same, provided inquiries were made within a reasonable time. 18 And similarly where a parcel was lost in transit, and the station master, in the ordinary course of his duty, made a statement to the police as to the absconding of a porter suspected to have taken it, with a view to his apprehension, the statement was held admissible against the stating what purported to be the facts In the case, In response to an Inquiry by the company, is admissible in evidence for the company. Loomis v. Railroad Co., 159 Mass. 39, 34 N. E. 82. The admission of an attorney is not receivable unless made with reference to a mat- ter in which be had authority to represent his client. Fletcher v. Railway Co., 109 Mich. 363, 67 N. W. 330; Pickert v. Hah-, 146 Mass. 1, 15 N. E. 79; Treadway v. Railroad Co., 40 Iowa, 526. As to the power of an attorney to make admissions in the conduct of a suit, Marsh v. Mitchell, 26 N. J. Eq. 497, 501; Haas v. Society, 80 111. 248; Perry v. Manufacturing Co., 40 Conn. 313, 317; McKel- vey, Ev. 103. See ante, p. 227. i* Morse v. Railroad Co., 6 Gray (Mass.) 450. 10 Kirkstall Brewery Co. v. Furness Ry. Co., L. R. 9 Q. B. 468. i Clifford v. Burton, 1 Bing. 199 (offer of compromise upon appli- cation for payment). IT Anderson v. Sanderson, 2 Stark. 204; Id., Holt, N. P. 591; Burt v. Palmer, 5 Esp. 145; Palethorp v. Furnish, 2 Esp. 511, note. is Morse v. Railroad Co., 6 Gray (Mass.) 450. See, also, Lane v. Railroad Co., 112 Mass. 455; Burnside v. Railway Co., 47 N. H. 554, 93 Am. Dec. 474. 252 ADMISSIONS BY AGENT NOTICE TO AGENT. (Ch. 10 company on the issue whether the parcel was stolen by one of its servants. 19 On the other hand, in an action against a railway company for nondelivery of cattle within a reasonable time, the statement of a night inspector at a station, through which the trucks which carried the cattle would pass, made a week after the alleged occurrence, in answer to a question why he had not sent on the cattle, that he had forgotten them, was held inadmissible, on the ground that he had not au- thority to make admissions relative to bygone transac- tions. 20 This case is distinguishable from the preceding up- on the ground that it was not part of the duty of the night inspector to render an account of the affair to the plaintiff in answer to his inquiries. So, where the plaintiff was injured by a fall from the gangway while attempting to go on board the defendant's steamboat, and afterwards during the voyage the captain admitted to her that it was through the careless- ness of the hands in putting out the plank that she fell, it was held error to permit the admission to be received. 21 Same Declarations, When Part of Res Gestce. Every act or event is set about by surrounding circum- stances, or circumstantial facts, which "may consist of decla- rations made at the time by participants in the act, or other acts done, of the position, condition, and appearance of in- animate objects, and of other elements which serve to illus- trate the main act or event." 22 Subject to not very well defined limitations, such circumstances may be proved as part of the thing done the res gesta, or, as it is common- ly put, the res gestse. Such declarations comprise state- ments, exclamations, and other utterances by the partici- pants in the act. They are received on the ground of their spontaneity. "They are the extempore utterances of the i Kirkstall Brewery Co. v. Furness Ry. Co., L. R. 9 Q. B. 468. so Great Western Ry. v. Willis, 38 C. B. (N. S.) 748. 21 Northwestern Union Packet Co. v. Clough, 20 Wall. (U. S.) 52P, 22 L. Ed. 406. *z McKelvey, Ev. 277. 57-58) ADMISSIONS BY AGENT. 253 mind under circumstances and at times when there has been no sufficient opportunity to plan false or misleading state- ments; they exhibit the mind's impressions of immediate events, and are not narrative of past happenings." *' Such declarations constitute an exception to the hearsay rule. To be admissible, they must be made while the act is be- ing done or the event happening, or so soon thereafter that the mind of the declarant is actively influenced by it. The cases are not in accord as to the extent of the time which the res gestae cover; and, indeed, the time necessarily depends more or less upon the circumstances of each case. The question always is whether the declaration is a sponta- neous utterance or the mere narrative of a past act. When such declarations are admitted, they are generally made with- in a few minutes of the act or event to which they relate. 24 The application of this rule, or rather exception to the hearsay rule, frequently arises in accident cases, where the declaration of the person whose act caused the injury is sought to be introduced as tending to show his negligence or otherwise throwing light upon the nature of the act. Where one of the participants in the act is a servant or agent, there appears no reason for applying a different rule to his declaration, if part of the res gestae, than to the declaration of any other person. If an act which causes injury to a third person, the plaintiff, is committed by a servant of the de- fendant, in the course of his employment, so as to be in law the act of the defendant, the act, with all its surrounding cir- cumstances, or res gestae, may be proved, and the declaration of any servant who participated in the act, if part of the res gestae, is admissible against the defendant. 28 The admissi- s McKelvey, Ev. 278. 2* Travelers' Ins. Co. v. Mosley, 8 Wall. (U. S.) 397, 19 L. Ed. 437; Vlcksburg & M. R. Co. v. O'Brien, 119 U. S. 99, 7 Sup. Ct 118, 30 L. Ed. 299; Lund v. Inhabitants of Tyngsborough, 9 Cush. (Mass.) 36, 42; Earle v. Earle, 11 Allen (Mass.) 1; Waldele v. Railroad Co., 95 N. Y. 274, 47 Am. Rep. 41; Rockwell v. Taylor, 41 Conii. 55, 59. * Hanover R. Co. v. Coyle, 55 Pa. 396; Obio & M. Ry. Co. v. 254 ADMISSIONS BY AGENT NOTICE TO AGENT. (Ch. 10 bih'ty of the declaration, although made by a servant, does not depend upon his power to bind his master by his ad- missions, but upon its being part of the res gestae. If a declaration is admissible as part of the res gestae, it is com- petent, no matter by whom made. 26 Upon the same ground a declaration of the party injured may be admissible in his own favor. 27 Stein, 133 Ind. 243, 31 N. E. 180, 32 N. B. 831, 19 L. R. A. 733; Cleveland v. Newsom, 45 Mich. 62, 7 N. W. 222; Keyser v. Railway Co., 66 Mich. 390, 33 N. W. 867; O'Connor v. Railway Co., 27 Minn. 166, 6 N. W. 481, 38 Am. Rep. 288; Hermes v. Railway Co., 80 Wis. 590, 50 N. W. 584, 27 Am. St. Rep. 69; Hooker v. Railway Co., 76 Wis. 542, 44 N. W. 1085; Marion v. Railway Co., 64 Iowa, 568, 21 N. W. 86; Omaha & R. V. Ry. Co. v. Chollette, 41 Neb. 578, 59 N. W. 921; Elledge v. Railway Co., 100 Cal. 282, 34 Pac. 720, 38 Am. St. Rep. 290; Lightcap v. Traction Co. (C. C.) 60 Fed. 212. The declaration must, of course, characterize the act Ohio & M. Ry. Co. v. Stein, supra; Butler v. Railway Co., 143 N. Y. 417, 38 N. E. 454, 26 L. R. A. 46, 42 Am. St. Rep. 738. 26 in an action by an administrator against a railway company to recover damages for decedent's death, declarations of decedent, which were made immediately after he was injured and while he was being extricated from under the wheels of the car, were admissible, against defendant, as part of the res gestse. Louisville, N. A. & C. Ry. Co. v. Buck, 116 Ind. 566, 19 N. E. 453, 2 L. R. A. 520, 9 Am. St. Rep. 883. Where a brakeman on a flat car received an injury in a collision between such car and a detached portion of the train while making a running switch, and two minutes after, while he was still on the car, the engineer walked a car length from the engine to where the brakeman was, declarations by the engineer as to the cause of the accident, which did not refer to acts done or matters happening be- fore the collision, were admissible against the company as part of the res gestse. "Counsel argue," said Elliott, C. J., "* * * that the declarations admitted in that case [Louisville, N. A. & C. Ry. Co. v. Buck, supra] were those of the injured person, while the declara- tions admitted in this instance were those of the agent or servant. A complete and effective answer to this argument is that, if the declarations were * * * part of the res gestse, they were com- petent, no matter by whom they were made." Ohio & M. Ry. Co. v. Stein, 133 Ind. 243, 31 N. E. 180, 32 N. E. 831, 19 L. R. A. 733. 27 Louisville, N. A. & C. Ry. Co. v. Buck, 116 Ind. 566, 19 N. E. 57-58) ADMISSIONS BY AGENT. 255 It must be conceded that the admissibility of declara- tions of servants and agents whose admissibility rests upon the ground that they are part of the res gestae, in its proper sense, is often treated as depending upon the power of an agent to bind his principal by his admissions. "Where the acts of the agent will bind the principal," it is said, "there his representations, declarations, and admissions, re- specting the subject-matter, will also bind him, if made at the same time, and constituting a part of the res gestae." " It is believed, however, that a distinction should be drawn.* 9 On the one hand, declarations made at the time of the act by the parties participating therein, and part of the res gestae that is, of the surrounding circumstances are admissible, ir- respective of whether the participants are servants of the person sought to be held responsible for the act, and by whomsoever made. On the other hand, the statement of a servant or agent is admissible as an admission, if it is made when he is engaged in some authorized transaction, and it is within the scope of his authority in that transaction to make the statement. To illustrate: In an action against a rail- way company, by a person injured by a collision, the dec- laration of the engineer, referring directly to and characteriz- ing or explaining the occurrence, made at the time or im- mediately afterwards, under its immediate influence, may, under the circumstances of the case, be held part of the res gestae, and admissible against the company upon that ground. 30 It might be, however, that some subsequent state- ment of the engineer, as to the cause of the accident, although not part of the res gestae, would be evidence against the com- pany as an admission ; as, for example, if it happened to be 453, 2 L. R. A. 520, 9 Am. St. Rep. 883. Of. Travelers' Ins. Co. v. Mosley, 8 Wall. (U. S.) 397, 19 L. Ed. 437. zs story, Ag. 134, frequently quoted in this connection. See cases cited, note 25, supra. 2 See Thayer, Cas. on Ev. 630; McKelvey, Ev. 280. so Ohio & M. Ry. Co. v. Stein, 133 Ind. 243, 31 N. E. 180, 32 N. E. 831, 19 L. R. A. 733. 256 ADMISSIONS BY AGENT NOTICE TO AGENT. (Ch. 10 made by him in the course of his duty in making a report of the accident to a superior officer. 81 In the one case the declaration of the engineer is admissible as a circumstantial fact, as part of the res gestae, because it is the spontaneous utterance of a participant in the event. In the other case his statement is admissible against the company as an admission, because it is made at a time and under circumstances when the engineer has authority to make it. If the statement is not admissible either as a declaration forming part of the res gestae, or as an admission, it cannot be received. 88 Admission Incompetent to Prove Agency. It follows from what has been said that neither the exist- ence of the agency nor its extent can be proved by the ad- mission of the agent. 88 His power to make admissions rests upon the very fact that he is agent, and has authority to i Texas & P. Ry. Co. v. Lester, 75 Tex. 56, 12 S. W. 955. See, also, Keyset v. Railway Co., 66 Mich. 390, 33 N. W. 867; St. Louis 6 S. F. Ry. Co. v. Weaver, 35 Kan. 412, 11 Pac. 408, 57 Am. Rep. 176; Meyer v. Insurance Co., 104 Cal. 381, 38 Pac. 82. Cf. North Hudson Co. R. Co. v. May, 48 N. J. Law, 401, 5 Atl. 276. It has been held that letters of an agent to his principal, In which he renders an account of his transactions, are not admissible, as being mere narration. Langhorn v. Alluutt, 4 Taunt. 511; and see Re Davila, 22 Ch. D. 593; United States v. The Burdett, 9 Pet. (U. S.) 682, 689, 9 L. Ed. 273. Contra, The Soloway, 10 Prob. D. 137, 54 L. J. P. 83. 82 gee Luby v. Railroad Co., 17 N. Y. 131; Lane v. Bryant, 9 Gray (Mass.) 245, 69 Am. Dec. 282; Williamson v. Railroad Co., 144 Mass. 148, 10 N. E. 790; Vicksburg & M. R. Co. v. O'Brien, 119 U. S. 99, 7 Sup. Ct. 118, 30 L. Ed. 299; Durkee v. Railroad Co., 69 Cal. 533, 11 Pac. 130, 58 Am. Rep. 562. as Brigham v. Peters, 1 Gray (Mass.) 139; Mussey v. Beecher, 3 Gush. (Mass.) 511; Hatch v. Squires, 11 Mich. 185; Sencerbox v. Mc- Grade, 6 Minn. 484 (Gil. 334); Sax v. Davis, 71 Iowa, 406, 32 N. W. 403; Howe Mach. Co. v. Clark, 15 Kan. 492; Bohanan v. Railroad, 70 N. H. 526, 49 Atl. 103. Admissions of an agent are not evidence without proof of agency, but the former may be admitted before proof of the latter. First Unitarian See. v. Faulkner, 91 U. S. 415, 23 L. Ed. 283. 59-61) NOTICE TO AGENT. 257 make the statement which constitutes the admission. To receive his statement as an admission of that authority would be to proceed in a circle. He is, however, competent as witness to testify to the fact and terms of his appointment, if it was not conferred by writing. 84 Neither is it competent to prove the extent of his authority by his acts when the effect of such proof would be only to show his assertion of the powers assumed. 85 Such proof is inadmissible except to show a course of dealing acquiesced in by the principal, from which authority to do other similar acts might be im- plied, or as the foundation for an estoppel. 86 NOTICE TO AGENT IMPUTED NOTICE NOTICE IN COURSE OF EMPLOYMENT. 59. When, in the course of his employment, the agent ac- quires knowledge, or receives notice, of any fact na- terial to the business in which he is employed, the principal is deemed (snbject to the exception stated in section 61) to have notice of snch fact. SAME KNOWLEDGE ACQUIRED IN OTHER TRANSAC- TION. 60. Different rules prevail in different jurisdictions as to whether the doctrine of imputed notice extends to knowledge acquired by the agent while acting in a different transaction: (a) In some jurisdictions, the rule of imputed notice is strictly confined to facts of which the agent acquires knowledge, or receives notice, in the particular trans- action in which he is then employed. Gould v. Lead Co., 9 Cush. (Mass.) 338, 57 Am. Dec. 50; Thayer y. Meeker, 86 111. 470; Howe Mach. Co. v. Clark, 15 Kan. 492; Rob- erts v. Insurance Co., 90 Wis. 210, 62 N. W. 1049 (though agent Is husband of principal). SB Graves v. Horton, 38 Minn. 66, 35 N. \V. 568; Leu v. Mayer, 82 Kan. 419, 34 Pac. 969. Ante, pp. 36, 37, 174. TIFF.P.& A 17 258 ADMISSIONS BY AGENT NOTICE TO AGENT. (Ch. 10 (b) In most jurisdictions, the rule prevails that knowledge of a fact material to the business in which the agent is employed, if actually present in his mind during the agency and while acting on the principal's behalf, although acquired by him in another transaction and while acting for another principal, is deemed (subject to the exception stated in section 61) notice to the principal, provided that it would not be a breach of the agent'* duty to his former principal to disclose the fact. SAME GENERAL EXCEPTION ADVERSE INTEREST OF AGENT. 61. The knowledge of the agent will not be imputed to the principal, when the agent is engaged in committing an independent fraudulent act upon his own. account, and the knowledge sought to be imputed is of facts -which relate to that act, and which it would be against his interest to disclose. In General. In business dealings the rights and obligations of one per- son may be affected by the knowledge or notice which he may have of the adverse rights or equities of persons other than the one with whom he deals, or of other facts which, because known to him, give a different character to his act. And, if he deals through an agent, his rights and obligations are, as a rule, equally affected by knowledge or notice of any such matter which comes to the agent in the course of the business in which he is employed. Notice to the agent is notice to the principal, if it is acquired in the very trans- action in which he is then employed. 1 It is commonly said 59-61. i Le Neve v. Le Neve, 1 Ves. Sr. 64; Sheldon v. Cox, Ambl. 624; Hiern v. Mill, 13 Ves. 120; The Distilled Spirits, 11 Wall. (U. S.) 35G, 20 L. Ed. 167; Suit v. Woodhall, 113 Mass. 391; MaComb v. Wilkinson, 83 Mich. 486, 47 N. W. 336. Where the agent of an insurance company negotiated a contract of insurance with a man who had lost an eye, the company was affected with the agent's knowledge of the fact, and could not avoid 59-61) NOTICE TO AGENT. 259 that the general rule that a principal is bound by the knowl- edge of his agent is based on the principle that it is the agent's duty to communicate the knowledge which he has respecting the subject-matter of the agency, and the pre- sumption that he will do his duty ; * but this reason, like many others assigned for the identification of principal and agent, is somewhat artificial.* Within certain limits, it is reasonable and just to impute the knowledge of the agent to the principal, and to the extent of imputing notice of what the agent learns or receives notice of in the same transaction the courts are agreed.* If the agent fails to complete the transaction, and it is taken up and completed by a second agent, notice of a material fact, which comes to the knowl- edge of the first agent while acting for the principal, will not be imputed to him.* Notice Acquired in Different Transaction. Whether the doctrine of imputed notice may be extended to knowledge acquired by the agent in a previous or dif- tbe contract on account of its nondisclosure by the assured. Bawden v. London, E. & G. Assur. Co. [1892] 2 Q. B. 534. See, generally, cases cited pp. 260, 261, * The Distilled Spirits, 11 WalL (U. S.) 356, 20 L. Ed, 167. Post P. 2G4, note 23. Otherwise it would be possible to avoid the possibility of notice by employing an agent. Sheldon v. Cor, Ambl. 624. Irvine v. Grady, 85 Tex. 120, 19 S. W. 1028; Blackburn T. Vigors. 12 App. Cas. 531. Cf. Blackburn v. Haslam, 21 Q. B. D. 144. "By some it is held that the rule rests upon the principle of the legal identity of the principal and agent By others it is placed upon the ground that when a principal has consummated a transaction in whole or in part, through an agent it is contrary to equity and good conscience that he should be permitted to avail himself of the bene- fits of his agent's participation without becoming responsible as well for his agent's knowledge as for his agent's acts. The lat- ter, in our opinion, is the more reasonable and equitable foundation for the rule, and gives it a more salutary operation. Such being, in our opinion, the proper ground, * * * we think the knowledge of Moore should not be imputed to Irvine." Per Gaines, J., in Irvine T. Grady, supra. 260 ADMISSIONS BY AGENT NOTICE TO AGENT. (Ch. 10 ferent transaction is a question upon which there is a con- flict of authority. (a) By the earlier view, which formerly prevailed in Eng- land, 6 and which still prevails in some jurisdictions in this country, 7 it was held that the rule could not be extended so far as to affect the principal by knowledge acquired by the agent in another transaction and at another time. The agent "cannot stand in the place of the principal," it was saftl, "until the relation of principal and agent is constituted, and as to all information previously acquired the principal is a mere stra'nger." 8 "Notice to him [the agent] twenty-four hours before the relation commenced is no more notice than twenty-four hours after it had ceased would be." 9 (b) At an early day the extreme technicality of the then prevailing view was recognized, and Lord Eldon declared that he should be unwilling to say "that if an attorney has notice of a transaction in the morning he shall be held in a court of equity to have forgotten it in the evening; it must in all cases depend upon the circumstances." 10 In England the view seems now to be established that knowledge of an agent acquired previous to the agency, but actually present in his mind during the agency and while acting for his principal, and material to the business delegated, will, as respects such transaction or matter, be deemed notice to the principal. 11 This view has been approved by the Supreme Court of the United States, 12 and is the view more generally prevailing. 13 Warrick v. Warrick, 3 Atk. 291; Worsley v. Earl of Scar- borough, 3 Atk. 392. See Fuller v. Bennett, 2 Hare, 294. 7 Houseman v. Association, 81 Pa. 256; Barbour v. Wienie, 116 Pa. 308, 9 Atl. 520; McCormick v. Joseph, 83 Ala. 401, 3 South. 796; Texas Loan Agency v. Taylor, 88 Tex. 47, 29 S. W. 1057. Mountford v. Scott, 3 Mad. 34, per Leach, V. C. Houseman v. Association, 81 Pa. 256. 10 Per Lord Eldon in Mountford v. Scott, 1 Turn. & R. 274. 11 Dresser v. Norwood, 17 C. B. (N. S.) 466. 12 The Distilled Spirits Case, 11 Wall. (U. S.) 356, 20 L. Ed. 167. is Falrfield Sav. Bank v. Chase, 72 Me. 226, 39 Am. Rep. 319; Constant v. University, 111 N. Y. 604, 19 N. E. 631, 2 L. R. A. 734, 59-61) NOTICE TO AGENT. 261 It must be established by the person asserting notice that the knowledge was present in the agent's mind, 14 although the burden would doubtless be sustained in any case if the in- formation had been acquired so recently as to make it in- credible that he should have forgotten it. 15 Where the agency is continuous, and is concerned with a business made up of a long series of transactions, as where the agent is the cashier of a bank, or otherwise placed in constant management and control of his principal's business, it seems that knowledge acquired or notice received by the agent during the course of the agency, although not ac- quired or received in the particular transaction which may be in question, will be imputed to the principal without proof that the agent retained it in his memory. 16 It is important to remember that knowledge acquired by the agent in an- other transaction is not, like notice acquired in the same transaction, to be imputed to the principal as matter of law; 7 Am. St. Rep. 769; Scyder v. Partridge, 138 111. 173, 29 N. E. 851, 32 Am. St. Rep. 130; Union Bank v. Campbell, 4 Humph. (Tenn.) 398; Lebanon Sav. Bank v. Hollenbeck, 29 Minn. 322, 13 N. W. 145; Wilson v. Association, 36 Minn. 112, 30 N. W. 401, 1 Am. St Rep. 659; Shafer v. Insurance Co., 53 Wis. 361, 10 N. W. 381; Chouteau v. Allen, 70 Mo. 290; Pennoyer v. Willis, 26 Or. 1, 36 Pac. 568, 46 Am. St Rep. 594; Westerman v. Evans, 1 Kan. App. 1, 41 Pac. 675; Chicago, St. P., M. & O. R. Co. v. Belliwith, 28 C. C. A. 358, 83 Fed. 437; Schwind v. Boyce, 94 Md. 510, 51 Atl. 45. i* Constant v. University, 111 N. Y. 604, 19 N. E. 631, 2 L. R. A. 734, 7 Am. St. Rep. 769; Burton v. Perry, 146 111. 71, 34 N. E. 60; Yerger v. Barz, 56 Iowa, 77, 8 N. W. 769; Equitable Securities Co. v. Sheppard, 78 Miss. 217, 28 South. 217; Gregg v. Baldwin, 9 N. D. 515, 84 N. W. 373. is The Distilled Spirits Case, 11 Wall. (U. S.) 356, 20 L. Ed. 167; Chouteau v. Allen, 70 Mo. 290; Brothers v. Bank, 84 Wis. 381, 54 N. W. 786, 36 Am. St. Rep. 932; Foote v. Bank, 17 Utah, 283, 54 Pac. 104. i It has been so held when the principal is a corporation. Holden v. Bank, 72 N. Y. 286; Cragie v. Hadley, 99 N. Y. 131, 1 N. E. 537, 52 Am. Rep. 9; Brothers v. Bank, 84 Wis. 381, 54 N. W. 786, 36 Am. St Rep. 932. 262 ADMISSIONS BY AGENT NOTICE TO AGENT. (Ch. 10 that is, irrespective of whether the agent actually had it in mind while engaged in the pending transaction. It is upon this ground that it is held, even in jurisdictions which extend the rule of imputed notice to knowledge acquired in other transactions, that the principal is not legally chargeable with such knowledge. 17 It must in each case depend upon the circumstances. One exception to this rule is to be noted. Notice will not be imputed to the principal if the fact of which the agent has knowledge was acquired by the agent confidentially as agent for another principal, under such circumstances that it would be a betrayal of professional confidence and a breach of his duty to the other principal to disclose it. 18 Notice must fie of Matter within Scope of Agency. The danger of extending the rule of imputed notice has always been recognized. It was this consideration that made the courts averse to extending it to knowledge acquired in another transaction; for, it was urged, the man of greatest practice and greatest eminence will then be most dangerous to employ. 18 The rule, even if it be so extended, subject to the limitations mentioned, applies only to knowledge of facts which are material in the business for which the agent is em- ployed. To affect the principal with notice, the matter known to the agent must be something within the scope of his agency; that is, in reference to which he has authority to act or which it is his duty in the capacity in which he is em- ployed to communicate. 20 "As it is the rule that whether IT St. Paul Fire & Marine Ins. Co. v. Parsons, 47 Minn. 352, 50 N. W. 240; Union Nat. Bank v. Insurance Co., 18 C. C. A. 203, 71 Fed. 473. is The Distilled Spirits Case, 11 Wall. (U. S.) 356, 20 L. Ed. 167; Constant v. University, 111 N. Y. 604, 19 N. E. 631, 2 L. R. A. 734, 7 Am. St. Rep. 769. i Worsley v. Earl of Scarborough, 3 Atk. 392. 20 Wylie v. Pollen, 32 L. J. Ch. 782; Tate v. Hyslop, 15 Q. B. D. 368; Trentor v. Pothen, 46 Minn. 298, 49 N. W. 129, 24 Am. St. Rep. 225; Strauch v. May, 80 Minn. 343, 83 N. W. 156; Hickman v. Green, 59-61) NOTICE TO AGENT. 263 the principal is bound by the contracts entered into by the agent depends upon the nature and extent of the agency, so does the effect upon the principal of notice to the agent depend upon the same conditions. Hence, in order to deter- mine whether the knowledge of the agent should be im- puted to the principal, it becomes of primary importance to ascertain the exact extent and scope of the agency." " General Exception Disclosure against Interest. The principal is not bound by the knowledge of his agent when it would be against the agent's interest to inform him of the facts. Therefore, if the agent is engaged in perpe- trating an independent fraud on his own account, knowledge of facts relating to the fraud will not be imputed to the prin- cipal. 22 The principal is not bound, it is said, when the char- acter and nature of the agent's knowledge make it intrinsic- 123 Mo. 165, 22 S. W. 455. 27 S. W. 440, 29 L. R. A. 39; Pennoyer v. Willis, 26 Or. 1, 36 Pac. 568, 46 Am. St. Rep. 594; American Surety Co. v. Pauly, 170 U. S. 133, 18 Sup. Ct 553, 42 L. Ed. 977; Bohanan v. Railroad Co., 70 N. H. 526, 49 Atl. 103. "Where the employment of the agent is such that in respect to the particular matter in question he really does represent the principal, the formula that the knowledge of the agent is his knowledge is cor- rect" Per Lord Halsbury in Blackburn v. Vigors, 12 App. Cas. 531, 537. 21 Trentor v. Pothen, 46 Minn. 298, 49 N. W. 129, 24 Am. St. Rep. 225. In this case it was held that when an attorney was employed to examine an abstract of title, and to give an opinion as to the suffi- ciency of the title, it was not within the scope of the agency to go beyond the record evidences of title, and that consequently the client was not charged with notice of an adverse claim not disclosed by the record, which had come to the knowledge of the attorney while en- gaged in another transaction for another client. 22 Cave v. Cave, 15 Ch. D. 639; American Surety Co. v. Pauly, 170 U. S. 133, 18 Sup. Ct. 552, 42 L. Ed. 977; Thompson-Houston Electric Co. v. Electric Co., 12 C. C. A. 643, 65 Fed. 341; Dillaway v. Butler, 135 Mass. 479; Innerarity v. Bank, 139 Mass. 332, 1 N. E. 282, 52 Am. Rep. 710; Allen v. Railroad Co., 150 Mass. 200, 22 N. E. 917, 5 L. R. A. 716, 15 Am. St. Rep. 185; National Life Ins. Co. v. Minch, 264 ADMISSIONS BY AGENT NOTICE TO AGENT. (Ch. 10 ally improbable that he will inform his principal. Whether the rule or the exception rest upon a presumption that the agent will or will not communicate the facts to his principal may be doubted. 28 Whatever the reasons for the exception, it is well established. Of course, if the agent is openly acting adversely to his principal, his knowledge will not be imputed to the latter. 24 In such case he is not acting as agent, but on his own behalf. 53 N. Y. 144; Henry v. Allen, 151 N. T. 1, 45 N. B. 355, 36 L. R. A. 658; Hickman v. Green, 123 Mo. 165, 22 S. W. 455, 27 S. W. 440, 29 L. R. A. 39; Benton v. Manufacturing Co., 73 Minn. 498, 76 N. W. 265; Cole v. Getzinger, 96 Wis. 559, 71 N. W. 75. A person cannot be held as a conspirator because his agent has knowledge of, or has participated in, a conspiracy. Benton v. Manu- facturing Co., supra. Actual malice is not to be imputed because of the knowledge of another person, however related. Reisan v. Mott, 42 Minn. 49, 43 N. W. 691, 18 Am. St. Rep. 489. 23 "it may be doubted whether the rule and the exception rest on any such reasons. It has been suggested that the true reason for the exception is that an independent fraud committed by the agent on his own account is beyond the scope of his employment, and there- fore knowledge of it, as matter of law, cannot be imputed to the prin- cipal, and the principal cannot be held responsible for it On this view, such a fraud bears some analogy to a tort willfully committed by a servant for his own purposes, and not as a means of perform- ing the business intrusted to him by his master." Per Field, 3., in Allen v. Railroad Co., 150 Mass. 200, 22 N. E. 917, 5 L. R. A. 716, 15 Am. St. Rep. 185. See, also, Henry v. Allen, 151 N. Y. 1, 45 N. E. 355, 36 L. R. A. 658. a* Third Nat Bank v. Harrison (C. C.) 10 Fed. 243; Corcoran v. Cattle Co., 151 Mass. 74, 23 N. E. 727; First Nat. Bank v. Babbidge, 160 Mass. 563, 36 N. E. 462; Frenkel v. Hudson, 82 Ala. 158, 2 South. 758, 60 Am. Rep. 736; Wickersham v. Zinc Co., 18 Kan. 481, 26 Am. Rep. 784. The fact that an agent also acts as agent for the party adversely interested in the transaction does not prevent his principal from be- ing bound by notice to or knowledge acquired by such agent where the principal consents to such adverse agency. Pine Mountain Iron & Coal Co. v. Bailey, 36 C. C. A. 229, 94 Fed. 258. 59-61) NOTICE TO AGENT. 265 Not/ice to Svbagent. If an agent has authority to employ a subagent, it seems that the same principles must apply as to the notice to be imputed to the principal as in cases of agents appointed by him directly, and that notice to the subagent of any fact material to the business which he is authorized to transact is notice to the principal. 26 This rule is frequently applied in cases of subagents appointed by insurance agents. 26 Nor would it seem to be material, so long as the agent had au- thority to appoint the subagent, whether privity of contract existed between him and the principal. 27 If the principal is bound by his act, he should also be charged by his knowl- edge. It has been held, however, by the Supreme Court of the United States, that where a creditor placed an account in the hands of a collecting agency, with instructions to col- lect, and the agency sent the claim to an attorney at the place of residence of the debtor, who persuaded him to confess judgment, the attorney was the agent of the collecting agency, and not of the creditor, and that his knowledge of the in- solvency of the debtor, who was soon after adjudged a bank- rupt, was not chargeable to the creditor, so as to render the judgment a preference. 28 The decision was placed upon the a Boyd v. Vanderkemp, 1 Barb. Ch. 273. 20 Arff v. Insurance Co., 125 N. Y. 57, 25 N. E. 1073, 10 L. R. A. 609, 21 Am. St. Rep. 721; Carpenter v. Insurance Co., 135 N. Y. 298. 31 N. E. 1015; Union Cent Life Ins. Co. v. Smith, 105 Mich. 353. 63 N. W. 438. 27 Ante, p. 123. 28 Hoover v. Wise, 91 U. S. 308, 23 L. Ed. 392: "Neither can it be doubted that, where an agent has power to employ a subagent, the acts of the subagent, or notice given to him in the transaction of the business, have the same effect as if done or received by the principal. * * * For the acts of a subagent the principal is liable, but * * * for the acts of the agent of an intermediate independent employer he is not liable. It is difficult to lay down a precise rule which will define the distinctions arising in such cases. The appli- cation of the rule is full of embarrassment. * * * Such attorney 266 ADMISSIONS BY AGENT NOTICE TO AGENT. (Ch. 10 ground that the attorney was the agent of an intermediate, independent contractor. Three members of the court dis- sented, holding that the attorney was the creditor's agent. 29 Notice to Officer of Corporation. The foregoing rules apply equally to officers and other agents of corporations. Indeed, many of ' the cases which have been here cited in their support are cases in which notice was imputed to a corporation. When the officer in question is a director, it must be remembered that the directors of a corporation have power to bind it only when acting as a board. 80 It follows that notice to a director, or knowledge acquired or possessed by him individually, and not while act- ing in his official capacity, as a member of the board, is not to be imputed to the corporation. 81 But if when so acting Is the agent of the collection agent, and not of the creditor who em- ployed that ageut." Opinion of the court, per Hunt, J. 29 "The attorney * * * acted for them [the creditors], and was compelled to use their name. * * * I am at a loss to see how their liability is changed by the fact that the notes were sent to him through a commercial or collecting agency. This agency had no interest in the notes; was not liable to the attorney for his fees. * * * The notes were not indorsed to this agency, nor could it in any manner have prevented Wise & Co. from controlling all the pro- ceedings of the attorney for collecting of the money. * * . * The effect of this decision is that a nonresident creditor, by sending his claim to a lawyer through some indirect agency, may secure all the advantages of priority and preference which the attorney can obtain of the debtor, well knowing his insolvency, without any re- sponsibility under the bankrupt law." Per Miller, J., dissenting, in Hoover v. Wise, 91 TJ. S. 308, 23 L. Ed. 392. See comments on this case in Bates v. Mortgage Co., 37 S. C. 88, 16 S. E. 883, 21 L. R. A. 340. so Clark, Corp. 488, 502. 3i Bank of United States v. Davis, 2 Hill (N. Y.) 451; Buttrick v. Railroad Co., 62 H. H. 413, 13 Am. St. Rep. 578; Farmers' & Citi- zens' Bank v. Payne, 25 Conn. 444, 68 Am. Dec. 362; Farrel Foundry v. Dart, 26 Conn. 376; New Haven, M. & W. R. Co. v. Town of Chat- ham, 42 Conn. 465. Otherwise if communicated to him as director for the purpose of 59-61) NOTICE TO AGENT. 267 he has actual knowledge of some fact material to the busi- ness in hand, the corporation will be affected, subject to the exceptions which apply to other agents, with notice. 82 Notice to a stockholder is not notice to the corporation. 83 being communicated to the board. United States Ins. Oo. 'v. Shriver, 3 Md. Ch. 381; National Bank v. Norton, 1 Hill (N. Y.) 572 (semble). 2 National Security Bank v. Cushman, 121 Mass. 490; Innerarity v. Bank, 139 Mass. 332, 1 N. B. 282, 52 Am. Rep. 710; Bank of United States v. Davis, 2 Hill (N. Y.) 451. Housatonlc Bank v. Martin, 1 Mete. (Mass.) 294. 268 LIABILITY OF PRINCIPAL TO THIRD PERSON. (Ch. 11 CHAPTER XI. LIABILITY OF PRINCIPAL TO THIRD PERSON TORTS AND CRIMES. 62. Liability for Torts Act Commanded OP Ratified. 63. Liability of Master for Tort of Servant 64. Liability of Principal for Tort of Agent In General. 65. Fraud. 66. Fraud not for Principal's Benefit Estoppel. 67. Liability for Crimes. TORTS ACT COMMANDED OR RATIFIED. 62. A person is liable for a tort committed by another pur- suant to his command, or which he has duly ratified. In General. Whoever commits a wrong is liable for it; and it is im- material whether the act be done by him in person or by another acting under his command. 1 Qui facit per alium facit per se. And if a wrong results as a natural consequence of an act commanded, the person who commanded the act is answerable not less than if he had commanded the wrong. 2 Moreover, a person may become liable by ratification for a wrongful act committed without authority on his behalf. 8 The liability of one person for wrongs committed by another, however, is not confined to cases where logically the wrong can be deemed a result of his command or authority. A person may be liable as principal for wrongs which he has not authorized because he stands to the actual wrongdoer 62. i State v. Smith, 78 Me. 260, 4 Atl. 412, 57 Am. Rep. 802 (and cases cited); Herring v. Hoppock, 15 N. Y. 409; Moir v. Hop- kins, 16 111. 313, 63 Am. Dec. 312; Maier v. Randolph, 33 Kan. 340, 6 Pac. 625. 2 Gregory v. Piper, 9 B. & C. 591; Jaggard, Torts, 245-247. Dempsey v. Chambers, 154 Mass. 330, 28 N. E. 279, 13 L. R. A. 219, 26 Am. St. Rep. 249; ante, p. 47. 63) LIABILITY OF MASTER FOR SERVANT'S TORT. 269 in a relation which makes him so answerable. Such a lia- bility seldom arises unless the relation is that of master and servant, but it arises also, though less frequently, when the relation is that of principal and agent in the narrow sense. LIABILITY OF MASTER FOR SERVANT'S TORT. 63. The master in liable for the tort of his servant committed when acting within the course of the employment and in furtherance of it. Liability of Master for Tort of Servant. The master is liable for the tort of his servant committed by him when acting within the course of the employment, and in furtherance of it, or, as it is often put, for his master's benefit, although he did not authorize, and even if he ex- pressly forbade, the wrongful act. 1 As we have seen,* the relation of master and servant exists only between persons one of whom employs the other to perform services subject to the employer's direction and control. "A master is one who not only prescribes to the workman the end of his work, but directs, or at any moment may direct, the end also, or, as it has been put, retains the power of controlling the work; and he who does work on those terms is in law a servant for whose acts, neglects, and defaults, to the extent to be specified, the master is lia- ble." 8 On the other hand, if the person employed is one who undertakes to produce a given result, and the employer does not retain the right to order and control the manner 63. i Limpus v. General Omnibus Co.. 1 H. & C. 526; Barwick v. English Joint-Stock Bank, L. R. 2 Ex. 259; and cases cited post, pp. 270-274. See Pollock (Webb's) Torts, 88-111, followed generally in this section; Jaggard, Torts, 239-280. * Ante, p. a Pollock (Webb's) Torts, 92. See Sadler v. Henlock, 4 E. & B. 570; Quarman v. Burnett, 6 M. & W. 499; Murphy v. Caralli, 3 H. & C. 462; Murray v. Currle, L. R. 6 C. P. 24: Lawrence v. Shiprnan, 39 Conn. 586; ginger Mfg. Co. v. Rahn, 132 U. S. 518, 10 Sup. Ct 175, 33 L. Ed. 440; Wood v. Cobb, 13 Allen (Mass.) 58. 270 LIABILITY OP PRINCIPAL TO THIRD PERSON. (Ch. 11 in which the work shall be done, the person is not a servant, but an independent contractor, for whose acts, neglects, and defaults in the course of the employment the employer is not ordinarily responsible. 4 The employer, nevertheless, re- mains answerable for what he has caused to be done, and if the result to be accomplished by the independent con- tractor is an unlawful act, as a trespass or a nuisance, or is likely to be attended with injurious consequences, he is not less liable than if he had acted in person ; nor can the em- ployer escape liability if in the performance of the work the contractor fails to. conform to a standard of duty which is required of the employer absolutely, by law or contract; and, if the employer fails to use due care in the selection of a competent contractor, he is, perhaps, answerable for the latter's negligence. 5 The distinction, already drawn, between a servant and an agent should be borne in mind. For the purposes of this discussion, a servant may be defined as a person employed to render to his employer, subject to his direction and con- trol, services which are not of a nature to create new legal re- lations between the employer and third persons. 6 Same Course of Employment. A servant is acting in the course of his employment when he is engaged in that which he was employed to do and is at the time about his master's business. He is not acting in the course of his employment if he is engaged in some pur- suit of his own. Not every deviation from the strict exe- cution of his duty is such an interruption of the course of employment as to suspend the master's responsibility; but, if there is a total departure from the course of the master's business, the master is no longer answerable for the servant's conduct. 7 Thus a servant employed to drive a delivery wag- * See cases cited in preceding note. B Jaggard, Torts, 231-238. Ante, p. 5. i Mitchell v. Crasweller, 13 O. B. 237; Joel v. Morison, 6 C. & P. 501; Story v. Ashton, L. R. 4 Q. B. 476; Aycrigg v. Railroad Co., 30 N. J. Law, 460- ?**> v. Hills. 45 Conn. 44, 29 Am. Rep. 635. 63) LIABILITY OF MASTER FOR SERVANT'S TORT. 271 on does not necessarily cease to be acting in the course of his employment because to suit his own convenience he takes a roundabout way; but if he starts upon an entirely new journey, whether at the beginning or end or middle of his proper duty, on his own account, he is no longer in the course of his employment. The question is one of fact. 8 "In determining whether a particular act is done in the course of the servant's employment, it is proper to in- quire whether the servant was at the time engaged in serving his master. If the act be done while the servant is at liberty from the service, and pursuing his own ends exclusively, the master is not responsible. If the servant was, at the time when the injury was inflicted, acting for himself, and as his own master, pro tempore, the master is not liable. If the servant steps aside from his master's business, for however short a time, to do an act not connected with such business, the relation of master and servant is for the time suspend- ed." * The act is done in furtherance of the employment, or for the master's benefit, if it is done with a view to the furtherance of his business. 10 Same Furtherance of Employment. The wrongful act for which the master is answerable may be due (i) to the servant's negligence, or (2) it may consist in excessive or mistaken execution of his authority, or (3) it may be a willful wrong. (i) Where the wrong results from the servant's want of care in doing an act in the course of his employment, the act Bums v. Poulson, L. R. 8 G. P. 563; Stevens v. Woodward, 6 Q. B. 318; Staples v. Schmid, 18 R. I. 224, 26 Atl. 193, 19 L. R. A. 824; Ritchie v. Waller, 63 Conn. 155, 28 Atl. 29, 27 L. R. A. 161, 38 Am. St. Rep. 361. Per Mitchell, J., in Morier v. Railway Co., 31 Minn. 351, 17 N. W. 952, 47 Am. Rep. 793. 10 Limpus v. General Omnibus Co., 1 H. & C. 526; Bowler v. O'Connell, 162 Mass. 319, 38 N. E. 498, 27 L, R. A. 173, 44 Am. St Rep. 359, and cases there cited; Illinois Cent R. Co. T. Latham, 72 Miss. 32, 16 South. 757. 272 LIABILITY OF PRINCIPAL TO THIRD PERSON. (Ch. 11 itself, being one which if properly performed would be in furtherance of the master's business, the requirement that the act must be in furtherance of the employment is ful- filled. 11 And, even if the negligence consists in mere omis- sion to do an act which it is the duty of the servant in the course of his employment to do, the master is answerable. 12 (2) Where the wrongful act consists in excessive or mis- taken execution of the servant's authority, the master is lia- ble, provided the act, if done properly or under the circum- stances erroneously supposed by the servant to exist, would have been lawful, and provided, also, the servant intended to do on behalf of his master an act which he was in fact au- thorized to do. 18 For example, where a train servant who has authority to remove disorderly passengers, under mis- apprehension that a passenger is disorderly, removes him, and in so doing uses excessive force, the master is answer- able. By giving the servant authority to remove disorderly passengers, the master necessarily gives him authority to determine whether the passenger is disorderly, and the serv- ant is hence acting. in the course of employment; and since the servant intends to do an act which he is authorized to do, notwithstanding that he uses excessive violence, he is acting in furtherance of the master's business. 14 So, where a servant, having authority for the protection of his mas- ter's interests to arrest persons attempting a theft, unlaw- fully arrests a supposed offender on his master's behalf, the 11 Burns v. Poulson, L. R. 8 C. P. 563; Sleath v. Wilson, 9 0. P. 607; Philadelphia & R. R. Co. v. Derby, 14 How. (U. S.) 468, 14 L. Ed. 502; Weed v. Railroad Co., 17 N. Y. 362, 72 Am. Dec. 474; Evans v. Davidson, 53 Md. 245, 36 Am. Rep. 400; Phelon v. Stiles, 43 Conn. 426. 12 Chapman v. Railroad Co., 33 N. Y. 369, 88 Am. Dec. 392. is Pollock (Webb's) Torts, 101; Bayley v. Manchester, S. & L. Ry., L. R. 8 C. P. 148. i* Seymour v. Greenwood, 6 H. & N. 359, 7 H. & N. 355; Higgins v. Railroad Co., 46 N. Y. 23, 7 Am. Rep. 293; Rounds v. Railroad Co., 64 N. Y. 129, 21 Am. Rep. 597. 63) LIABILITY OF MASTER FOB SERVANT'S TORT. 273 master is liable although in the performance of his supposed duty the servant mistakes the occasion for it, or exceeds his powers, or employs excessive force. 18 (3) Where the wrong committed by the servant is willful and deliberate, the master is nevertheless liable, provided the act is committed in the course of the employment and for the master's purposes, and not merely for the servant's pri- vate ends ; and this, as in other cases, although the servant's conduct is of a kind actually forbidden. 1 ' Thus, where an omnibus driver obstructed a rival omnibus by pulling across the road in front of it, and caused it to upset, it was held proper to instruct the jury that if he acted in the way of his employment, and in the supposed interest of his employer, as against a rival in the business, although needlessly, wan- tonly, and improperly, the master was answerable for his con- duct, and this notwithstanding that he had been instructed not to race with or obstruct rival omnibuses, but that if the true character of his act was that it was an act of his own, and in order to effect a purpose of his own, the master was not responsible. 17 "A master is responsible for the torts of his servant done with a view to the furtherance of the mas- ter's business, whether the same be done negligently or will- fully, but within the scope of his agency. The fact that the servant, in committing the tort, may have exceeded his actual Staples v. Schmid, 18 R. I. 224. 26 Atl. 193, 19 L. R, A. 824; Palmeri v. Railway Co., 133 N. T. 261, 30 N. E. 1001, 16 L. R. A. 136, 28 Am. St Rep. 632: Smith v. Munch, 65 Minn. 256, 68 N. W. 19. Of. Gobb v. Great Northern Ry., 3 E. & E. 672; Poulton v. London & S. W. Ry. Co., L. R. 2 Q. B. 534; Central Ry. Co. v. Brewer, 78 Md. 394, 28 Atl. 615, 27 L. R. A. 63; Mulligan v. Railway Co., 129 N. Y. 500, 29 N. E. 952, 14 L. R, A. 791, 20 Am. St. Rep. 59. is Limpus v. General Omnibus Co., 1 H. & C. 526; Seymour v. Greenwood, 6 H. & X. 359; Howe v. Newmarch, 12 Allen (Mass.) 49; Wallace v. Express Co., 134 Mass. 95, 45 Am. Rep. 301; Rounds v. Railroad Co., 64 N. Y. 129, 21 Am. Rep. 597; Texas & P. R, Co. T. Scoville, 10 C. C. A. 479, 62 Fed. 730, 27 L. R. A. 179. Limpus v. General Omnibus Co., 1 H. & C. 526. TIFF.P.& A 18 274 LIABILITY OF PRINCIPAL TO THIRD PERSON. (Ch. 11 authority, or even disobeyed his express instructions, does not alter the rule." 18 Only the general rule has been stated. A fuller statement of the master's liability would show that it is even broader under some circumstances, as where he owes a peculiar duty to the person injured, 19 or intrusts his servant with dangerous instrumentalities. 80 This rule is subject to an important ex- ception, where the person injured is a fellow servant of the tort feasor. 21 It is beyond the scope of this book to follow the rule into its manifold applications in the field of master and servant. Same Ground of Liability. It is manifest that this rule differs essentially from that governing the liability of the principal for his agent's con- tract. In that case the third person is dealing with the agent, and is bound at his peril to ascertain the extent of his au- thority, and if he fails to do so takes the risk of the con- tract not falling within the agent's powers, real or appar- ent. 22 The power of the servant to subject his master to liability for tort is not affected by any knowledge which the third person may have of the extent of the servant's author- ity. He is not dealing with the servant. It is enough to give him a right of action that he is injured by the servant's act, and that the act was committed while the latter was en- gaged in what he was employed to do and in furtherance of the employment. The reason for the master's vicarious lia- bility is not clear. 28 The commonly accepted explanation is that given by Chief Justice Shaw: "This rule is obviously founded on the great principle of social duty, that every man in the management of his own affairs, whether by himself or his agents or servants, shall so conduct them as not to is per Mitchell, J., In Smith v. Munch, 65 Minn. 256, 68 N. W. 19. i Jaggard, Torts, 261 et seq. * Jaggard, Torts, 264 et seq. 21. laggard, Torts, 1029 et seq. a 2 A.nte, p. 180 et seq. 2S Ante, p. u. Gi-66) LIABILITY OF PRINCIPAL FOR TORT OF AGENT. 275 injure another; and if he does not, and another thereby sus- tains damage, he shall answer for it." ** Whether the master is liable for exemplary damages, where the wrongful act was not authorized or ratified, is a question on which the courts disagree. Some courts have recognized the fiction of identity to the extent of holding the master liable ; " while other courts, "more impressed by the mon- strosity of the result than by the elegantia juris, have per- emptorily declared that it was absurd to punish a man who had not been to blame," " and hold that he is not liable beyond compensatory damages. 17 LIABILITY OF PRINCIPAL FOR TORT OF AGENT IN GENERAL. 64. The principal is liable for the tort of his agent (not aris- ing in a false representation) committed when acting in the course of his employment and in furtherance of it. SAME FRAUD. 65. The principal in liable for the fraud of his agent, com- mitted for the principal's benefit, when the false rep- resentation by means of which the fraud is committed I* made as an inducement to a third person in a trans- action which is -within the scope of the agent's actual authority, or which is within the scope of his apparent Farwell v. Railroad Corp., 4 Mete. (Mass.) 49, 38 Am. Dec. 339. *o Goddard v. Railway, 57 Me. 202, 2 Am. Rep. 39; Atlantic & G. W. Ry. Co. v. Dunn, 19 Ohio St 162, 2 Am. Rep. 382; New Orleans, J. & G. N. R. Co. v. Bailey, 40 Miss. 395, 452, 453; Philadelphia, W. & B. R. Co. v. Larkin, 47 Md. 155, 28 Am. Rep. 442; Wheeler & Wilson Mfg. Co. T. Boyee. 36 Kan. 350, 13 Pac. 609, 59 Am. Rep. 571. 5 Harv. L. R. 21-22. T Lake Shore & M. S. R. Co. v. Prentice, 147 U. S. 101, 13 Sup. Ct. 261, 37 L. Ed. 97: Hagan v. Railroad Co., 3 R. I. 88, 62 Am. Dec. 377; Staples v. Schmid, 18 R. I. 224, 26. Atl. 193, 19 L. R. A. 824; Cleghorn v. Railroad Co., 56 N. Y. 44, 15 Am. Rep. 375; Eviston v. Cramer, 57 Wis. 570, 15 N. W. 760; Maisenbacker v. Society Con- cordia, 71 Conn. 369, 42 Atl. 67, 71 Ain. St. Kep. 213; Warner v. Pacific Co., 113 Cal. 105, 45 Pac. 187, 54 Am. St. Rep. 327. 276 LIABILITY OP PRINCIPAL TO THIRD PERSON. (Ch. 11 authority, unless the person dealing -with the agent and injured by the fraud has notice that the trans- action or the representation is unauthorized. SAME FRAUD NOT FOR PRINCIPAL'S BENEFIT ESTOP- PEL. 66. la some jurisdictions it is held that when the principal has clothed the agent with power to do an act resting upon the existence of some extrinsic fact necessarily and peculiarly within the knowledge of the agent, of v the existence of which the execution of the power is itself a representation, a third person dealing with the agent in good faith, pursuant to the apparent power, may rely upon the representation, and the principal is estopped from denying the authority of the agent to make it, to such person's prejudice; and consequently that if the agent exercises the power when such fact does not exist, and fraudulently, the principal is an- swerable in tort to the person injured by the fraud, although it was committed by the agent for his own benefit or for the benefit of some person other than the principal. Liability of Principal for Tort of Agent in General. The rule which governs the liability of the principal for the torts of his agent is usually declared to be the same as that which governs the liability of the master for the torts of his servant; but in cases involving fraud this statement, it is believed, requires qualification. An agent, as distinguished from a servant, is a person authorized by another to act on his behalf in bringing him into legal relations with third persons. He is employed, as has already been said, 1 to represent his employer in doing acts the object of which is, and which are of a nature, to bring him into contractual relations as by making offers, representations, and promises and in doing acts the object of which is, and which are of a nature, to affect his existing contractual and other legal relations, by way of performance 64-66. i Ante, p. 7. 64r-66) LIABILITY OF PRINCIPAL FOR TORT OF AGENT. 277 and discharge of his obligations and enforcement of his rights. It is his function to create new relations, usually by inducing third persons to act, and not ordinarily to perform on his employer's behalf other acts, which can impose lia- bility upon the employer, if at all, only by reason of the neg- ligent or wrongful manner of their performance.* He may, indeed, have authority to perform an act of this character as an incident to the performance of his peculiar function, as where a solicitor or an attorney has authority, as an in- cident to the enforcement of his client's right of action, to cause an arrest or levy to be made ; * and one and the same person may be employed both as an agent and as a servant, with a consequent broadening of the field of employer's lia- bility in tort. Dut where a person is employed merely as an agent, his power of subjecting his employer to liability for torts is comparatively narrow. In most cases, an agent's tort arises only in a false representation, and hence the main question in respect to the principal's liability in tort relates to fraud. 4 Before taking up this question, it will be con- venient to consider the principal's liability for other torts. Same Employment as Agent and Servant. Where the same person is employed as a servant and an agent, the employer, as master, is, of course, liable for the acts of the servant as in other cases. Thus, if a person is employed to sell goods or to make other contracts, and is intrusted with a wagon to be used in prosecuting the busi- ness of his employer, and by the terms of the employment he is to be subject to the employer's direction and control, he is both a servant and an agent, and for his negligence in driving, while he is acting in the course of the employ- ment, the employer is responsible. 5 Illustrations of the em- ployer's liability as master, where the person employed is * Ante, p. 7. Post, p. 281. Ante, p. 8. B Singer Mfg. Co. v. Rahn, 132 U. S. 518, 10 Sup. Ct. 175, 33 L. Ed. 440; Mulvehlll v. Bates, 31 Minn. 364, 17 N. W. 959, 47 Am. Rep. 79G. See, also, Patten v. Rea, 2 C. B. (N. S.) 606. 278 LIABILITY OF PRINCIPAL TO THIRD PERSON. (Ch. 11 servant as well as agent, are frequent in cases of libel, 6 false imprisonment, 7 malicious prosecution, 8 and many other torts. 9 The wrongful act must, of course, be committed in the course of and within the scope of the employment. 10 In many of the cases here cited the master and principal was a corporation; for the rule now prevails that a corporation is liable for the torts of its servants and agents committed in the course of the employment to the same extent as a natural person, and may be liable for malicious wrongs. 11 Philadelphia, W. & B. R. Co. v. Qulgley, 21 How. (U. S.) 202, 16 L. Ed. 73; Andres v. Wells, 7 Johns. (N. Y.) 260, 5 Am. Dec. 267; Bruce v. Reed, 104 Pa. 408, 49 Am. Rep. 586; Hoboken Printing & Publishing Co. v. Kahn, 59 N. J. Law, 218, 35 Atl. 1053, 59 Am. St. Rep. 585; Bacon v. Railroad Co., 55 Mich. 224, 21 N. W. 324, 54 Am. Rep. 372; Allen v. Publishing Co., 81 Wis. 120, 50 N. W. 1093; post, P- 279. T Lynch v. Railroad Co., 90 N. Y. 77, 43 Am. Rep. 141; Palmeri v. Railway Co., 133 N. Y. 261, 30 N. E. 1001, 16 L. R. A. 136, 28 Am. St Rep. 632; Staples v. Schmid, 18 R. I. 224, 26 Atl. 193, 19 L. R. A. 824. s Reed v. Bank, 130 Mass. 443, 39 Am. Rep. 468; Krulevttz v. Railroad, 140 Mass. 573, 5 N. E. 500; Turner v. Insurance Co., 55 Mich. 236, 21 N. W. 326; Copley v. Sewing-Mach. Co., 2 Woods, 494, Fed. Cas. No. 3,213. Not liable where for a purpose personal to the agent. Larson v. Association, 71 Minn. 101, 73 N. W. 711. Where the superintendent of defendant's factory, who had gen- eral charge of the business, gave notice to other manufacturers not to employ plaintiff, who had been in the service of defendants as an apprentice under indentures erroneously supposed to be valid, the superintendent supposing that plaintiff might lawfully be reclaimed, and that others might not lawfully employ him, it was held that the acts of the superintendent were within the scope of his employment, and that defendants were liable for his wrongful act in preventing plaintiff from getting work. Blumenthal v. Shaw, 23 C. C. A. 590, 77 Fed. 954. 10 Poulton v. London & S. W. Ry. Co., L. R. 2 Q. B. 534; Abraham v. Deakin [1891] 1 Q. B. 516; Mulligan v. Railway Co., 129 N. Y. 506, 29 N. E. 952, 14 L. R. A. 791, 26 Am. St. Rep. 539. 11 Philadelphia, W. & B. R. Co. v. Quigley, 21 Wall. (U. S.) 202, 16 L. Ed. 73; Salt Lake City v. Hollister, 118 U. S. 256, 6 Sup. Ct. 64r-66) LIABILITY OF PRINCIPAL FOR TORT OF AGENT. 279 For example, where a person was employed as a ticket agent in the ticket office of the defendant railway company, subject to the general control and supervision of the com- pany's general passenger agent, and it was part of the agent's duty to post in the office notices pertaining to the business there carried on, and he posted an extract from a newspaper which was a libel upon the plaintiff, a neighboring ticket broker, indicating that he was not a safe and reliable person from whom to buy tickets, and calculated to diminish his in- come and thereby increase that of the defendant from the sale of tickets, it was held that there was evidence that the act was done by the agent in the course of his business as a servant of the defendant, and that if it was so done the de- fendant was liable. 11 So, where it is the duty, or at least within the implied authority, of a ticket agent, in the protec- tion of the company's interests, to recover the employer's property, and the agent, erroneously believing that a pur- chaser of a ticket has passed a counterfeit coin upon him, and thus obtained a ticket and good money in change, caus- es the purchaser to be arrested, the company is responsible for the false imprisonment. 18 Such cases shade into those in which it cannot be said that the relation of master and servant exists, but in which the wrongful act is committed in 1055, 30 L. Ed. 176; Goodspeed v. Bank, 22 Conn. 530, 58 Am. Dec. 439; Nims v. Boys' School, 160 Mass. 177, 35 N. E. 776, 22 L. R, A. 364, 39 Am. St Rep. 467; Clark, Corp. 193, 523; Jaggard, Torts, 167. 12 Fogg v. Railroad Corp., 148 Mass. 513, 20 N. E. 109, 12 Am. St. Rep. 583. is Palmer! v. Railway Co., 133 N. Y. 261, 30 N. E. 1001, 16 L. R. A. 136, 28 Am. St. Rep. 632. But if a ticket agent, in order to perform a supposed duty to the community, accepts money which he suspects to be counterfeit, and then causes the arrest, he is not acting in the course of his employ- ment, and the company is not answerable. Mulligan v. Railway Co.. 129 N. Y. 506, 29 N. E. 952, 14 L. R. A. 791, 26 Am. St Rep. 539. See, also, Allen v. L. & S. W. Ry., L. R. 6 Q. B. 65; Abraham v. Deakin [1891] 1 Q. B. 516; Baltimore & Y. Turnpike Road v. Green, 86 Md. 161, 37 Atl. 642. 280 LIABILITY OP PRINCIPAL TO THIRD PERSON. (Ch. 11 the performance, or attempted performance, of an act specif- ically commanded, or which is within the express or implied authority of the agent as an incident to the enforcement of the principal's rights against the person with whom the agent is authorized to deal. 14 Same Wrongful Performance of Act withm Agent's Au- thority. As has been stated, the liability of the employer for an act which he has commanded does not depend upon the peculiar relation of master and servant. Such liability exists even when the act is brought about by the employment of an inde- pendent contractor. 15 No doubt the distinction between a servant and an independent contractor is somewhat arbitrary, as well as vague, resting on "no more profound or logical reason" than the practical necessity of placing a limit some- where upon the identification of employer and employed. 18 For whatever reason it may be, the law declares that in act- ing in the course of his employment the contractor does not represent -his employer, and that a servant does represent him. But let it once be established that the person employed does act in what the law has seen fit to regard as a repre- sentative capacity, the rule determining the liability of the employer for his torts is, in all cases not involving fraud, the same. This holds true even when the authority is merely a specific command to do a single act. For example, if a person, being commanded by another to go to a certain place and get lum- ber belonging to him, by mistake takes lumber belonging to another, the person who gave the command is liable for the i* Caswell v. Cross, 120 Mass. 545. Evidence that the defendant in an action for malicious prosecution employed a person to search for property he had lost, and to take all legal steps necessary for its recovery, and that such person charged plaintiff with larceny of the property, and caused his arrest, does not sustain a verdict for plaintiff. Murrey v. Kelso, 10 Wash. 47, 38 Pac. 879. IB Ante, p. 270. 16 See 5 Harv. L. R. 14-16. 64-66) LIABILITY OF PRINCIPAL FOR TORT OF AGENT. 281 trespass, 17 and he would also be liable if in taking the right lumber the person used unlawful force. Here the scope of the employment is, of course, very narrow. And so when the relation is that of principal and agent in the narrow sense, if, in the course of the employment and in furtherance of it, in performing or attempting to per- form some act which is within the agent's authority as inci- dent to his authority to create a new relation, he commits a tort, the principal is answerable. Thus, if a solicitor or at- torney at law, who has authority as such in the conduct of a suit to cause the defendant to be arrested or his property to be taken on execution, does so when the particular cir- cumstances do not justify the arrest 18 or the seizure, 19 the " May v. Bliss, 22 Vt. 477. See, also, Andrus v. Howard. 36 Vt. 248, 84 Am. Dec. 680; Moir v. Hopkins, 16 111. 313, 63 Am. Dec. 312; Maier v. Randolph, 33 Kan. 340, 6 Pac. 625. is Collett v. Foster, 2 H. & N. 356. In this case, judgment having been entered up against plaintiff, on a warrant of attorney, for 60, given to secure a debt payable by in- stallments of which less than 20 was due, defendant's attorney caused plaintiff to be arrested tinder a ca. sa., indorsed to levy 21 10s. Held, that defendant was liable in trespass for the act of the attorney in improperly causing plaintiff to be arrested. "I think," said Pollock, C. B., "there is a great distinction between employing an attorney who represents the parties in a suit and employing a contractor to do work, such as building a house. In the latter case the employer is not liable for the acts of the contractor * * *; but * * * a person is liable for the acts of his attorney in the conduct of a suit at law brought under his authority. He gives to the attorney the right to represent him, and he is responsible for whatever the attorney does." See, also, Bates v. Pilling, 6 B. & C. 38. i Foster v. Wiley, 27 Mich. 245, 15 Am. Rep. 185, holding a. client liable in trespass for taking property on execution issued by a jus- tice of the peace at the instance of the attorney after an appeal was perfected. A client who puts his claim in the hands of an attorney for suit, said Cooley, J., is presumed to authorize such action as the latter in his superior knowledge of the law may decide to be legal; and whatever adverse proceedings the attorney may take are to be considered, so far as affects the defendant in the suit, as approved 282 LIABILITY OF PRINCIPAL TO THIRD PERSON. (Ch. 11 client is liable for the trespass. The scope of the employ- ment of such an agent also is very narrow. For example, where a solicitor, by an indorsement on a writ of execution directing the sheriff to levy on the goods of the judgment debtor, misled the sheriff by giving the address of the debtor's father, whose goods were, in consequence, wrong- fully seized by the sheriff, it was held that the client was lia- ble ; it being part of the duty of the solicitor, in the or- dinary course of the employment, to indorse the writ. 20 But where a solicitor on issuing a writ verbally directed the sheriff to seize particular goods, which were not the debtor's property, it was held that the client was not liable, since it was not within the scope of his implied authority as solicitor to direct the sheriff to seize particular goods. 21 Of course, if a third person, dealing with the agent within the scope of his authority, intrusts to him property which the agent misappropriates 22 or negligently injures, 23 the prin- cipal is answerable for the loss or injury. Liability for Fraud In General. A false representation may be the inducement to a con- tract or it may be part of a contract, and thus give rise to a right of action for breach of the contract. A false representa- tion may also create an estoppel. And, finally, a false repre- sentation, if fraudulent, may give a right to rescind a contract In advance by the client, and his acts, even if they prove unwar- ranted in law, although as to trespasses on third parties the rule is different. Cf. Howell v. Caryl, 50 Mo. App. 444; Kirksey v. Jones, 7 Ala. 622. 20 Morris v. Salberg, 22 Q. B. D. 614. "If he is his agent to do the particular act, the client must stand the consequences if he acts inadvertently or ignorantly." Jarmain v. Hooper, 6 M. & G. 827, per Tindal, C. J. 21 Smith v. Keal, 9 Q. B. D. 340. See, also, Averill v. Williams, 4 Denio (N. Y.) 295, 47 Am. Dec. 252; Welsh v. Cochran, 63 N. Y. 181, 20 Am. Rep. 519. 22 Thompson v. Bell, 10 Ex. 10. " Huntley v. Mathias, 90 N. C. 101, 47 Am. Rep. 516. 64^66) LIABILITY OF PRINCIPAL FOR TORT OF AGENT. 283 or a right of action in tort for deceit. An innocent misrepre- sentation, which is not a term of the contract, has ordinarily no effect upon it, though in certain classes of contracts it gives rise to a right of rescission, and it may sometimes be ground for granting or refusing equitable relief. Whenever, how- ever, a party to a contract has been induced to enter into it by the fraud of the other party, the contract is voidable, at his option. 24 "Fraud," as the word is here used, is a false representation of a material fact, made with a knowledge of its falsity, or in reckless disregard of whether it is true or false, with the intention that it shall be acted upon by the complaining party, and actually inducing him to act upon it to his injury. 86 The same state of facts which is ground for an avoidance of the contract also gives rise to an action at common law for deceit, in which the defrauded party may re- cover such damages as he has suffered by reason of the false representation. It is not essential, however, that a repre- sentation, in order to give ground for an action for deceit, be made directly to the injured party ; 26 nor is it essential that it be made as an inducement to the injured party to con- tract with the person making the representation ; it is enough if it be made as an inducement to act, and he so acts in conse- quence, and thereby suffers damage. 27 Same Deceit. "With respect to the question whether a principal is an- swerable for the act of his agent in the course of his master's business and for his master's benefit," said Willes, J., in the English case of Barwick v. English Joint Stock Bank, 28 "no * Clark, Contr. 308 et seq. . 25 Clark, Contr. 324 et seq.; laggard, Torts, 558 et seq.; Tiffany, Sales, 111 et seq. 26 Barry v. Croskey, 2 Johns. & H. 1, 22; Langrldge v. Levy, 2 M. & W. 519; Wells v. Cook, 16 Ohio St. 67, 88 Am. Dec. 436; Bank of Montreal v. Thayer (C. C.) 7 Fed. 623. Langridge v. Levy, 2 M. & W. 519. 28 L. R. 2 Ex. 259. In this case plaintiff, who had been In the habit of supplying D., a customer of defendant bank, with oats on 284 LIABILITY OP PRINCIPAL TO THIRD PERSON. v Ch. 11 sensible distinction can be drawn between the case of fraud and the case of any other wrong. The general rule is that the master is answerable for every such wrong of the servant o r agent as is committed in the course of the service and for the master's benefit. * * * It may be said * * * that the master has not authorized the act. It is true, he has not authorized the particular act, but he has put the agent in his place to do that class of acts, and he must be answerable for the manner in which the agent has conducted himself in doing the business which it was the act of the master to place him in." This statement of the rule governing the principal's lia- bility for fraud calls for explanation. 29 The rule declares credit on a guaranty of defendant, refused to continue to do so ex- cept on a better guaranty. Defendant's manager accordingly prom- ised in writing that if plaintiff would supply to D. oats which were needed by him to fulfill a government contract, the bank would honor D.'s check in plaintiff's favor in payment of the same, on receipt of the money from the government in payment under the contract, "in priority to any other payment except to this bank." D. then owed the bank 12.000, which fact was not communicated to plaintiff, who supplied oats to the value of 1,227. D. received 2,- 676 from the government, paid it into the bank, and drew a check in plaintiff's favor for the amount of the oats, which was dishonored, the bank claiming to retain the whole 2,676 in payment of D.'s debt. It was held that there was evidence for the jury that the manager knew and intended that the guaranty would be unavailing, and fraudulently concealed the fact that would make it so, and that the bank would be liable for such fraud. See, also, Mackay v. Com- mercial Bank, L. R. 5 P. C. 394; Swire v. Francis, 3 App. Gas. 106; Houldsworth v. City of Glasgow Bank, 5 App. Gas. 317. Cf. Addie v. Western Bank, L. R. 1 Sc. & D. 145, 158, 166, 167. 29 "The principle which governs such cases as these (Barwick v. English Joint-Stock Bank, L. R. 2 Ex. 259, and the cases following it) is not that the master is liable for the acts of his servant It is the liability of the principal for the acts of his agent. * * * It seems to me. then, that Barwick v. English Joint-Stock Bank cannot be supported on the reasons given. * * * I think that any person who authorizes another to act for him in the making of any contract undertakes for the absence of fraud in that person in the execution 64-66) LIABILITY OP PRINCIPAL FOR TORT OF AGENT. 285 that the principal is liable for the wrongs of his agent or servant, committed in the "course of the service," or, as is commonly said, in the course of the employment. It is to be borne in mind, however, that when the wrong is fraud the person injured by the representation is dealing with the agent and by him induced to act, and is not merely acted upon; and that, as against third persons who deal with him without notice of limitations upon his authority, he has the powers usually confided to an agent of that character, which may exceed the authority actually conferred, while as against persons dealing with him with such notice his powers do not exceed his actual authority. 30 The rule, as applied to fraud, must be interpreted in the light of these considerations. The agent may perhaps be said to be acting in the course of his employment, although he exceeds his actual authority, so long as he does not exceed the usual powers of an agent of that character; but, although he be so acting, the third per- son dealing with 'him and injured by his fraud can thereby acquire no rights against the principal if he has notice that the transaction in which the representation is made, or the representation itself, is in fact unauthorized. On the whole, it seems to place the matter in a clearer light to discard the term "course of employment," and to substitute "scope of authority." The principal is liable for the fraud of his agent, committed for his benefit, in a transaction which is within the scope of the agent's actual authority, or which is within the scope of his apparent authority, unless the person dealing with him and injured by his fraud has notice that the transac- tion or the representation is unauthorized. Of course, in any case, if the third person knows that the representation is not true, he is not injured, and no fraud is committed; but of the authority given, as much as he contracts for Its absence in himself when he makes the contract." Weir v. Bell, 3 Ex. D. 238, 244, per Bramwell, L. J. See, also, McNeile v. Cridland, 168 Pa. 16, 31 Atl. 939. o Ante, p. 180 et seq. See Huffcut, Ag. (2d Ed.) 10 et seq., 193 et seq. 286 LIABILITY OF PRINCIPAL TO THIRD PERSON. (Ch. 11 this is aside from any question of agency. Second, the rule as stated declares that the fraud must be committed for the benefit of the principal. How far this is subject to qualifica- tion will be considered later. 81 It follows that if, in furtherance of the business committed to him, the agent commits a fraud by making a false repre- sentation which belongs to the class of representations that, as against the person dealing with him, he must be deemed to have authority to make, the principal is answerable. 82 Whether the principal is answerable, if the representation is made as an inducement to an authorized contract, but does not belong to a class of representations which he would be deemed to have authority to make as a term of the contract as where an agent authorized to sell makes a representation which would not be binding as a warranty because such a warranty would be unusual is a question upon which there has been difference of opinion. 83 In many cases where the i Post, p. 288. 2 Barwick v. English Joint-Stock Bank, L. R. 2 Ex. 259; Mayer v. Dean, 115 N. Y. 556, 22 N. E. 201, 5 L. R. A. 540; Griswold v. Gebbie, 126 Pa. 353, 17 Atl. 673, 12 Am. St. Rep. 878. as Udell v. Atherton, 7 H. & N. 172. In this case one employed by defendants to sell timber on com- mission sold plaintiff a defective mahogany log, which he fraudu- lently represented to be sound, defendants being unaware of the defect or of the representation. In an action for deceit the court directed a nonsuit, and the court in bane was equally divided whether the ruling should be sustained. In Barwick v. English Joint-Stock Bank, L. R. 2 Ex. 259, Willes, J., disclaiming to over- rule the opinions of Bramwell and Martin, BB., in Udell v. Atherton, who upheld the nonsuit, said: "It seems pretty clear that the di- vision of opinion * * * arose, not so much upon the question whether the principal is answerable for the act of an agent in the course of his business a question which was settled as early as Lord Holt's time, in Hern v. Nichols, 1 Salk. 289 but in applying that principle to the peculiar facts of the case; the act which was relied upon there as constituting a liability in the sellers having been an act adopted by them under peculiar circumstances, and the au- thor of that act not being their general agent in business, as the manager of a bank is." 64-66) LIABILITY OF PRINCIPAL FOR TORT OF AGENT. 287 principal is held liable for the fraud of his agent made as an inducement to a sale, the question does not arise because the representation is of a class which the agent has apparent authority to make. An agent authorized to effect a sale of property "must be presumed to possess authority to make such representations in regard to its quality and condition as usually accompany such transactions." 84 The rule, however, in this country at least, is usually stated in broader terms, and it is declared that it is sufficient to charge the principal for the agent's fraud that the agent is acting in the business which he is authorized to transact, and that the represen- tation is made in that transaction and as an inducement to the other party to act. Thus, where an agent is authorized to sell, his false representation concerning the property, made as an inducement to the purchaser, binds the seller, who is liable to the purchaser in an action of tort for deceit. 85 * Mayer v. Dean, 115 N. Y. 556, 22 N. E. 261, 5 L. R. A. 540, per Ruger, C. J. In this case it was held that, while a written contract for sale of goods by sample cannot be shown by oral evidence to be made with warranty wheii none is set out in the contract, the state- ments of the broker falsely recommending the quality are admissible to prove fraud. See, also, Griswold v. Gebbie, 126 Pa. 353, 17 Atl. 673, 12 Am. St. Rep. 878. ss Jeffrey v. Bigelow, 13 Wend. (N. Y.) 518, 28 Am. Dec. 476; Locke v. Stearns, 1 Mete. (Mass.) 560, 35 Am. Dec. 382; White v. Sawyer, 16 Gray (Mass.) 586; Haskell v. Starbird, 152 Mass. 117. 25 N. E. 14, 23 Am. St. Rep. 809; Rhoda v. Annis, 75 Me. 17, 46 Am. Rep. 354; Peebles v. Guano Co., 77 N. C. 233, 24 Am. Rep. 447; Wolfe v. Pugh, 101 Ind. 293; Busch r. Wilcox, 82 Mich. 315, 46 N. W. 940; Gunther v. Ullrich, 82 Wis. 220, 52 N. W. 88, 33 Am. St. Rep. 32; Hopkins v. Insurance Co^ 57 Iowa, 203, 10 N. W. 605, 42 Am. Rep. 41; Lynch v. Trust Co. (C. C.) IS Fed. 486. The representation must be made in the particular transaction. Gate v. Blodgett, 70 N. H. 316, 48 Atl. 281. Contra (holding that an action for deceit will not lie against an Innocent principal): Kennedy v. McKay, 43 N. J. Law, 288, 39 Am. Rep. 581; State v. Fredericks, 47 N. J. Law, 469, 1 Atl. 470; Freyer v. McCord, 165 Pa. 539, 30 Atl. 1024; Keefo v. Sholl, 181 Pa. 90, 87 Atl. 116. So far as Udell v. Atherton, 7 H. & N. 172, and Western Bank 288 LIABILITY OP PRINCIPAL TO THIRD PERSON. (Ch. 11 "While the principal may not have authorized the particular act [the representation], he has put the agent in his place to make the sale, and must be responsible for the manner in which he has conducted himself in doing the business which the principal intrusted to him." 8e "Having given such au- thority, the principal is responsible for the fraudulent as well as the fair means used by the agent, if they are in the line of accomplishing the object of the agency." 8T If when the representation is made the agent is not engaged in a transaction within the scope of his authority, the principal is not answerable for it. 88 The principal cannot, however, reap the fruit of his agent's fraud and escape liability by de- nying the agent's authority; he cannot retain the benefits derived from the fraudulent conduct of the agent without being charged with the instrumentalities used to accomplish the purpose. 38 Fraud not for Principals Benefit English Rule. In England it is clearly established that to make the prin- cipal liable the fraud must be committed by the agent not v. Addie, L. R. 1 Sc. & D. Gas. 145, support this doctrine, they are opposed to the later English decisions. 86Haskell v. Starbird, 152 Mass. 117, 25 N. E. 14, 23 Am. St. Rep. 809, per Devens, J. The court also said: "The defendant con- tends that Rockwell was a special agent only, and that, as his au- thority extended only to the sale of this single tract of land, the defendant is not responsible for any representations Rockwell might have made, which he did not authorize. * * * There is no dis- tinction in the matter of responsibility for the fraud of an agent au- thorized to do business generally and of an agent employed to con- duct a single transaction, if in either case he Is acting in the busi- ness for which he was employed by the principal, and had full au- thority to complete the transaction." 7 Wolfe v. Pugh, 101 Ind. 293. ss Lamm v. Association, 49 Md. 233. 33 Am. Rep. 246; Second Nat. Bank v. Howe, 40 Minn. 390, 42 N. W. 200, 12 Am. St. Rep. 744; Browning v. Hlnkle, 48 Minu. 544, 51 N. W. 605, 31 Am. St. Rep. 691. 39 Bennett v. Judson, 21 N. Y. 238; Krumm v. Beach, 96 N. Y. 398; Sunbury Fire Ins. Co. v. Humble, 100 Pa. 495; Busch v. Wil- 64^66) LIABILITY OF PRINCIPAL FOR TORT OF AGENT. 289 merely in the course of the employment, but must be for the benefit of the principal; that is, in furtherance of his business. 40 Thus, where the secretary of the defendant com- pany had, in conjunction with another, fraudulently issued certificates for debenture stock in excess of the amount the company was authorized to issue, and the plaintiffs, who had been applied to by customers for a loan on the security of transfers of some of this stock, were informed by the secre- tary, who was held out as such to answer such inquiries, that the transfers were valid, and that the stock which they pro- posed to transfer existed, and the plaintiffs accordingly lost their security, it was held in an action to recover damages for fraudulent misrepresentation that, the fraud being committed by the secretary for his own purposes and not for the benefit of the company, the defendant was not liable. "The secre- tary was held out by the defendants," said Lord Esher, "as cox, 82 Mich. 336, 47 N. W. 328, 21 Am. St Rep. 563; Ripley v. Case, 86 Mich. 261, 49 S. W. 46; Albitz v. Railway Co., 40 Minn. 476, 42 X. W. 394; Leavitt v. SJzer, 35 Neb. 80, 52 N. W. 832; Con- tinental Ins. Co. v. Insurance Co., 2 C. C. A. 535, 51 Fed. 884. Cf. Smith v. Tracy, 36 N. Y. 79; Baldwin v. Burrows, 47 N. Y. 199; ante, p. 65 et seq. A joint owner of real estate, who consents to the listing thereof by his co-owner with a real-estate agent for sale, receives part of the consideration, and never repudiates the sale made by the agents after discovering that they were guilty of fraud, is estopped to deny connection with the fraud, but will be held liable only to the extent of the benefit actually received. Alger v. Anderson (C. C.) 78 Fed. 729. Treasurer" it was held to be the note of the society. Here the principal was named, and the promise was by the signer "as treasurer of" the society, and by him or his "successors," which could not be if the note were his personal act, and the designation of his office was repeated after his signa- ture. 20 So a note which read, "We, the undersigned, committee for the first school district, promise in behalf of said school district," signed by the individual members of the committee, with the word "Committee" opposite their names, was held not to be the note of the members.* 1 So a note which read, "We promise to pay on account of" the A. Company, signed "B., C., D., Directors," and counter- signed "E., Secretary," was held to be the note of the Com- pany. 22 So a note which read, "We, as trustees of the A. Company, promise," signed "B., C., D., Trustees of the A. Company," was held to be the note of the company. 28 It is *o Barlow v. Society, 8 Allen (Mass.) 460. *i Andrews v. Estes, 11 Me. 267, 26 Am. Dec. 521. See, also. Aggs T. Nicholson, 1 H. & N. 165. a Lindus v. Melrose, 2 H. & N. 293. But see Allan v. Miller, 22 L. T. 825. In Frankland v. Johnson, 147 111. 520. 35 N. E. 480, 37 Am. St. Rep. 234, it was held that a note whereby "the Western Seaman's Friend Society agrees to pay," signed "B., Gen. Supt.," was so ambiguous that whether it was the obligation of the society or of B. was a question of fact 23 Blanchard v. Kaull, 44 Cal. 440. But see Powers v. Briggs, 79 111. 493, 22 Am. Rep. 175. Cf. New Market Sav. Bank v. Gillett, 100 111. 254, 39 Am. Rep. 39. In Mann y. Chandler, 9 Mass. 335, a note expressed to be made by 344 LIABILITY OF AGENT TO THIRD PERSON. (Ch. 13 to be noticed that in these cases the signatures were accom- panied with the official designation of the signers, without which the opposite conclusion might have been reached. 24 In such cases, however, where the rule admitting extrinsic evidence in case of ambiguity prevails, the principal might be charged by proof that he was understood by the parties to be the real principal. Same Indications on Face of Paper Headings. Where the agent draws a bill of exchange and signs it as "agent," sufficient indication that he is acting as agent may appear by a direction to charge it to a person named therein. Thus a draft not naming the principal otherwise than by con- cluding, "and charge the same to the A. Company," signed "B., Agent," was held the draft of the company. 25 And, although the principal is not otherwise named, it has been held that when the name of a company or corporation is printed at the top or in the margin of the draft, and the draft is signed as "agent," the principal, as well as the fact that it is drawn on his behalf, is sufficiently disclosed, and the principal is bound. Thus a check directing payment to "I, the subscriber, treasurer of the A. Turnpike Corporation," and signed "B., Treasurer of A. Turnpike Corporation," was held the note of the corporation. In Barlow v. Society, 8 Allen (Mass.) 460, it is said that this case must be maintained, if at all, upon the ground that the treasurer of a corporation is by virtue of his office the hand by which the corporation conducts its pecuniary affairs, assimilating his note to that of a cashier of a bank. z* Fogg v. Virgin, 19 Me. 352, 36 Am. Dec. 757; Pack v. White, 78 Ky. 243; McKensey v. Edwards, 88 Ky. 272, 10 S. W. 815, 3 L. R. A. 397, 21 Am. St. Rep. 339. The mere insertion of "for" or "on behalf or* the principal In the body of the note does not make it his contract, if signed by the name of the agent without addition. Bradlee v. Manufactory, 16 Pick. (Mass.) 347; Morell v. Codding, 4 Allen (Mass.) 403. 2B Tripp v. Paper Co., 13 Pick. (Mass.) 291. Otherwise if signed by the agent without addition. Mayhew v. Prince, 11 Mass. 54; Bank of British North America v. Hooper, 5 Gray (Mass.) 567, 66 Am. Dec. 390. &4-S5) PARTIES TO NEGOTIABLE INSTRUMENT. 345 C., and signed "B., Treasurer," with the words "JEtna Mills" printed on the margin, was held to bind the corporation, and not B. 26 And a similar holding was made where a draft was signed "F. and C.," but at the top of the paper was print- ed "New England Agency of the Pennsylvania Fire Insur- ance Company," and in the margin "F. & C., General Agents for the New England States." JT So where a draft had the words "Office of the A. Company, Hancock, Michigan," printed at the top, and was signed "B., Agent," it was held that he could not be personally charged. 28 Such cases can hardly be reconciled with other cases of notes with the name of a corporation printed at the top or in the margin, and signed by the maker as "Agent," which have nevertheless been held to be the personal obligation of the signer. Thus, a note in form, "We promise to pay," headed "Midland Coun- ties Building Society, No. 3," and signed "B., C., Trustees, D., Secretary," was held to bind the signers personally. "Midland Counties Building Society, No. 3," it was said, "may be the name of the place from which the note is dated ; the promise is not qualified." " And where a note was in form, "We promise to pay," and signed "B., Pres't., C., Treas.," with the words "A. Co." printed across the end, it was held the personal obligation of the signers. 80 * Carpenter v. Farnsworth, 106 Mass. 561, 8 Am. Rep. 360. A bill headed "Office of the A. Co.," and concluding charge same to account of "A. Co.," and signed "B., Pres't, C., Sec'y.," is the bill of the company. Hitchcock v. Buchanan, 105 U. S. 416, 26 L. Ed. 1078. See, also, Mechanics' Bank v. Bank, 5 Wheat (U. S.]( 326, 5 L. Ed. 100; Fuller v. Hooper, 3 Gray (Mass.) 334. *i Chipman v. Foster, 119 Mass. 189. as Slawson v. Loring, 5 Allen (Mass.) 340, 343, 81 Am. Dec. 750, 29 Price v. Taylor, 5 H. & N. 540. Contra, Lacy v. Lumber Co., 43 Iowa, 510. A note was signed "B., President" and above the note ap- peared the name of a corporation. Held, that the presumption that the note was the individual obligation of the signer was not conclusive, and parol evidence was admissible to show that it was the note of the corporation. o Casco Nat Bank v. Clark, 139 N. Y. 307, 34 N. E. 908, 36 Am. 346 LIABILITY OF AGENT TO THIRD PERSON. (Oh. 13 Same Signature l>y Corporation. Where there is nothing in the body of the Instrument to indicate on whose behalf it is made, but it bears the signature of a corporation, followed by the name of a person describing himself as an officer, it is generally held that the corporation, and not the agent, is bound. 31 Thus where a note read, "We promise to pay," and was signed "Warrick Glass Works," and thereunder appeared the name of "J. Price Warrick, Pres.," it was held to be the note of the corporation. "The name of a corporation, so placed," said the court, "raises the implication of a corporate liability. * * * The name of an officer of such corporation, to which name the official title is appended, but beneath the corporate name, implies the relation of principal and agent. It means that, inasmuch as every corporate act must be done by 'the hand of a natural person, this person is the agent by whose hand the corpora- St. Rep. 705. "It was competent for Its officers," said Gray, J., "to obligate themselves personally * * *; and, apparently to the world, they did so by the language of the note, which the mere use of a blank form of note having upon its margin the name of their company was insufficient to negative." This was an action by a pur- chaser of the note, and it was conceded that, if it had had knowl- edge that the note was between the parties intended to be a cor- porate obligation, the signers could not be charged; but it was held that it was not so charged by the manner of the execution. To the same effect, First Nat. Bank v. Wallis, 150 N. Y. 455, 44 N. B. 1038, affirming 80 Hun, 435, 30 N. Y. Supp. 83. Of. Second Nat Bank v. Steele Co., 155 Ind. 581, 58 N. E. 833. i Reeve v. Bank, 54 N. J. Law. 208, 23 Atl. 853, 16 L. R. A. 143, 33 Am. St. Rep. 675; Liebscher v. Kraus, 74 Wis. 387, 43 N. W. 166, 5 L. R. A. 496, 17 Am. St. Rep. 171. See, also, Draper v. Heating Co., 5 Allen (Mass.) 338; Castle v. Foundry Co., 72 Me. 167; Bean v. Mining Co., 66 Cal. 451, 6 Pac. 86, 56 Am. Rep. 106 (parol evidence admissible). An indorsement, "Estate of A., B., Executor," does not bind the executor personally, though the estate may not be bound. Grafton Nat. Bank v. Wing, 172 Mass. 513, 52 N. E. 1067, 43 L. R. A. 831, 70 Am. St Rep. 303. 84-85) PARTIES TO NEGOTIABLE INSTRUMENT. 347 tion did the particular act." " The use of the word "we" raises no implication that the note is the joint note of the cor- poration and the officer, the word "we" being often used by corporations. The cases are, however, conflicting. Such a note has been held the joint note of the corporation and of the officer. 38 Where, in lieu of a written signature, the seal of the corporation containing its name is affixed in the prop- er place, the effect is the same as if the name had been signed. 84 When Agent Bov/nd. When an agent makes a negotiable instrument and signs it with his own name, although with the addition of the word "Agent," even of a named person, he is nevertheless personally bound thereby, unless it otherwise appears from the instrument that he acts as agent and intends to bind the principal. "Is it not a universal rule," said Lord Ellen- borough, "that a man who puts his name to a bill of ex- change thereby makes himself personally liable, unless he states upon the face of the bill that he subscribes it for an- other, or by procuration of another, which are words of ex- clusion? Unless he says plainly, 'I am the mere scribe,' he becomes liable." 80 The agent is therefore bound, when there are not sufficient words of exclusion elsewhere in the instrument, if he signs "B., Agent," "B., Trustee," " "B., Reeve v. Bank, 54 N. J. Law, 208, 23 Ati. 853, 16 L. R. A. 143, 33 Am. St. Rep. 675. as Mathews v. Mattress Co., 87 Iowa, 246, 54 N. W. 225, 19 L. R. A. 676; Heffner v. Brownell, 70 Iowa, 591, 31 N. W. 947. 84 Miller v. Roach, 150 Mass. 140, 22 N. E. 634. 6 L. R. A. 71; Means v. Swormstedt, 32 Ind. 87, 2 Am. Rep. 330; Scanlan v. Keith, 102 111. 634, 40 Am. Rep. 624; Guthrie v. Imbrie, 12 Or. 182, 6 Pac. 664, 53 Am. Rep. 331. SB Leadbitter v. Farrow, 5 M. & S. 345. Fentz v. Stanton, 10 Wend. (N. Y.) 271, 25 Am. Dec. 558; Cort- land Wagon Co. v. Lynch, 82 Hun, 173, 31 N. Y. Supp. 325; Manu- 3t Trice v. Taylor, 5 H. & N. 540. 348 LIABILITY OF AGENT TO THIRD PERSON. (Ch. 13 Agent of A.," 88 "B., President [or Treasurer]," 39 "B., President [or Treasurer, or Trustee, etc.] of the A. Com- pany." * Thus, where a bill read, "Pay to the order of C., * * * and charge the same to the account of [signed] B. & Co., Agts. A. Ins. Co.," and was addressed to the "A. Insurance Co.," it was held that B. & Co. were bound. "A mere description of the general relation or office which the person signing the paper holds to another person or to a corporation," said the court, "without indicating that the particular signature is made in the execution of the office and agency, is not sufficient to charge the principal or to exempt the agent from liability." 41 This is subject, of course, to the qualification that in many jurisdictions the liability of the agent so signing is, except as against a purchaser for value without notice, only prim a facie, and that extrinsic evidence is admissible to show that the intention of the parties was that the principal should be so bound. 42 facturers' & Traders' Bank v. Love, 13 App. Div. 561, 43 N. T. Supp. 812;. Williams v. Robbins, 16 Gray (Mass.) 77, 77 Am. Dec. 396; Anderton v. Shoup, 17 Ohio St. 125; Ohio Nat. Bank v. Cook, 38 Ohio St 442; Stiuson v. Lee, 68 Miss. 113, 8 South. 272, 9 L. R. A. 830, 24 Am. St. Rep. 257; Sparks v. Transfer Co., 104 Mo. 531, 15 S. W. 417, 12 L. R. A. 714, 24 Am. St. Rep. 351 (and cases cited). s Tucker Mfg. Co. v. Fairbanks, 98 Mass. 101. Hobson v. Hassett, 76 Cal. 203, 18 Pac. 320, 9 Am. St. Rep. 193. o Fiske v. Eldridge, 12 Gray (Mass.) 474; Haverill Mut. Fire Ins. Co. v. Newhall, 1 Allen (Mass.) 130; Seaver v. Coburn, 10 Gush. (Mass.) 324; Davis v. England, 141 Mass. 587, 6 N. E. 731; Sturdi- vant v. Hull, 59 Me. 172, 8 Am. Rep. 409; Rendell v. Harriman, 75 Me. 497, 46 Am. Rep. 421; Barker v. Insurance Co., 3 Wend, (N. Y.) 98, 20 Am. Dec. 664; Hills v. Bannister, 8 Cow. (N. Y.) 31; Ohio Nat Bank v. Cook, 38 Ohio St. 442; Tilden v. Barnard, 43 Mich. 376, 5 N. W. 420, 38 Am. Rep. 197; Fowler v. Atkinson, 6 Minn. 578 (Gil. 412); Burlingame v. Brewster, 79 111. 515, 22 Am. Rep. 177; Coburn v. Lodge, 71 Iowa, 581, 32 N. W. 533. 41 Tucker Mfg. Co. v. Fairbanks, 98 Mass. 101. 42 Ante, p. 339. fc 84-85) PARTIES TO NEGOTIABLE INSTRUMENT. 849 Same Acting Without Authority Negotiable Instruments LOAD. The negotiable instruments law provides that "where the instrument contains or a person adds to his signature words indicating that he signs for or on behalf of a principal, or in a representative capacity, he is not liable on the instru- ment if he was duly authorized)' but the mere addition of words describing him as an agent, or as filling a representa- tive character, without disclosing his principal, does not ex- empt him from personal liability." ** The effect of the words in italics appears to be to render an agent who signs in a representative capacity, but without authority, liable on the instrument; thus making for the parties a contract which was not in contemplation, and changing the common-law rule that one who contracts in the name of an ostensible prin- cipal is not liable upon the contract, his only liability on con- tract being upon an implied warranty of authority. 44 This change has been justly condemned, and the amendment of the section by striking out the words "if he was duly author- ized" has been urged. 48 Agent as Payee and Indorser. When a negotiable instrument is made or indorsed to an agent in his own name, with added words descriptive of his relation as agent of another person, named or unnamed, the same conflict of authority prevails as to who is the payee or indorsee, and consequently as to who is the proper per- son to bring suit and to indorse. It is generally held that the agent, although described as agent of a named prin- cipal, may maintain an action upon the instrument in his own name. 48 But, when the payee is described as treasurer or N. Y. Laws 1897, c. 612, 39. See Norton, Bills & N. (3d Ed.) Appendix, 442, 39 (20). 4* Post, p. 869. 45 Prof. J. B. Ames, 16 Harv. L. Rev. 256. 4 Chadsey v. McCreery, 27 111. 253; Ord v. McKee, 5 Cal. 515. Where a bill is payable to the order of "B., Treasurer," he may 350 LIABILITY OP AGENT TO THIRD PERSON. (Ch. 13 other officer of a corporation named, it is often held that the corporation is the payee. 47 When the instrument is payable to a person as "Agent," and he indorses in that form, the same diversity exists as to who is bound by the indorsement. Where the rule excluding parol evidence is strictly maintained there can be no recovery against the prin- cipal upon an indorsement in the name of the agent, though he describe himself as such. Thus, in a Massachusetts case, where a bill was payable to and indorsed by "B., Agent," in an action against him as indorser it was held that parol evi- dence was inadmissible to show that he was merely agent, and that the plaintiff knew the fact. "The defendants," said Gray, C. J., "appeared upon the face of the bill to be them- selves the payees and indorsers, and the word 'Agents' was a mere designatio personarum, and parol evidence was in- admissible to discharge them." * 8 But in a Minnesota case, where a note was payable to and indorsed by "B., Treasur- er," it was held that the indorsement was prima facie his in- dividual contract, but that extrinsic evidence was admissible to show that he made it only in his official capacity as treas- urer of the maker corporation. 49 It has also been held that where a note is payable to "B.," by indorsing "B., Agent," the indorsement is qualified, and he relieves himself from lia- bility as indorser ; B0 and the same holding was made where Indorse it personally or by attorney. Shaw v. Stone, 1 Gush. (Mass.) 228. 47 Nichols v. Frothingham, 45 Me. 220, 71 Am. Dec. 539; Vater v. Lewis, 36 Ind. 228, 10 Am. Rep. 29; Falk v. Moebs, 127 U. S. 597, 8 Sup. Ct. 1319, 32 L. Ed. 266. 48 Bartlett v. Hawley, 120 Mass. 92. See, also, Towne v. Rice, 122 Mass. 67 (B., Receiver). Where a note was payable to "B., Agent," and indorsed, "A. Co., B., Agent," the Indorsement was B.'s. Mann v. Bank, 34 Kan. 746, 10 Pac. 150. 49 Souhegan Nat. Bank v. Boardinan, 46 Minn. 293, 48 N. W. 1116. See, also, Babcock v. Beman, 11 N. Y. 200. A bill payable to "B., Agent," and so indorsed, binds the prin- cipal. Merchants' Bank v. Bank, 1 Ga. 418, 44 Am. Dec. 665. eo Mott v. Hicks, 1 Cow. (N. Y.) 513, 13 Am. Dec. 550. 84-85) PARTIES TO NEGOTIABLE INSTRUMENT. 851 a note was payable to and indorsed "B., Treasurer." 81 There is, moreover, a tendency to assimilate indorsements by the treasurer or managing officer of a corporation to in- dorsements by bank cashiers, to be considered in the next paragraph. Same Cashier of Bank Officer of Corporation. To the rule that one who is not named as a party to a negotiable instrument cannot maintain an action or be char- ged thereon there is an apparent exception, applicable to paper payable to the cashier of a bank, which prevails even where parol evidence is in other cases inadmissible to show the intention of the parties. By usage the name of such officer, with his title "Cashier," has become established as the alternative designation of the bank. Where paper is so made payable to him, an action may be maintained thereon by the bank 82 or by the cashier ; and, when indorsed by him in the same form, the indorsement is the indorsement of the bank, which may be charged thereon. 54 There is a tendency to apply the same rule to jbaper made payable to the treasurer or managing officer of other corporations. 86 BI Babcock v. Beman, 11 N. Y. 200. 2 First Nat. Bank v. Hall, 44 N. Y. 395, 4 Am. Rep. 698; Water-v vliet Bank v. White, 1 Denio (N. Y.) 608; Commercial Bank v. French, 21 Pick. (Mass.) 486, 32 Am. Dec. 280; Barney v. Newcomb, 9 Gush. (Mass.) 46; Bank of Manchester v. Slason, 13 Vt 334; Dutch v. Boyd, 81 Ind. 146; Nave v. Bank, 87 Ind. 204; Garton v. Bank, 34 Mich. 279; Baldwin v. Bank, 1 Wall. (U. S.) 234. 17 L. Ed. 534. 83 Fairfield v. Adams, 16 Pick. (Mass.) 381; McHenry v. Ridgely, 2 Scam. (111.) 309, 35 Am. Dec. 110. B* Bank of Genesee v. Bank, 13 N. Y. 309; Bank of New York v. Bank, 29 N. Y. 619; Collins y. Johnson, 16 Ga. 458; Bank of State v. Wheeler, 21 Ind. 90; Houghton v. Bank, 26 Wis. 663, 7 Am. Rep. 107. OB Chillicothe Branch of State Bank v. Fox, 3 Blatchf. 431, Fed. Gas. No. 2,683; Babcock v. Beman, 11 N. Y. 200; Nichols v. Frothlngham, 45 Me. 220, 71 Am. Dec, 539; Vater v. Lewis, 30 Ind. 288, 10 Am. Rep. 29. A note payable to the "A. Co.," and indorsed "B., President," or 352 LIABILITY OF AGENT TO THIRD PERSON. (Ch. 13 The negotiable instruments law provides : "Where an instru- ment is drawn or indorsed payable to a person as 'cashier' or other fiscal officer of a bank or corporation, it is deemed to be prima facie payable to the bank or corporation of which he is such officer ; and may be negotiated by either the indorse- ment of the bank or corporation, or the indorsement of the officer." Agent as Acceptor of a SiU. Except in so far as affected by the rule that a bill can be accepted, except for honor, only by the drawee and by the anomalous doctrine of unsigned and oral acceptances, the same considerations which determine the liability of the prin- cipal or of the agent upon a note or a bill made or drawn by the agent determine their liability upon an acceptance made by him. When a bill is drawn on an agent in his own name, whether described with or without addition as "Agent," and is accepted by him in his own name, he is lia- ble as acceptor, even if he adds to his signature words indi- cating that he signs for and on behalf of a principal. 57 Treasurer," or "Secretary," transfers the title, Chillicothe Branch of State Bank Y. Fox, supra; Nicholas v. Oliver, 36 N. H. 218; Rus- sell v. Folsom, 72 Me. 436. "The usage is universal for presidents and cashiers of incorporated companies, acting as the executive officers and agents of such com- panies, to make, in their behalf, indorsements and transfers of nego- tiable paper, by simply indorsing their names, with additions of their titles of office. I cannot donbt that such indorsement is suffi- cient to charge the corporation under whose authority the indorse- ment is made, and to transfer the note to the indorsee, so that the latter can maintain an action thereon in his own name." Per Hall, J., in CMUicothe Branch of State Bank v. Fox, supra. A note signed, "A. Co., B., Sec. and. Tteas.," and payable to and indorsed "B., Sec. & Treas.," held to be the note and indorsement of the A. Co., and unambiguous, and parol evidence inadmissible to show that the indorsement was that of B. personally. Falk v. Moebs, 127 U. S. 597, 8 Sup. Ct 1319 ? 32 L. Ed. 266. See Norton, B. & N. (3d Ed.), appendix, 447, 72 (42). T Mare v. Charles, 5 El. & B. 978. Where a bill, headed "Office of A. Co.," was drawn by "B., Agent," 84-85) PARTIES TO NEGOTIABLE INSTRUMENT. 353 Thus, where a bill was drawn on B., who wrote across it, "Accepted for the Company, B., Purser," he was personally liable. 58 And the same rule has been applied when the bill is addressed to him as agent of a named principal, and is ac- cepted by him as such agent." In jurisdictions where parol evidence is admitted, it would, however, be admissible in such cases tc show that it was the intention of the parties to bind the principal. 60 But, when the bill is drawn on the agent in his own name, if he accepts in the name of the principal nei- ther is bound not the principal, because he was not named as drawee, nor the agent, because by the manner of ac- ceptance he has disclaimed personal responsibility." 1 Conversely, where a bill is drawn on the principal, and is accepted by the agent in his own name, the agent is not liable.* 2 It does not follow, however, that the principal may not be bound by such an acceptance. Great looseness has prevailed in respect to the formal requisites of an acceptance, and addressed to "C., Agent," who wrote across it, "Accepted, C., Agent," he was personally bound. Slawson v. Loring, 5 Allen (Mass.) 340, 81 Am. Dec. 750. The drawee of a bill drawn by the "A. Co." was described as "B., Agent," and accepted as "B., Agent A. Co." Held, that he was personally bound, and that In a suit by an indorsee parol evidence was not admissible to show intention to bind the company, and that the plaintiff purchased with knowledge of this fact Robinson v. Bank, 44 Ohio St. 441, 8 N. E. 583, 58 Am. Rep. 829. See Bowstead, Dig. Ag. art 109. 8 Mare v. Charles, 5 EL & B. 978. B Jones v. Jackson, 22 L. T. 828; Moss T. Livingston, 4 N. T. 209. Contra, Shelton v. Darling, 2 Conn. 435. o Laflin & Rand Powder Co. v. Sinsheimer, 48 Md, 411, 30 Am. Rep. 472. i Walker v. Bank, 9 N. T. 582. Where a bill was drawn on "B., Purser A. Company," and was accepted, "B., per proc. A. Company," B. being a member of the company, which was unincorporated, he was personally liable. Nich- ols v. Diamond, 9 Ex. 154. 2 Pothill v. Walker, 3 B. & Ad. 114. Of. Okell v. Charles, 34 L. T. 822. TIFF.P.& A.-23 354 LIABILITY OF AGENT TO THIRD PERSON. (Ch. 13 and, in the absence of any statutory requirements to the con- trary, unsigned, and even oral, acceptances have been sus- tained. Thus, when a bill is addressed to several persons, and is accepted by one, he being the duly authorized agent of the others, by writing his name on the bill, it has been held that all are liable as acceptors, though the acceptance does not purport to be in the name of or on behalf of all. 63 And it has even been held, where a bill was addressed to A., and accepted by his wife by writing across it her own name, and A., on presentation, promised to pay it, that he was liable as acceptor, his promise peing sufficient evidence of author- ity or of ratification."* In many jurisdictions to-day it is provided by statute that the acceptance must be in writing and signed by the drawee, 66 and where this requirement ex- ists the cases last referred to would not be precedents. 8 * Public Agents. It has been pointed out that where a contract is entered into on behalf of the government by a public agent, notwith- s Jenkins v. Morris, 16 M. & W. 877. This rule was applied to bills drawn upon a partnership and ac- cepted by one partner, only his name appearing in the written ac- ceptance. Mason v. Rumsey, 1 Camp. 384; Wells v. Masterman, 2 Esp. 731; Beach v. Bank, 2 Ind. 488; 1 Ames, Cas. B. & N. 206, n. 1. "It would have been enough if the word 'Accepted' had been writ- ten on the bill, and the effect cannot be altered by adding 'T. Rum- Bey, Sen.' " Per Lord Ellenborough in Mason v. Rumsey, supra. 64 Lindus v. Bradwell, 5 C. B. 583. See Bowstead, Dig. Ag. art 89. c Neg. Inst Law, 220; Norton, B. & N. (3d Ed.) 472. Cf. 224. ee Heenan v. Nash, 8 Minn. 407 (Gil. 363), 83 Am. Dec. 790. In this case it was held that where a bill was addressed to a firm, and accepted by an individual member In his own name, neither the partnership nor the member accepting were bound. The statute pro- vided that no person should be charged as acceptor, unless his accept- ance should be "in writing, signed by himself or his lawful agent" "If a draft were drawn on a corporation by name, and accepted by Its duly authorized agent or officer in his individual name, adding his official designation, the acceptance would be deemed that of the cor- poration, for only the drawee can accept a bill." Per Mitchell, J., in Souhegan Nat. Bank v. Boardman, 46 Minn. 293, 48 N. W. 1116. 86-90) CONTRACT NOT SEALED OR NEGOTIABLE. 355 standing that the agent executes it in his own name, it is the contract of the government. 61 It seems that the same rule is applicable to negotiable paper, and it has frequently been held that where an instrument executed by a public agent contains words which, if used by a private agent, would be deemed mere descriptio personae, the principal, and not the agent, is bound." In other cases, however, the dis- tinction has been disregarded.'* PARTIES TO CONTRACT HOT SEALED OR NEGOTIABLE. 86. When an agent contracts personally, he is liable upon the contract. In inch case, if the contract is not sealed or negotiable, the principal is also liable there- on, provided it was authorized. EXCEPTION 1: EXCLUSIVE CREDIT TO AGENT. When the other party to the contract knows that the person with whom he deals is agent, and who the principal is, and the contract is on such terms that exclusive credit is given to the agent, the agent only is liable thereon. EXCEPTION 2: FOREIGN PRINCIPAL. In England (it seems), but not in the United States, when an agent contracts on behalf of a foreign principal, he is pre- sumed to contract personally, unless a contrary inten- tion appears from the terms of the contract ox from the surrounding circumstances. SAME WRITTEN CONTRACT. 87. Where the contract is in writing, whether the agent is deemed to have contracted merely as agent, or person- ally, depends upon the intention of the parties, as dis- closed by the terms of the instrument as a whole, the construction of which is for the court. T Ante, p. 836. Jones v. Le Tombe, 3 Dall. (U. S.) 384, 1 L. Ed. 947; School Town of Monticello v. Kendall, 72 Ind. 91, 37 Am. Rep. 139; San- born v. Neal, 4 Minn. 126 (Gil. 83), 77 Am. Dec. 502. Cf. Fowler v. Atkinson, 6 Minn. 579 (Gil. 412). Schools of Village of Cahokia v. Rautenberg, 88 111. 219; Wing v. Click, 56 Iowa, 473, 9 N. W. 384, 41 Am. Rep. 118. 356 LIABILITY OF AGENT TO THIRD PERSON. (Oh. 13 SAME PAROL EVIDENCE. 87a. When the agent appears by the terms of the writing to have contracted personally, parol evidence is inad- missible to show that in fact he merely contracted as agent, and -was not intended to be personally liable. EXCEPTION: In some jurisdictions, if the agent is de- scribed as such, and it does not otherwise clearly ap- pear by the instrument that he contracted person- ally, he is only prima facie liable, and may show by extrinsic evidence that he was not intended to be bound. SAME ORAL CONTRACT. 88. When the contract is not in writing, whether the agent is deemed to have contracted merely as agent, or per- sonally, is a question depending upon the intention of the parties, as disclosed by all the circumstances of the transaction, and is for the jury. PUBLIC AGENT. 89. A public agent is not liable upon a contract entered into by him on behalf of the government, unless it clearly appears that he pledges his personal credit. WHEN APPARENT AGENT IS REAL PRINCIPAL. 90. When a person professes to contract as agent, whether in writing or orally, evidence is admissible to prove that he was the real principal, and to charge him person- ally. Written Contract. As we have seen, when a contract not under seal or ne- gotiable is made by the agent, which is in terms his con- tract, both principal and agent are bound. The principal is liable, although undisclosed; for, notwithstanding that the contract is in writing, parol evidence is admisssible to charge him, 1 and the agent is liable because he has so contracted. 86-90. i Ante, p. 233. 86-90) CONTRACT NOT SEALED OB NEGOTIABLE. 357 The agent may, however, contract on behalf of the prin- cipal, so as to bind him only. Whether a written contract, not under seal or negotiable, is to be deemed the personal contract of the agent or the contract of his principal, de- pends upon the intention of the parties as disclosed by the writing. The technical rules governing the execution of con- tracts under seal do not apply, and a somewhat more lib- eral interpretation than prevails in respect to negotiable in- struments is adopted. If the meaning is clear, it matters not how the contract is phrased, nor how it is signed, wheth- er by the name of the agent for the principal, or with the name of the principal by the agent, or merely in the name of the agent. 1 If, indeed, the contract is signed in the name of the agent without qualification, and no sufficient indication of a con- trary intention appears upon the face of the instrument, he is conclusively bound ; ' but if a contrary intention does ap- pear it will control. 4 Thus, when the writing states that the undertaking is "on account of," B or "in behalf of," e a named principal, although the signature is unqualified, the principal, and not the agent, is bound. The mere fact, however, that the agent describes 2 Spittle v. Lavendar, 2 B. & B. 452; Southwell v. Bowdltch, 1 C. P. D. 374; Whitney v. Wyman, 101 U. S. 392, 25 L. Ed. 1050; New England Marine Ins. Co. v. De Wolf, 8 Pick. (Mass.) 56; Simonds v. Hoard, 23 Pick. (Mass.) 120, 34 Ain. Dec. 41; Goodenough v. Thayer, 132 Mass. 152; Rogers v. March, 33 Me. 106; Wheeler v. Walden, 17 Neb. 122, 22 N. W. 346. s Kennedy v. Gouveia, 3 D. & R. 503; Pace v. Walker, L. R. 5 Ex. 173; Miller v. Early (Ky.) 58 S. W. 789. < City of Detroit v. Jackson, 1 Doug. (Mich.) 106; Fowle v. Kerch- ner, 87 N. C. 47. 6 Gadd v. Houghton, 1 Ex. D. 357. See, also, Fairlie v. Fenton. L. R. 5 Ex. 169. Ogden v. Hall, 40 L. T. 751; Key v. Parnham, 6 Har. & J. (Md.) 418. See, also, Andrews v. Estes, 11 Me. 267, 26 Am. Dec. 521. Otherwise if in another part of the contract the agent undertakes personally. Norton v. Herron, 1 C. & P. 648 (the said G. H. doth hereby agree); Tanner v. Christian, 4 El. & B. 591. 8J58 LIABILITY OF AGENT TO THIRD PERSON. (Ch. 13 himself as agent, whether in the body of the instrument 7 or in the signature, 8 even though the principal be named, is insufficient to show that he does not intend to contract per- sonally. Even a contract m which the agent contracts "as agent of A." has been held binding upon him personally, 9 though this case has been doubted. 10 "Although an agent is duly authorized," said Shaw, C. J., "if by the terms of his contract he binds himself personally, and engages expressly in his own name to pay or perform other obligations, he is responsible, though he describes himself as agent." ll The constructions placed by different courts upon similar instruments are frequently irreconcilable, and very slight in- i Burwell v. Jones, 3 B. & Aid. 47; Paice v. Walker, L. R. 5 Ex. 173; Parker v. Winslow, 7 El. & B. 942; Kennedy v. Gouveia, 3 D. & R. 503; Simonds v. Heard, 23 Pick. (Mass.) 120, 34 Am. Dec. 41; Guernsey v. Cook, 117 Mass. 548; Grau v. McVicker, 8 Bias. (U. S.) 13, Fed. Gas. No. 5,708; Matthews v. Jenkins, 80 Va. 463. s Brown v. Bradlee, 156 Mass. 28, 30 N. E. 85, 15 L. R. A. 509, 32 Am. St. Rep. 430. This was an action to recover a reward which was offered in a writing in the following terms: "$2,500 reward will be paid to any person furnishing evidence that will lead to the arrest and convic- tion of the person who shot X. [Signed] B., C., D., Selectmen of Milton." It was held that the defendants were personally liable. "Perhaps," said Holmes, J., "our conclusion is a little strengthened by the consideration that * * * the defendants bad not authority to bind the town for more than $500. For although, of course, an agent does not make a promise his own by exceeding his authority, if it purports to bind his principal only, still, when the construction is doubtful, the fact that he has no authority * * * is a reason for reading his words as directed towards himself." See, also, Knicker- bocker v. Wilcox, 83 Mich. 200, 47 N. W. 123, 21 Am. St. Rep. 595; MacDonald v. Bond, 195 111. 122, 62 N. E. 881. Paice v. Walker, L. R. 5 Ex. 173. In this case the language was, "Sold A. B. 200 quarters of wheat (as agent of C., F. & Co., Danzig)." 10 Gadd v. Houghton, 1 Ex. D. 357. "As" preceding "agent," "trustee," and the like indicates that the person referred to contracts in his representative capacity. Hayes v. Crane, 48 Minn. 39, 50 N. W. 925. 11 Simonds v. Heard, 23 Pick. (Mass.) 120, 34 Am. Dec. 41. 86-90) CONTRACT NOT SEALED OB NEGOTIABLE 359 dications of an intention to bind the principal are frequently construed as controlling the presumption that words descrip- tive of the relation are to be deemed mere descriptio per- sonae. 12 Conversely, if the agent adds to his signature words indicating that he signs for and on behalf of his principal, he is not personally liable unless a contrary intention is else- where disclosed, 18 but, if so disclosed, it will be given effect. 14 The agent may also use such words as to bind both the prin- cipal and himself, as where he contracts for the principal and assumes the obligation of a surety. 18 12 Cook T. Gray, 133 Mass. 106; Rogers v. March, 33 Me. 106; State v. Commissioners, 60 Neb. 566, 83 N. W. 733. The introductory clause of a lease read, "This agreement made * * * between B., Agent of A.," and the signature was in the same form. "It clearly appears," said the court, "that B. was the agent of the lessor, and acted as such, for we find this recital: 'That the said B., agent as aforesaid, has rented. * * *' There are other provisions In the instrument clearly showing that B. executed the lease as the agent of A., and we have no doubt that It should be treated as having been executed by him." Avery v. Dougherty, 102 Ind. 443, 2 N. E. 123, 52 Am. Rep. 680. An agreement between "W., superintendent of the K. Mining Com- pany, parties of the first part, and P., party of the second part," by which "the said parties of the first part" agree to deliver at P.'s mill ore from the K. mine to be milled by P., and signed "W., Supt. K. Mining Co.," is the contract of the company. "By the subject-matter of this contract," said Gray, J., "which is the delivery and milling of ore from the Keets mine; by the description of Whitney, both in the body of the contract and in the signature, as superintendent of the Keets Mining Company; and by the use of the words 'parties of the first part,' which are applicable to a company and not to a single Individual the contract made by the hand of Whitney clearly appears upon its face to have been intended to bind, and therefore did bind, the company; and, upon proof that Post was a partner in the com- pany, bound him." Post v. Pearson, 108 U. S. 418, 2 Sup. Ct 799, 27 L. Ed. 774. iSDeslands v. Gregory, 30 L. J. Q. B. 36; Lyon v. Williams, 5 Gray (Mass.) 557; Sun Fruiting & Publishing Ass'n v. Moore, 183 U. S. 642, 22 Sup. Ct. 240, 46 L. Ed. 366. i* Lennard v. Robinson, 5 El. & B. 125; Knickerbocker v. Wilcox, 83 Mich. 200, 47 N. W. 123, 21 Am. St. Rep. 595. IB Young v. Schuler, 11 Q. B. D. 651. 360 LIABILITY OF AGENT TO THIRD PERSON. (Ch. 13 Same Parol Evidence, The construction of a written instrument is for the court. 10 Where it clearly appears from the contract that the agent contracts personally, parol evidence is inadmissible to show that he contracted as agent, and that it was not the inten- tion of the parties that he should be personally bound, for such evidence would contradict the written contract. 17 In case of ambiguity, parol evidence may be admitted. 18 It seems that although the instrument contains words describ- ing the agent as such, if upon ordinary principles of con- struction the words are to be taken as mere descriptio per- sonse, and there is no further indication of intention to bind the principal, parol evidence is not admissible to control the construction. 19 In some jurisdictions, however, it has been held that where such words as "agent," "trustee," and the like are affixed to the name of a party to the contract they are prima facie descriptive only, but that it may be shown by extrinsic evidence that they were intended and under- stood by the parties as determining the character in which he contracted. 20 ie Tanner v. Christian, 4 El. & B. 591; Southwell r. Bowditch, 1 C. P. D. 374; Hayes v. Crane, 48 Minn. 39, 50 N. W. 925. " Jones v. Littledale, 6 Ad. & E. 486; Higgins v. Senior, 8 M. & W. 834; ante, p. 233. When an invoice is only evidence of a contract, and not the con- tract, parol evidence is admissible to show that a person whose name appears at the head as seller is not in fact a contracting party. Holding v. Elliott, 5 H. & N. 117. is McCollin v. Gilpin, 6 Q. B. D. 516. See, also, Ziegler v. Fallen, 28 Mo. App. 295; Becker v. Lament, 13 How. Prac. (N. Y.) 23; State v. Commissioners, 60 Neb. 566, 83 N. W. 733; De Reiner v. Brown, 165 N. Y. 410, 59 N. E. 129. is Jones v. Littledale, 6 Ad. & E. 486; Higgins v. Senior, 8 M. & W. 834. See, also, Pike v. Quigley, 18 Q. B. D. 708; Fleet v. Murton, L. R. 7 Q. B. 126; Walker v. Christian, 21 Grat (Va.) 291. The agent may, however, prove as an equitable defense an express agreement that he was not to be liable, when by mistake the written contract fails to carry out such agreement. Wake v. Harrop, 1 H. & C. 202. 20 Pratt v. Beaupre, 13 Minn. 187 (Gil. 177); Deering v. Thorn, 29 g 86 90) CONTRACT NOT SEALED OB NEGOTIABLE. 361 Although parol evidence is not admissible to show that the person who appears to be is not bound, evidence of custom is sometimes admissible to show that the agent, notwithstanding that he contracted merely as such, is also personally liable. For this purpose evidence of custom or usage in the particular business, to the effect that an agent so contracting is also personally liable on the contract, may be admitted, 21 provided the custom or usage is not incon- sistent with the express terms of the contract." Oral Contract. When the contract is not reduced to writing, the question whether the agent contracted merely as agent or personally depends upon the intention of the parties, and is for the jury. 28 Where the principal is disclosed, and the agent is known to be acting as such, he cannot be made personally liable unless he agreed to be so. 24 The intention is to be as- certained from all the circumstances attending the transac- Minn. 120, 12 N. W. 350; Peterson v. Homan, 44 Minn. 166, 46 N. W. 303, 20 Am. St Rep. 564; Rhone v. Powell, 20 Colo. 41, 36 Pac. 899. Cf. Rowell v. Oleson, 32 Minn. 288, 20 N. W. 227; American Bonding & Trust Co. v. Takahashi, 49 C. C. A. 267, 111 Fed. 125. Where B. contracts "as assignee of A.," the contract so clearly ex- presses that he contracts In his representative capacity that parol evidence is Inadmissible. Hayes v. Crane, 48 Minn. 39, 50 N. W. 925. 21 Pike v. Ongley, 18 Q. B. D. 708; Fleet v. Murton, L. R. 7 Q. B. 120; Baermister v. Fenton, 1 C. & E. 121. See Bowstead, Dig. Ag. art. 111. 22 Barrow v. Dyster, 13 Q. B. D. 635. * Owen v. Gooch, 2 Esp. 567; Seaber v. Hawkes, 5 M. & P. 549; Long v. Millar, 4 C. P. D. 450; Steamship Bulgarian Co. v. Trans- portation Co., 135 Mass. 421; Cobb v. Knapp, 71 N. Y. 348, 27 Am. Rep. 51; Hovey v. Pitcher, 13 Mo. 191; Anderson v. Timberlake, 114 Ala. 377, 22 South. 431, 62 Am. St. Rep. 105. 2* Owen v. Gooch, 2 Esp. 567; Ex p. Hartop, 12 Yes. 352; Whit- ney v. Wyman, 101 U. S. 392, 25 L. Ed. 1050; Meeker v. Claghorn, 44 N. Y. 352; Foster v. Persch, 68 N. Y. 400; Covell v. Hart, 14 Hun (N. Y.) 252; Anderson v. Timberlake, 114 Ala. 377, 22 South. 431, 62 Am. St Rep. 105; Bleau v. Wright, 110 Mich. 183, 68 N. W. 115. 362 LIABILITY OP AGENT TO THIRD PERSON. (Ch. 13 tion. Thus, if an agent verbally orders goods, he is person- ally liable unless the seller knows that he is contracting mere- ly as agent ; 25 but if he orders the goods in his principal's name he is not liable, unless he gives his personal credit. 8 * So, where a broker sells goods by auction, and invoices them in his own name as seller, it is a question for the jury whether the invoice was intended to be the contract, and, if so, the broker is personally liable ; but, if the invoice was not so intended, it is a question for the jury whether it was in- tended by the parties that the broker contracted personally. 27 So, when an agent buys at auction, and gives his own name, he is personally liable unless it is clearly proved that he did not intend to bind himself personally, and that the auctioneer so understood. 28 Principal Undisclosed or IJnnamed. As has already been explained, when an agent makes a contract without disclosing that he is acting for a principal he is personally liable, although the other party, if the con- tract is not under seal or negotiable, may, upon discovering the principal, resort to the principal, or hold the agent, as he may elect. 29 And the rule is the same when the name Seaber v. Hawkes, 5 M. & P. 549. Ex p. Hartop, 12 Ves. 352; Johnson v. Ogllby, 3 P. Wm. 277; Owen v. Gooch, 2 Esp. 567. 27 Jones v. Littledale, 6 Ad. & E. 486; Holding v. Elliott, 5 H. & N. 117. as Williamson v. Barton, 7 H. & N. 899. Simon v. Motives, 3 Burr. 1921; McComb v. Wright, 4 Johns. Ch. (N. Y.) 656; Royce v. Allen, 28 Vt. 234; Pierce v. Johnson, 34 Conn. 274; Beymer v. Bonsall, 79 Pa. 298; York County Bank v. Stein, 24 Md. 447; Davenport v. Eiley, 2 McCord (S. C.) 198; Wheeler v. Reed, 36 111. 82; McClellan v. Parker, 27 Mo. 162; Brigham v. Herrick, 173 Mass. 460, 53 N. E. 906; Mitchell y. Beck, 88 Mich. 342, 50 N. W. 305; Lull v. Bank, 110 Iowa, 537, 81 N. W. 784; Mackey v. Briggs, 16 Colo. 143, 26 Pac. 131. Where C. conducted a business in the name of "C. & Co.," and In that name employed plaintiff, without disclosing the fact that he was agent for another, he cannot avoid personal liability on the ground 86-90) CONTRACT NOT SEALED OB NEGOTIABLE. 363 of the principal, but not the fact of the agency, is undis- closed ; 30 although it is, of course, possible for the agent to exonerate himself by the terms of the contract. 31 When the contract is in writing the liability of the agent thereon is a question of construction, and if he contracts in his own name he is necessarily liable. 82 When the contract is oral, however, it does not follow from the mere fact that the agent fails himself to disclose the agency that he is bound. By failing to disclose he assumes the risk of being bound ; " but if the other party actually knows, although from some other source, that the agent is contracting as such, and he does not expressly bind himself, the principal only is bound. 84 When the other party discovers the undisclosed or unnamed principal, while he may elect to resort to him, he is not obliged to do so. 85 Entrance upon performance after such that "C. & Co." consisted of his wife alone, and that he acted as her agent. Amans v. Campbell, 70 Minn. 493, 73 N. W. 506, 68 Am. St Rep. 547. Ante, p. 235. o Thomson v. Davenport, 9 B. & C. 78; Jones v. Littledale, 6 Ad. & E. 486; Ye Seng Co. v. Corbitt (D. C.) 9 Fed. 423; Winsor v. Griggs, 5 Cush. (Mass.) 210; Cobb v. Knapp, 71/ N. Y. 348, 27 Am. Rep. 51; Argersinger v. Macnaughton, 114 N. Y. 539, 21 N. E. 1022, 11 Am. St Rep. 687; McClure v. Trust Co., 165 N. Y. 108, 58 N. E. 777, 53 L. R. A. 153; De Remer v. Brown, 165 N. Y. 410, 59 N. K 129; Brown v. Ames, 59 Minn. 476, 61 N. W. 448; ante, p. 236. i A broker sent a contract note: "Messrs. S.: I have this da, sold by your order and for your account, to my principals. * * [Signed] W. A. B.'* Held, in an action of goods sold and delivered, that he was not personally liable. Southwell v. Bowditch, 1 C. P. D. 374. In such case, however, the agent may be liable also where there Is usage to that effect Ante, p. 181, 32 Ante, p. 357. Baldwin v. Leonard, 39 Vt 260, 94 Am. Dec. 324; Nixon T. Downey, 49 Iowa, 166. 84 Chase v. Debolt, 7 111. 371; Warren v. Dickson, 27 111. 115; Boston & M. R. v. Whitcher, 1 Allen (Mass.) 497; Johnson v. Arm- strong, 83 Tex. 325, 18 S. W. 594, 29 .Am. St. Rep. 648; Sharp v. Swayne, 1 .Pennewill, 210, 40 Atl. 113. Cf. Williamson v. Barton. T H. & N. 899; Worthington v. Cowles, 112 Mass. 30. SB AS to what constitutes election, ante, p. 238. 364 LIABILITY OF AGENT TO THIRD PERSON. (Ch. 13 discovery does not discharge the agent ; 88 nor does mere alteration of the charges upon the other party's books from the name of the agent to that of the principal, without no- tice or attempt to enforce the claim against the latter, show an election. 87 Giving Credit to Agent When Agent Only Sound. While, as a rule, every principal, whether disclosed or un- disclosed, is bound by a contract made on his behalf, the parties may so contract that only the agent is bound. We have seen that when a contract is made on behalf of an undisclosed principal, and the other party, after discovery of the principal, has once elected to hold the agent, he is bound by his election, and cannot afterwards resort to the principal. 38 And so, when the agent enters into a contract on such terms that he is personally liable thereon, but the other party, knowing at the time who the principal is, elects to give exclusive credit to the agent, he is bound by the election, and cannot subsequently charge the principal. "If at the time of the sale the seller knows, not only that the person who is nominally dealing with him is not principal but agent, and also knows who the principal really is, and not- withstanding all that knowledge chooses to make the agent his debtor, dealing with him and him alone, then * * * the seller cannot afterwards, on the failure of the agent, turn round and charge the principal, having once made his elec- tion at the time when he had the power of choosing be- tween the one and the other." 8S> The question of election is one of fact. 40 The mere fact that the other party, with Forney v. Shipp, 49 N. C. 527; Whiting v. Saunders, 23 Misc. Rep. 332, 51 N. Y. Supp. 211. 87 Hutchinson v. Wheeler, 3 Allen (Mass.) 577. s Ante, p. 238. sn Per Lord Teoterden in Thomson v. Davenport, 9 B. & 0. 78, citing Addison v. Gandesqui, 4 Taunt. 574, and Paterson v. Gandesqui, 15 East. 62. 40 Calder v. Dobell, L. R. 6 C. P. 486; Bylngton v. Simpson, 134 Mass. 169, 45 Am. Rep. 314. 86-90) CONTRACT NOT SEALED OB NEGOTIABLE. 365 knowledge of the real principal, enters into a contract in writing which purports to be the personal contract of the agent seems not to be conclusive, 41 although the contrary has been held. 4 * On the other hand, when a sale is made to one who is acting as agent for the purchaser, who is known to the vendor, and only the note or other personal obligation of the agent is taken in payment of the price, this makes a prima facie case that credit is given to the agent alone. 48 Foreign Principal. According to the rule frequently declared in England, when an agent contracts in that country on behalf of a for- eign principal he is presumed to contract personally, unless a contrary intention appears from the terms of the contract or from the surrounding circumstances. 44 "Where a for- eign merchant has authorized English merchants to act for him, I take it that the usage of trade, established for many years, has been that it is understood that the foreign con- stituent has not authorized the merchants to pledge his credit to the contract, to establish privity between him and the home supplier. On the other hand, the home supplier, knowing that to be the usage, unless there is something in the bargain showing the intention to be otherwise, does not trust the foreigner, and so does not make the foreigner re- sponsible to him, and does not make himself responsible to 41 Calder v. Dobell, L. R. 6 C. P. 486; Byington v. Simpson, 134 Mass. 169, 45 Am. Rep. 314. See Moliiie Malleable Iron Co. v. Iron Co., 27 C. C. A. 442, 83 Fed. 66. 42 Chandler v. Coe, 54 N. H. 561. 4 Paige v. Stone, 10 Mete. (Mass.) 160, 43 Am. Dec. 420; Henry Ames Packing & Provision Co. v. Tucker, 8 Mo. App. 95; Merrell v. Witherby, 120 Ala. 418, 23 South. 994, 26 South. 974, 74 Am. St. Rep. 39. See, also, Coleman v. Bank, 53 N. Y. 388. Cf. Atlas S. S. Co. v. Land Co., 42 C. C. A. 398, 102 Fed. 358. 44 Elbinger Actien-Gesellschaft v. Claye, L. R. 8 Q. B. 313; Dram- burg v. Pollizer, 28 L. T. 470; Button v. Bullock, 9 Q. B. 572. 366 LIABILITY OP AGENT TO THIRD PERSON. (Ch. 13 the foreigner." 4B When the contract is in writing, how- ever, and it clearly appears that the agent contracted for the principal and not as agent, it has been held that the agent is not bound. 46 In this country the existence of a usage or custom so ingrafted into the common law as to become a rule, and cre- ating a presumption in all cases that the agent is exclusively liable, has been denied. The question in each case is to whom credit was in fact given, and when goods are sold to a home agent, or a contract is made with him, the fact that he acts for a foreign principal is merely evidence that the agent, and not the principal, is bound, and must be consid- ered in connection with other facts entering into the ques- tion of credit. 47 When the contract is in writing, if the terms are clear and unambiguous, the contract must be deemed the final repository of the intention of the parties ; and, if it is in form a contract by the principal only, the agent must be exonerated, without regard to the fact that the principal is resident in a foreign country. 48 Whatever weight the con- sideration that the principal is a resident of a foreign country 48 Per Blackburn, J., in Blbinger Actlen-Gesellschaft v. CTaye, L. R. 8 Q. B. 313, citing dicta in Addison v. Gandesqui, 4 Taunt. 574, 580; Paterson v. Gandesqui, 15 East, 62; Thomson v. Davenport, 9 B. & C. 78, 87, 89; Armstrong v. Stokes, L. R. 7 Q. B. 598. 605. 4 Green v. Kopke, 18 C. B. 549; Gadd v. Houghton. 1 Ex. D. 357; Ogden v. Hall, 40 L. T. (N. S.) 751; Glover v. Langford [1892] 8 Times Law R. 628. In Glover v. Langford, supra, Charles, J., said: "In point of law there is no distinction as to the liability of an agent acting in behalf of an English or a foreign principal; it is always a question of fact" 47 Oelricks v. Ford, 23 How. (XL S.) 49, 16 L. Ed. 534; Kirkpatrick v. Stainer, 22 Wend. (X. Y.) 244; Bray v. Kettell, 1 Allen (Mass.) 80; Barry v. Page, 10 Gray (Mass.) 398; Kaulback v. Churchill, 59 N! H. 296; Maury v. Ranger, 38 La. Ann. 485, 58 Am. Rep. 197. Of. Rogers v. March, 33 Me. 106. 4* Bray v. Kettell, 1 Allen (Mass.) 80. g 86-90) WHEN APPARENT AGENT IS REAL PRINCIPAL. 367 may have, it seems that a resident in another state stands upon the same footing as a home principal. 4 * Public Agent. The, rule which prevails in respect to the contracts, even under seal, made by public agents, has already been stated. A public officer or agent is not liable upon a contract entered into by him on behalf of the government, 60 unless it clearly appears that he pledges his personal credit. 51 It has been doubted, however, whether the distinction applicable to pub- lic agents applies to officers or agents of a town or other municipal corporation capable of contracting and liable to an action on its contracts. 6 * When Professed Agent is Heal Principal. Inasmuch as the real principal, whether disclosed or un- disclosed, is liable on a contract made on his behalf, it may be shown that a person who purports to contract as agent, either of an unnamed '* or of a named principal, 64 was in Vawter v. Baker, 23 Ind. 63; Barham v. Bell, 112 N. C. 131, 16 8. E. 903. BO Macbeath T. Haldemund, 1 T. R. 172; Rice v. Chute, 1 East, 579; Parks v. Ross, 11 How. (U. S.) 362, 13 L. Ed. 730; Brown v. Austin, 1 Mass. 208, 2 Am. Dec. 11; Freeman v. Otis, 9 Mass. 272, 6 Am. Dec. 66; Belknap v. Reinhart, 2 Wend. (N. Y.) 375, 20 Am. Dec. 621; Walker v. Swartwout, 12 Johns. (X. Y.) 444, 7 Am. Dec. 334; Tutt v. Hobbs, 17 Mo. 48C; Sparta School Tp. v. Mendell, 138 Ind. 188, 37 N. E. 604. And see cases cited ante, p. 336. 61 Clutterbuck v. Coffin, 3 M. & G. 842; Auty v. Hutchlnson, 6 C. B. 266. 62 Simonds v. Heard, 23 Pick. (Mass.) 120, 34 Am. Dec. 41; Brown T. Bradlee, 156 Mass. 28, 30 N. E. 85, 15 L. R. A. 509, 32 Am. St. Rep. 430; City of Providence v. Miller, 11 R. I. 272, 23 Am. Rep. 453; Hall v. Cockrell, 28 Ala. 507. 6 Carr v. Jackson, 21 L. J. Ex. 137; Adams v. Hall, 37 L. T. 70. See, also, Patrick v. Bowman, 149 U. S. 411, 13 Sup. Ct 811, 37 L. Ed. 790. 6* Rallton v. Hodgson, 15 East, 67; Isham v. Burgett, 157 Mass. 54G, 32 N. E. 907. See, also, Jenkins v. Hutchinson, 13 Q. B. 744. Contra, Heffron v. Pollard, 73 Tex. 9G, 11 S. W. 165, 15 Am. St Rep. 764. 368 LIABILITY OF AGENT TO THIRD PERSON. (Ch. 13 fact acting on his own behalf, and is himself the real prin- cipal. WHEN AGENT ACTS -WITHOUT AUTHORITY IMPLIED WARRANTY OF AUTHORITY.i 91. When one person expressly or impliedly represents that he has authority to act on behalf of another, and a third person is induced thereby to enter into a con- tract with the professed agent, the latter is deemed to warrant that the representation is true, and is liable for any loss caused to such third person by breach of such implied warranty, even if he acted in good faith under a mistaken belief that he had such authority. Every person who professes to contract as agent is deemed to warrant that he is in fact authorized to make the contract. When any such representation is made fraudulently, the person injured may sue in tort for the deceit. EXCEPTION It In some jurisdictions, when a person en- ters into an unauthorized contract in the name of another, he is held to be personally liable on the con- tract. EXCEPTION 2: When a person who contracts as agent, acting in good faith, either stipulates that he shall not be responsible for any want of authority, or dis- closes all the facts known to him upon which his sup- posed authority rests, he is not deemed to represent that he is in fact duly authorized. SAME MEASURE OF DAMAGES FOR BREACH OF WAR- RANTY. 92. The measure of damages for breach of warranty of au- thority is the loss directly resulting as a natural and probable consequence of the breach. When a contract is repudiated by the person on whose behalf it is made, such loss is prima facie the amount which -would have been recoverable against him thereon upon his refusal to perform had the contract been authorized. If the 91-92. i Following substantially Bowstead, Dig. Ag. art 115, 116. g 91-92) WHEN AGENT ACTS WITHOUT AUTHORITY. 369 contract would not have been enforceable against him, even if authorized, because the formalities required by law were not observed, there .can be no recovery for breach, of -warranty of authority. Unauthorized Contract Liability of Professed Agent Warranty of Autfiority. When a person without authority makes a contract on be- half of another, the latter is not bound unless he ratifies the contract. If the professed agent contracts in his own name he is, of course, personally liable on the contract. If, how- ever, he contracts in the name of the ostensible principal, the professed agent is not liable on the contract, because it does not purport to be his, and to hold him liable on it would be "to make a contract, not to construe it." * This rule is sus- tained by principle and authority, though there are some decisions which hold him liable on the contract. 8 The rem- edy of the third person who contracts with the professed age.nt in reliance upon the authority which he asserts, but does not possess, must, therefore, be sought in some other form of action than an action on the contract. If the agent fraudulently represents that he is authorized when he is not, he is, upon familiar principles, liable in an action of tort, for deceit ; and this, whether the representa- t Jenkins v. Hutchinson, 13 Q. B. 744; Lewis v. Nicholson, 18 Q. B. 503; Ballon v. Talbot, 16 Mass. 461, 8 Am. Dec. 146; Bartlett T. Tucker, 104 Mass. 336, 6 Am. Rep. 240; Noyes v. Loring, 55 Me. 408: White v. Madison, 26 N. Y. 117; Dung v. Parker, 52 N. Y. 494; Dun- can v. Niles, 32 HI. 532, 83 Am. Dec. 293; McCurdy v. Rogers, 21 Wis. 199, 91 Am. Dec. 468; Sheffield v. Ladue, 16 Minn. 388 (Gil. 346), 10 Am. Rep. 145; Cole v. O'Brien, 34 Neb. 68, 51 N. W. 316. 33 Am. St Rep. 616; Hall v. Crandall, 29 Cal. 567, 89 Am. Dec. 64: Senter v. Monroe, 77 Cal. 347, 19 Pac. 580. s Roberts v. Button, 14 Vt. 195; Weare v. Gove, 44 N. H. 196; and see Terwilliger v. Murphy, 104 Ind. 32, 3 N. E. 404; Solomon v. Penoyar, 89 Mich. 11, 50 N. W. 644; Du^enbury v. Ellis, 3 Johns. Cas. (N. Y.) 70, 2 Am. Dec. 144, and other early New York cases to the same effect, have been overruled. White v. Madison, 20 N. Y. 117; Simmons v. More, 100 N. Y. 140, 2 N. E. 640. TIFF.P.& A. 24 370 LIABILITY OF AGENT TO THIRD PERSON. (Ch. 13 tion of authority is express or is merely implied from his assuming to act as one having authority. 4 So long as he is aware of his want of authority, it is immaterial whether he makes the representation actually intending a fraud or mere- ly in reckless disregard whether it be true or false. On the other hand, if he honestly but mistakenly believes that he has authority, he is not liable in an action of deceit. The effect of the foregoing doctrines being to leave a person who enters into a contract with another as agent without remedy where the professed agent has acted under a mistaken belief that he has authority, as in the case of a sup- posed agent acting under a forged power of attorney, which he believes to be genuine, has led the courts to resort to the fiction of an implied contract or warranty of authority. 5 "The fact that the professed agent honestly thinks that he has authority affects the moral character of his act ; but his moral innocence, so far as the person whom he has induced to con- tract is concerned, in no way aids such person or alleviates the inconvenience and damage which he sustains. The obli- gation which arises in such a case is well expressed by say- ing that a person, professing to contract as agent of another, See Pothill v. Walker, 3 B. & Ad. 114; Randell v. Trimen. 18 C. B. 786; Smout v. Ilbery, 10 M. & W. 1; May v. Telegraph Co., 112 Mass. 90; Kroeger v. Pitcalrn, 101 Pa. 311, 47 Am. Rep. 718; Noyes v. Loring, 55 Me. 408; White v. Madison, 26 N. Y. 117; Dung v. Parker, 52 N. Y. 494; Duncan v. Niles. 32 111. 532. Colleii v. Wright, 8 El. & B. 647; Richardson v. Williamson, L. R. 6 Q. B. 276; Weeks v. Propert, L. R. 8 C. P. 427; Re Na- tional Coffee Palace Co., 24 Ch. D. 367; Stuart v. Haight, 9 T. L. R. 488; Oliver v. Bank of England [1902] 1 Ch. 210 (forged power); Baltzen v. Nicolay, 53 N. Y. 467; White v. Madison, 26 N. Y. 117; Simmons v. More, 100 N. Y. 140. 2 N. E. 640; Taylor v. Nostrand, 134 N. Y. 108, 31 N. E. 246; Kroeger v. Pitcairn, 101 Pa. 311, 47 Am. Rep. 718; Lane v. Corr, 156 Pa. 250, 25 Atl. 830; Patterson v. Lippincott, 47 N. J. Law, 457, 1 Atl. 506, 54 Am. Rep. 178; Far- mers' Co-op. Trust Co. v. Floyd, 47 Ohio St. 525, 26 N. E. 110, 12 L. R. A. 346, 21 Am. St. Rep. 846; Seeberger v. McCormick, 178 111. 404, 53 N. E. 340; Skaaraas v. Finnegan, 31 Minn. 48, 16 N. W. 456; Id., 32 Minn. 107, 19 N. W. 729. 91-92) WHEN AGENT ACTS WITHOUT AUTHORITY. 371 impliedly, if not expressly, undertakes to or promises the per- son who enters into such contract, upon the faith of the pro- fessed agent being duly authorized, that the authority which he professes to have does in point of fact exist." 8 The im- plied undertaking or warranty of the agent extends as well to cases in which he exceeds his authority as to cases in which he has no authority at all. Nor is the rule confined to the case of one person inducing another to enter into a contract; for, if the professed agent induces the other to enter into any transaction which he would not have entered into but for the representation of authority, the rule ap- plies. 7 Same Principal Incapable. The want of authority may arise from a lack of legal capac- ity on the part of the principal. In such case it seems that the assuming agent is liable upon the implied warranty,* Collen v. Wright, 8 El. & B. 647. T Plaintiff having entered into a binding contract with a company to accept Its debenture stock in payment of a debt, defendant di- rectors issued stock, which without their knowledge was an overis- sue. Held, that they were liable on an implied warranty that they had authority to Issue valid stock. Firbank's Ex'rs v. Humphreys, 18 Q. B. D. 60. Where a broker, believing himself authorized under a power of attorney which proved to be a forgery, procured the Bank of Eng- land to allow him to v.ausfer consols, to its loss, a recovery against him was allowed. Oliver v. Bank of England [1902] 1 Ch. 610. See 16 Harv. L. Rev. 311. Where directors of a company which had no power to accept bills accepted on its behalf, they were personally liable to a pur- chaser without notice, on an Implied warranty of authority, the com- pany's powers being defined by private act, and the representation held to be of fact, and not of law. West London Com. Bank v. Kitson, 13 Q. B. D. 360. In Patterson v. Lippincott, 47 N. J. Law, 457, 1 Atl. 506, 54 Am. Rep. 178, it was held that the infancy of the principal was not a breach of the warranty of authority, unless the act of the professed agent was entirely without the infant's knowledge or consent, since the contract, If authorized, would be voidable, and not void. 372 LIABILITY OP AGENT TO THIRD PERSON. (Ch. 13 unless the incapacity has occurred without his knowledge since his appointment, 8 or the parties, being equally informed as to the facts, act under a mutual mistake of law. 1 * When Circumstances Negative Warranty. If the contract is made on such terms that the agent stip- ulates that he shall not be responsible for any want of au- thority, no warranty of authority will be implied, at least in the absence of bad faith on his part. Thus, where a broker signed a charter party "per telegraphic authority," evidence was admitted to prove that when charters are en- tered into by brokers in accordance with telegraphic instruc- tions it was usual to sign in that form, and that it was un- derstood in the trade as negativing the implication of a war- ranty by the charterer's agent, at all events, to a greater extent than warranting that he had a telegram which, if cor- rect, authorized such a charter. 11 And if the agent, acting in good faith, discloses all the facts upon which his authority rests, no warranty of authority can be implied. 18 Thus, where the defendant, after the death of her husband, but be- fore she was informed of the fact, ordered goods from the plaintiff, who had previously supplied her on the credit of the husband, and been paid for them by him, the husband to the knowledge of the plaintiff being resident abroad, it was held that she was not liable on an implied warranty, the continuance of the life of the principal being, under the "It seems to me that an agent Is liable to be sued by a third person, If he assumes to act on his principal's behalf after be had knowledge of his principal's incompetency to act. * * * In my opinion, if a person who has been held out as agent assumes to act on behalf of a lunatic, * * the pretended agent is liable to an action for misleading an Innocent person." Per Brett, L. J., In Drew V. Nunn, 4 Q. B. D. 661. 10 Jefts v. York, 10 Gush. (Mass.) 392. 11 Lilly v. Smales [1892J 1 Q. B. 456. 12 Smout v. Ilbery, 10 M. & W. 1; Hall y. Lauderdale, 46 N. Y. 72; Ware v. Morgan, 67 Ala. 461; Newman v. Sylvester, 42 Ind. 106; Michael v. Jones, 84 Mo. 578; Barry v. Pike, 21 La. Ann. 221. 91-92) WHEN AGENT ACTS WITHOUT AUTHORITY. 373 circumstances, a fact equally within the knowledge of both contracting parties, and there having been no failure on her part to state any fact within her knowledge relating to the continuance of the authority. 11 In this case the authority of the agent turned upon a question of fact, namely, the con- tinuance of the authority dependent upon the life of the prin- cipal. When the agent makes full disclosure of the facts constituting his authority, as where he shows to the other party the power of attorney or letter of instructions under which he acts, the question of his authority becomes a mere question of construction, or of law, and no warranty of the sufficiency of the authority can be implied. 14 Measure of Damages. The measure of damages for a breach of a warranty of authority is the loss directly resulting as a natural and prob- able consequence of the breach. 18 The damages are to be arrived at by considering the difference in the position the plaintiff would have been in had the authority existed and the position he is actually in in consequence of the contract or transaction being unauthorized. 16 When a contract made by the professed agent is repudiated, the measure of dam- is Smout v. Ilbery, 10 M. & W. 1. n Beattie v. Ebury, L. R. 7 Ch. 777, affirmed L. R. 7 H. L. 102 (cf. West London Com. Bank v. Kitson, 13 Q. B. D. 360); McReavy v. Eshelman, 4 Wash. St. 757, 31 Pac. 35. "If the defect of authority arises from a want of legal capacity, and if the parties are under a mutual mistake of the law, and are both equally informed in regard to the facts, so that the lender is not misled by any word or act of the agent, he wpuM. have no legal remedy against the agent, not in assumpsit, for it is not his contract, nor in tort, for he is chargeable with no deceit." Per Shaw, C. J., in .lefts v. York, 10 Cush. (Mass.) 392. Cf.' Oliver v. Bank of England [1902] 1 Ch. 610. is Simons v. Patchett, 7 EL & B. 568; Spedding v. Nevill, L. R. 4 C. P. 212; Godwin v. Francis, L. R. 5 C. P. 295; Skaaraas v. Fin- negan, 32 Minn. 107, 19 N. W. 729. i Per Lord Esher in Firbank's Ex'rs v. Humphreys, 18 Q. B. D. 54. 374 LIABILITY OF AGENT TO THIRD PERSON. (Cll. 13 ages is what the plaintiff has lost by losing the contract, or prima facie the damages which would have been recoverable against the principal, had the contract been authorized, upon his failure to perform it. 17 Other damages, naturally result- ing from the breach, may be recovered. 18 Thus, when the plaintiff has incurred expense in prosecuting an action against the principal upon the contract, in which he has been de- feated on the ground that the contract was unauthorized, he may also recover the costs of such action, at least if the agent has persisted in asserting his authority and the costs were justified. 19 It follows that if the contract as made could not have been enforced against the principal, even if author- ized, because of failure to observe formalities required by law, as in the case of a contract in which the requirements of the statute of frauds are not satisfied, there can be no recovery against the agent." When No Principal in Existence. It would seem that the same principles should govern where a person professes to contract in the name of an al- leged principal, but no such principal is in existence. In such case, however, it has been declared that the professed agent is liable upon the contract. Thus, where a contract IT Re National Coffee Palace Co.. 24 Ch. D. 367; Meek v. Wend. 21 Q. B. D. 126; Simmons v. More, 100 N. Y. 14O, 2 N. E. 640; See- berger v. McConnick, 178 m. 404, 53 N. E. 340; Skaaraas v. Finne- gan. 31 Minn. 48, 16 N. W. 456. is Farmers' Co-op. Trust Co. v. Floyd. 47 Ohio St 525, 26 N. E. 110, 12 L. R. A. 346, 21 Am. St Rep. 846; Skaaraas v. Finnegan, 32 Minn. 107, 19 N. W. 729. Collen v. Wright, 8 E. & B. 647; Randell v. Trimen, 18 C. B. 786; Godwin T. Francis, L. R. 5 a P. 295; White v. Madison, 26 N. Y. 117. o Baltzen v. Nicolay, 53 N. Y. 467; Dung v. Parker, 52 N. Y. 496. Where A. verbally contracted, without authority, to sell real estate to B., it was held that the latter had no remedy in equity against A. for breach of the warranty of authority on the ground of part performance. Warr T. Jones, 24 W. R. 695; Bowstead, Dig. Ag. art 116. 91-92) WHEN AGENT ACTS WITHOUT AUTHORITY. 375 was entered into by the promoters of a proposed corpora- tion on its behalf, in which case, as we have seen, there can be no ratification, since to admit of ratification the contract must be made on behalf of some person in existence, it was held that the professed agents were bound. -"Where a contract is signed," said Earle, C. J., "by one who professes to be sign- ing 'as agent,' but who has no principal existing at the time, and the contract would be altogether inoperative unless bind- ing upon the person who signed it, he is bound thereby ; and a stranger cannot by a subsequent ratification relieve him from that responsibility." " The statement as to the liability of a professed agent when no principal exists was hardly neces- sary to the decision, for the contract, which in terms de- scribed the corporation as "proposed," was construed as one in which the parties contemplated that the persons signing should be personally liable. And the existence of any rule which, by reason of there not being at the time any principal in existence who can be bound, can convert the position of a person signing the name of an alleged principal, without using language indicating an intention to be bound person- ally, into the position of a contracting party, has been doubt- ed. 22 There is, however, some authority for holding person- ally liable upon this ground a person who contracts pro- fessedly on behalf of a voluntary association, 23 which, being neither a corporation nor a partnership, is not a legal entity. 14 It is conceded that the rule, if it exists, does not apply where an agent contracts on behalf of a principal who with- out his knowledge has died since the authority was con- si Kelner T. Baxter, L. R. 2 C. P. 174. Hollman v. Pullin, 1 Cababe & E. 254. See. also. Jones v. Hope, 3 T. L. B. 247; Bartlett v. Tucker, 101 Mass. 336. 6 Am. Rep. 240. " Lewis v. Tiltoii, 64 Iowa, 220, 19 N. W. 911, 52 Am. Rep. 436; Reding v. Anderson, 72 Iowa, 498, 34 N. W. 300; Comfort v. Gra- ham, 87 Iowa, 295, 54 N. W. 242. See, also, Learn v. Upstill, 52 Neb. 271, 72 N. W. 213; Codding v. Munson, 52 Neb. 680, 72 N. W. 84G, 66 Am. St. Rep. 524. *4 Ante, p. 376 LIABILITY OP AGENT TO THIRD PERSON. (Ch. 13 ferred. In such case, if the agent was aware of the fact of his principal's death, it seems that he would be liable in deceit or upon an implied warranty of authority." LIABILITY ON QUASI CONTRACT MONEY RECEIVED IN GOOD FAITH. 93. Where money I* paid by a third person to an agent for the use of his principal, nnder a mistake of fact, the agent is liable to repay the same; provided that the money is reclaimed before he has paid it over, or dealt to his detriment with his principal on the faith of the payment. SAME MONET OBTAINED WRONGFULLY. 94. When money is obtained by an agent from a third per- son by extortion or fraud, or otherwise -wrongfully, he is liable to repay the same, although before it is reclaimed he has paid it over to his principal. Money Received in Good faith. While an agent who contracts as such for a disclosed prin- cipal is not as a rule liable personally upon the contract, he may be liable to repay money which has been paid to him as agent by a third person, in an action for money had and re- ceived to the plaintiff's use. Although the agent has acted in good faith, as where the money has been paid to him under a mistake of fact, he is nevertheless liable to repay it, provided the party who made the payment reclaims it before he has paid it over or otherwise dealt to his detriment with his principal on the faith of the payment ; * but, if he has in Smout v. Ilbery, 10 M. & W. 1; Carriger v. Whittlngton, 26 Mo. 811, 72 Am. Dec. 212. 93-94. i Duller v. Harrison, Cowp. 505; Cox r. Prentice. 3 M. & S. 344; La Farge v. Kneeland. 7 Cow. (N. Y.) 456: Mowatt v. McLelan, 1 Wend. (N. Y.) 173; O'Connor v. Clopton, 60 Miss. 349; Smith v. Binder, 75 111. 492; Granger v. Hathaway, 17 Mich. 500; Shepard v. Sherin, 43 Minn. 382, 45 N. W. 718. Where one entitled, to elect whether he will hold an ageat or a 93-94) LIABILITY ON QUASI CONTRACT. 377 the meantime paid it over or so dealt with his principal, he is not liable. 2 "An agent," said Lord Ellenborough, "who receives money for his principal is liable as a principal so long as he stands in his original situation, and until there has been a change of circumstances by his having paid over the money to his principal, or done something equivalent to it." 8 Payment to another, on behalf of the principal on faith of the credit, is equivalent to payment to the princi- pal; 4 but merely crediting him with the amount is not. 5 Notice need not be formal, but must be such as to apprise the agent of the facts and of the intention of the other party by reason thereof to reclaim the money. 6 If the agent did not disclose his agency, and the other party dealt with him as principal, payment over to the real principal will be no de- fense. 7 Such cases are to be distinguished from those in which the agent receives money as a stakeholder, as where an auc- tioneer receives a deposit, in which case he is liable to re- fund on default of the vendor, it being his duty to hold as stakeholder until the completion or rescission of the con- tract. 8 It has been held that, when money is paid to an agent for principal who holds money which he Is ex sequo et bono entitled to receive makes such election, he renounces all remedies against the other party. Eufaula Grocery Co. v. Bank, 118 Ala. 408, 24 South. 389. See Bowstead, Dig. Ag. art 117. 2 Holland v. Russell, 4 B. & S. 14; United States v. Pinover (D. C.) 3 Fed. 305; Cabot v. Shaw, 148 Mass. 459, 20 N. B. 99. Cox v. Prentice, 3 M. & S. 344. 4 Cabot v. Shaw, 148 Mass. 459, 20 N. E. 99. B Buller v. Harrison, Cowp. 565; Cox v. Prentice, 3 M. & S. 344. Shepard T. Sherin, 43 Minn. 382, 45 N. W. 718. i Newall v. Tomlinson, L. R. 6 C. P. 405; Smith v. Kelly, 43 Mich. 390, 5 N. W. 437. See, also, United States v. Pinover (D. C.) 3 Fed. 305, 309. s Burrough v. Skinner, 5 Burr. 2639; Edwards v. Hodding, 1 Marsh. 377; Gray v. Gutterldge, 8 O. & P. 40. 378 LIABILITY OF AGENT TO THIRD PERSON. (Ch. 13 a consideration which fails, an action for its recovery must be against the principal. 8 Money Obtained Wrongfully. If the agent has obtained the money wrongfully, he is lia- ble to repay it in any event, although he has paid it over to his principal or otherwise dealt with him to his detriment on the faith of the payment without notice or demand from the other party. Thus, he is so liable if he obtains the money by extortion or illegal exaction, 10 or by fraud, 11 or under other circumstances which to his knowledge make it illegal for him to receive it. 12 Of course, if the wrong was that of the principal, and was not participated in or known by the agent, payment to the principal is a defense. 18 MONEY RECEIVED FROM PRINCIPAL, FOR THIRD PERSON. 95. When an agent is authorized to pay to a third person money in his hands, and expressly or impliedly prom- ises such person to pay him, the agent is personally liable to such person for the amount so received. An agent who is instructed by his principal to pay money in his hands to a third person does not come thereby under Ellis v. Goulton [1893] 1 Q. B. 350; Bleau v. Wright, 110 Mich. 183, 68 N. W. 115. 10 Snowdon v. Davis, 1 Taunt. 359 (payment tinder terror of illegal distress); Smith v. Sleap, 12 M. & W. 585 (withholding documents to obtain more money than is due); Elliott v. Swartwout, 10 Pot. (TJ. S.) 137, 9 L. Ed. 373; United States v. Pinover (D: C.) 3 Fed. 305. 309; Ripley v. Gelston, 9 Johns. (N. Y.) 201, 6 Am. Dec. 271; Frye v. Lockwood, 4 Cow. (N. Y.) 454. 11 Moore v. Shields, 121 Ind. 267, 23 N. E. 89; Hardy v. Express Co. (Mass.) 65 N. E. 375. 12 Ex parte Edwards, 13 Q. B. D. 747 (receiving money from debtor with notice of act of bankruptcy); Sharland v. Mildon, 5 Hare, 469; Larkin v. Hapgood, 56 Vt. 597 (money paid in fraud of insolvent law). is Owen v. Cronk [1895] 1 Q. B. 265. 96-97) LIABILITY FOR TORTS. 379 any obligation to the person in whose favor the payment is directed. The authority may be revoked by the principal until it is executed or the agent has come under some bind- ing engagement with the third person. 1 But, if the agent promises to pay the third person, the authority is no longer revocable, 2 and he becomes liable to him for the amount. In such case the money is deemed to be appropriated to the use of the promisee, who may maintain an action for money had and received to his use.* INABILITY FOR TORTS. 96. Where loss or injury in caused to a third person by the wrongful act or omission of an agent while acting on behalf of his principal, the agent is personally liable therefor, whether he is acting -with the authority of the principal or not, to the same extent as if he were acting on bis own behalf .1 SAME-NONFEASANCE. 97. An agent is not liable to a third person merely by rea- son of failure to perform a duty which he owes to his principal; but, if he enters upon the performance of any act, he is liable to a third person for any injury resulting from his failure to exercise such reasonable care in the manner of its performance as he owes to nch person. 95. i Williams v. Everett, 14 East, 582; Baron v. Husband, 4 B. & Ad. 611; Malcolm v. Scott, 5 Ex. 601. 2 Ante, p. 163. Crowfoot v. Gurney, 9 Bing. 372; Robertson v. Fauntleroy, 8 Moore, 10; Walker v. Hostron, 9 M. & W. 411; Goodwin v. Bowden, 54 Me. 424; Wyman v. Smith, 2 Sandf. (N. Y.) 331. Where a bill drawn on an agent is payable out of a particular fund, and he promises the holder to pay when he receives money from his principal, he is liable to the holder if he subsequently re- ceives the money. Stevens v. Hill, 5 Esp. 247. { 9C-07. i Substantially as in Bowstead, Dig. Ag. art 124. 380 LIABILITY OF AGENT TO THIRD PERSON. (Oil. 13 In General Misfeasance. An agent is personally liable for his wrongful acts; nor does the fact that he commits an act under direction of his principal, who is also liable, relieve him. 2 "For the warrant of no man, not even of the king himself, can excuse the doing of an illegal act; for, although the commanders are tres- passers, so also are the persons who did the fact." * It is immaterial that the agent acted in the bona fide belief that the principal had a right to do the act. Accordingly an agent is liable if he converts the goods of a third person to his principal's use. 4 It is no defense that he acted in good faith and in the belief that the prin- cipal was the owner. 8 The various cases in which an inno- Bennett v. Bayes, 5 H. & N. 391 (illegal distress); Stevens v. Midland Counties Ry., 10 Ex. 352 {malicious prosecution); Bennett v. Ives, 30 Conn. 329; Johnson v. Barbel 1 , 5 Oilman, 425, 50 Am. Dec. 416; Burnap v. Marsh, 13 111. 535 (malicious prosecution); Blue Y. Briggs, 12 Ind. App. 105, 39 N. E. 885; Josselyn v. McAllister, 22 Mich. 300 (false imprisonment); Wright v. Eaton, 7 Wis. 595; City of Duluth v. Mallett, 43 Minn. 205, 45 N. W. 154. Sands v. Child, 3 Lev. 351, 352. Perkins v. Smith, 1 Wils. 328; Cranch v. White, 1 Bing. N. C. 414; McPheters v. Page, 83 Me. 234, 22 Atl. 101, 23 Am. St Rep. 772. s Stevens v. Elwell, 4 M. & S. 259; Hollins v. Fowler, L. R. 7 Q. B. 616, affirmed L. R. 7 H. L. 757; Cochrane v. Rymill, 4 L. T. (N. S.) 744 (auctioneer); Coles v. Clark, 3 Gush. (Mass.) 399; Robinson v. Bird, 158 Mass. 357, 33 N. E. 391, 35 Am. St. Rep. 495 (auctioneer); Everett v. Coffin, 6 Wend. (N. Y.) 603, 22 Am. Dec. 551; Hoffman v. Carow, 22 Wend. (N. Y.) 285; Spraights v. Hawley, 39 N. Y. 441, 100 Am. Dec. 452; Kearney v. Glutton, 101 Mich. 106, 59 N. W. 419, 45 Am. St. Rep. 394; Warder, Bushnell & Glessner Co. v. Harris, 81 Iowa, 153, 46 N. W. 859; Stevens v. Lovejoy (Gal.) 27 Pac. 33. But see Leuthold v. Fairchild, 35 Minn. 99, 27 N. W. 503, 28 N. W. 218; Roach v. Turk. 9 Heisk. (Term.) 708, 24 Am. Rep. 360; Abernathy v. Wheeler, 92 Ky. 320, 17 S. W. 858, 36 Am. St. Rep. 593. It has even been held that an innocent agent is liable although the property sold was government bonds payable to bearer. Kimball v. Billings, 55 Me. 147, 92 Am. Dec. 581. But see Spooner v. Holmes, 102 Mass. 503, 3 Am. Rep. 491. 96-97) LIABILITY FOE TOKT8. 381 cent agent may be liable for conversion have been formulated by a recent English writer as follows : -An agent who has control or possession of goods, even if he obtained the pos- session from the apparent owner and acted in good faith on his authority, is guilty of a conversion if he sells and de- livers or otherwise assumes to transfer the possession and property in the goods without the authority of the true own- er; 7 or refuses, without qualification, to deliver the goods to the true owner on demand ; 8 or transfers the possession to his principal or any other person except the true owner, with notice of the claim of the true owner ; ' but an agent is not guilty of conversion who in good faith merely con- tracts on behalf of his principal to sell goods of which he has not possession or control ; 10 or by the authority of the apparent owner, and without notice of the claim of the true owner, deals with the possession without assuming to deal with the property in the goods. 11 "All persons directly concerned in the commission of a fraud are to be treated as principals. No party can be per- mitted to excuse himself on the ground that he acted as the agent or servant of another." 1S If an agent makes a false Bowstead, Dig. Ag. art. 125 (substantially). T Barker v. Furlong [1881] 2 Cb. 172; Consolidated Co. y. Curtis [1892] 1 Q. B. 495. And see cases cited supra, p. 880, note 5. s Alexander v. Southey, 5 B. & Aid. 247; Lee v. Bayes, 18 C. B. 699; Singer Mfg. Co. y. King, 14 R. I. 511. Davis v. Artingstall, 49 L. J. Ch. 609. 10 Consolidated Co. v. Curtis [1892] 1 Q. B. 495, 498. National Merc. Bank v. Eymill, 44 L. T. (X. S.) 767; Gurley v. Armstead, 148 Mass. 267, 19 N. E. 389, 2 L. R. A. 80, 12 Am. St. Rep. 555. In this last case the court said: "Whoever receives goods from one in actual, though illegal, possession thereof, and who re- stores the goods to such person, is not liable for a conversion by reason of having transported them. * * * And this is so, ap- parently, even if the goods thus received were restored to the wrong- ful possessor after notice of the claim of the true owner. Loring v. Mulcahy, 3 Allen (Mass.) 575; Metcalf v. McLaughlin, 122 Mass. 84." i* Cullen v. Thompson's Trustees, 4 Macq. 424, 432. See, also, Bulkeley v. Dunbar, 1 Aust. 37. LIABILITY OF AGENT TO THIRD PERSON. (Oh. 13 representation because his principal directed him to do so, and in consequence, believing it to be true, the necessary mental element is, of course, lacking, and the agent is not liable, 13 although the principal, if he knew the representation to be false, would be. 14 If, however, the agent makes a representa- tion knowing it to be false, or in reckless disregard whether it be true or false, he is liable. 16 So, where an agent assists in the commission of a breach of trust, he is personally lia- ble. 18 An agent is liable in an action of deceit for a fraudulent representation of authority. 1 * Nonfeasance. It is commonly said that an agent is responsible to third persons for misfeasance only, and not for nonfeasance. It is obvious that an agent incurs no liability to third persons merely because of his failure to perform a duty which he owes to his principal. "His liability * * * is solely to his principal, there being no privity between him and such third persons." 18 "A servant or deputy, quatenus such, can- not be charged for neglect, but the principal only shall be charged for it ; but for a misfeasance an action will lie against a servant or deputy, but not quatenus a deputy or servant, but as a wrongdoer." 18 A person may become a wrong- doer, however, by wrongful neglect as well as by wrongful act that is, by omitting to perform a duty which he owes to a third person and in such case, non constat he is a depu- ty, an action lies against him for his wrongful neglect or default, not quatenus a deputy, but as a wrongdoer. Thus, is Jaggard, Torts, 286. 1* Ante, p. 295. is Swift v. Jewsbury, L. R. 9 Q. B. 301; Hedden v. Griffin, 136 Mass. 229, 49 Am. Rep. 25; Weber v. Weber, 47 Mich. 569, 11 N. W. 389; Clark v. Levering, 37 Minn. 120, 33 N. W. 776; Hedin v. Institution, 62 Minn. 146, 64 N. W. 158, 35 L. R. A. 417, 54 Am. St Rep. 628. See, also, Arnot v. Biscoe, 1 Ves. 95; Salmon v. Richard- son, 30 Conn. 360, 79 Am. Dec. 255; Reed v. Peterson, 91 I1L 288. i A. G. v. Corporation of Leicester, 7 Beav. 176. IT Ante, p. 368, 18 Story, Ag. 308. i Per Holt C. J., in Lane v. Cotton, 12 Mod. 472. 96-97) LIABILITY FOR TORTS. 383 an agent is not liable to a third person because he faib to carry out his contract with his principal, and the latter is the only person who can maintain an action against him for that nonfeasance ; * but if he enters upon performance, and in doing some act fails to exercise such reasonable care as the nature of the act demands, to the injury of a third person, he is liable therefor. 21 For example, where an agent employed to manage a tenement directed the city water to be let on, but failed to see that the pipes had been left in proper condition, and in consequence of a faucet being open and the sink clogged water overflowed to the injury of a tenant be- low, it was held that the agent was liable to the latter. "The defendant's omission to examine the state of the pipes," said the court, "was a nonfeasance. * * * As the facts are, the nonfeasance caused the act done to be a misfeasance. But from what did the plaintiff suffer? Clearly from the act done, which was no less a misfeasance by reason of its being preceded by a nonfeasance." " And so, where the superintendent of a manufacturing establishment and other agents and servants of the corporation negligently placed a tackle block so that it fell and injured the plaintiff, it was held that they were liable. "If the agent once actually under- takes and enters upon the execution of a particular work," said Gray, C. J., "it is his duty to use reasonable care in the manner of executing it, so as not to cause any injury to third persons which may be the natural consequences of his acts ; and he cannot, by abandoning its execution midway and 20 Denny v. Manhattan Co., 2 Denio (N. Y.) 115; Id., 5 Denio (N. Y.) 639; Hill v. Caverly, 7 N. H. 215, 26 Am. Dec. 735; Delaney v. Rochereau, 34 La. Ann. 1123, 44 Am. Rep. 456; Reid v. Humber, 49 Ga. 207; Feltus v. Swan, 62 Miss. 415. 21 Bell v. Josselyn, 3 Gray, 309, 63 Am. Dec. 741; Osborne v. Morgan, 130 Mass. 102, 39 Am. Rep. 437; Phelps v. Wait. 30 N. Y. 78; Horner v. Lawrence, 37 N. J. Law, 46; Harriman v. Stowe, 57 Mo. 93; Lottman v. Barnett, 62 Mo. 159; Miller v. Staples, 3 Colo. App. 93, 32 Pac. 81. See Jaggard, Torts, 286-291. 22 Bell v. Josselyn, supra. See, also, Greenberg Y. Lumber Co., 90 Wis. 225, 63 N. W. 93, 28 L. R. A. 439, 48 Am. SL Rep. 911. 384 LIABILITY OP AGENT TO THIRD PERSON. (Gh. 13 leaving things in a dangerous condition, exempt himself from liability. * * * This is not nonfeasance, or doing noth- ing ; but it is misfeasance, doing improperly. * * * The plaintiff's action is not founded on any contract. * * * The fact that a wrongful act is a breach of a contract between the wrongdoer and one person does not exempt him from the responsibility for it as a tort to a third person injured thereby." " It must be remembered that it is only for neglect of a duty which is imposed upon him as a member of society that the agent is liable to third persons. Thus, where an agent is charged with the management of a house and with the duty of keeping it in repair, his duty is solely to his principal, and consequently he is not liable to a third person who is injured by accident caused by his failure in that regard. 24 It must be conceded, however, that there is a tendency to ignore this distinction in such cases, and to hold agents in charge of property to a peculiar responsibility. 25 And in a recent case an agent was held liable to a person injured by * Osborne v. Morgan, 130 Mass. 102, 39 Am. Rep. 437. 24 Delaney v. Rochereau, 34 La. Ann. 1123, 44 Am. Rep. 456. An agent in charge of a building who fails to make necessary re- pairs is not liable to a tenant injured by such failure. Dean v. Brock, 11 Ind. App. 507, 38 N. E. 829. An agent in charge of a plantation is not liable to the owner of an adjoining plantation for damage resulting from malicious neglect and refusal to keep open a drain which it was his duty as such agent to keep open. Feltus v. Swan, 62 Miss. 415. An agent charged with the duty of superintending the erection on his principal's premises of a grand-stand for a foot-ball game was not liable to persons injured by his negligence in permitting a de- fective structure. Van Antwerp v. Linton, 89 Hun, 417, 35 N. Y. Supp. 318, affirmed 157 N. Y. 716, 53 N. E. 1133, following Murray v. Usher, 117 N. Y. 542, 23 N. E. 564. 26 Lough v. John Davis & Co. (Wash.) 70 Pac. 491; Mayer v. Building Co., 104 Ala. 611, 16 South. 620, 28 L. R. A. 433, 53 Am. St. Rep. 88; Ellis v. McNaughton, 76 Mich. 237, 42 N. W. 1113, 15 Am. St. Rep. 308. 96-97) LIABILITY FOB TORTS. 385 his failure to keep in repair premises of which he had been given control.* 6 Subagents and CoagenU. An agent is not, as a rule, liable to third persons for loss or injury caused by the wrongful act or omission of a sub- agent or coagent, unless he authorized or participated there- in. 27 In cases of libel, however, a stricter rule prevails, and the manager of a newspaper is equally liable with the pro- prietor or publisher for the publication of a libelous article, whether he knows of the publication or not, since it is his business to know. 28 2 Lough v. John Davis & Co. (Wash.) 70 Pac. 491. See, also, Baird v. Shipraan, 132 I1L 10, 23 N. E. 384, 7 L. R. A. 128, 22 Ain. St. Rep. 504, and Campbell v. Sugar Co., 62 Me. 552, 16 Am. Rep. 503, in which cases, however, the agent let premises in dangerous condition, promising to repair. 27 Stone v. Cartwright, 6 T. R. 411; Baer v. Stevenson, 30 L. T. 117; Cargill v. Brown, 10 Ch. D. 502; Weir v. Barnett, 3 Ex. D. 238; Brown v. Lent, 20 Vt. 529. zs Nevin v. Spieckeraann (Pa.) 4 Atl. 497; Smith v. Utley, 92 Wis. 133, 65 N. W. 744, 35 L. R, A. 620. TIFF.P.& A. 25 386 LIABILITY OF THIRD PERSON TO AGENT. (Gil. 14 CHAPTER XIV. LIABILITY OP THIRD PERSON TO AGENT. 98. Liability on Contract Right of Agent to Sue. 99. Intervention by Principal. 100. Defenses. 101. When Professed Agent Is Real Principal. 102. Liability for Money Had and Received. 103. Liability for Torts. LIABILITY ON CONTRACT BIGHT OF AGENT TO SUE.' 88. An agent may sue in his own name on a contract made by him on behalf of his principal: (1) "When he has con- tracted personally; and (2) when he has a special property in, or lien upon, the subject-matter of the contract. SAME INTERVENTION BY PRINCIPAL 99. The right of the agent to sue ceases on the intervention of the principal, unless the agent has as against him a right of lien on the subject-matter of the contract, in which case the right of action of the agent has prior- ity to that of the principal. SAMEDEFENSES. 100. In an action by the agent, the defendant may avail himself of any defense which would be good (1) As against the plaintiff of record; or (2) As against the principal. EXCEPTION: If the agent has, as against the principal, a right of lien on the subject-matter of the contract, a settlement -with the principal is not available as a defense to the prejudice of the agent's claim, unless the defendant was led to believe that the agent acquiesced therein. 98-100. i Following substantially Bowstead, Dig. Ag. art 119- 121. 98-100) LIABILITY ON CONTRACT. 387 Contract in, Name of Agent. When a contract is made by an agent in his own name, he is bound thereby and has a corresponding right to sue there- on. The rules which determine whether a contract is to be deemed the contract of the principal or of the agent have already been considered. 2 If the contract is the contract of the agent, and is under seal * or negotiable, 4 he, and he only, can sue upon it. If the contract is the contract of the agent, and is not under seal or negotiable, the principal, although undisclosed, 8 may sue upon it, and the agent, subject to the qualifications to be mentioned, may also sue.* And although the principal be disclosed, if the agent contracts personally he may sue. 1 The agent's promise is a sufficient considera- tion for an undertaking to him personally. It is immaterial that the beneficial interest is in the principal, and that the agent when he recovers will be bound to account to him. Thus, an agent who sells goods for an undisclosed principal may recover the price; 8 or an agent who consigns goods, taking a bill of lading or otherwise contracting in his own name, may sue for nondelivery or other breach of the con- tract. 9 "There is privity of contract," said Lord Ellenbor- 2 Ante, p. 331 et seq. Ante, p. 244. Ante, p. 243. Ante, p. :-'.U3. Joseph v. Knox, 3 Camp. 320; Gardner v. Davis, 2 O. & P. 49; Sims v. Bond, 5 B. & Ad. 389, 393; Coiburn v. Phillips, 13 Gray (Mass.) 64; Alsop v. Caines, 10 Johns. (N. Y.) 396; United States Tel. Co. v. Gildersleve, 29 Md. 232, 96 Am. Dec. 519; Sharp v. Jones, 18 Ind. 314, 81 Am. Dec. 359. i Cooke v. Wilson, 1 C. B. (N. S.) 153; Albany & R. Iron & Steel Co. v. Luiidberg, 121 U. S. 451, 7 Sup. Ct. 958, 30 L. Ed. 982; Pelton v. Baker, 158 Mass. 349, 33 N. E. 394; Ludwig v. Gillespie, 105 N. Y. 653, 11 N. E. 835; Doe v. Thompson, 22 N. H. 217; Potts v. Rider, 3 Ohio, 70, 17 Am. Dec. 581; Tustin Fruit Assn. v. Fruit Co. (Cal.) 53 Pac. 693. Gardner v. Davis, 2 a & P. 49; Alsop v. Caines, 10 Johns. (N. Y.) 396. Joseph Y. Knox, 3 Camp. 320; Dunlop v. Lambert, 6 Cl. & P. 600; Blanchard Y. Page, 8 Gray (Mass.) 281; Finn v. Railroad Corp., 112 388 LIABILITY OP THIRD PERSON TO AGENT. (Ch. 14 ough, "established between these parties by means of the bill of lading. * * * To the plaintiffs, therefore, from whom the consideration moves, and to whom the promise is made, the defendant is liable. * * * We cannot say to the ship- pers they have no interest in the goods and are not damnified by the breach of contract. I think the plaintiffs are entitled to recover the value of the goods, and they will hold the sum recovered as trustees for the real owner." 10 Even where the principal, with the acquiescence of the broker who had contracted in his own name to purchase goods, refused to have anything to do with them, the contract nevertheless remaining enforceable against them, it was held that the bro- ker, having contracted personally, could recover damages against the seller for nondelivery. 11 When the agent has no beneficial interest in the contract, his right of action does not pass to his assignee in bankruptcy. 12 The right of the agent to maintain an action is not abolish- ed by the provision of the codes which provides that every action must be prosecuted in the name of "the real party in interest," since an exception is created in favor of "the trustee of an express trust," and "a person with whom, or in whose name, a contract is made for the benefit of another" is declared to be such trustee, within the meaning of the term. 18 Mass. 524, 17 Am. Rep. 128; Carter v. Railway Co., Ill Ga. 38, 36 S. E. 308, 50 L. R. A. 354. Where an agent sent the proceeds of sale to the owner by ex- press, he could maintain an action against the express company for loss of the money. Snider v. Express Co., 77 Mo. 523. 10 Joseph v. Knox, 3 Camp. 320. i Short v. Spackman, 2 B. & Ad. 962. Rhoades v. Blackiston, 106 Mass. 334, 8 Am. Rep. 332. is Consideraut v. Brisbane, 22 N. Y. 389; Landwerlen v. Wheeler, 106 Ind. 526, 5 N. E. 888; Cremer v. Wimmer, 40 Minn. 511, 42 N. W. 467; Snider v. Express Co., 77 Mo. 523; Hudson v. Archer, 4 S. D. 128, 55 N. W. 1099. This rule is applicable in the federal courts held within the code states. Albany & R. Iron & Steel Co. v. Lundberg, 121 U. S. 451, 98-100) LIABILITY ON CONTRACT. 389 The agent's right of action, however, unless he has a special interest in the subject-matter, is subservient to the right of the principal, who may supersede the agent's right by suing in his own name or otherwise intervening. 14 An assign- ment for the benefit of creditors on the part of the principal works a revocation of the agency and terminates the agent's right of action. 16 When, Agent has Interest in Subject- Matter. The agent may have such a special interest in the subject- matter of the contract as to entitle him to sue in his own name. 16 A factor " or an auctioneer 18 has a special prop- erty in the goods, and may hence sue in his own name. A broker, on the other hand, having no such special property, is not entitled to sue unless he contracts personally, or unless under the circumstances of the case he does in fact have such special property. 19 If the agent has, as against his principal, a right of lien in the subject-matter, his right to sue on the contract has priority, during the existence of his claim, to that of the principal.* 7 Sup. Ct 958, 30 L. Ed. 982. Cf. Ward v. Ryba, 58 Kan. 741, 61 Pac. 223. n Sadler v. Leigh, 4 Camp. 195; Morris v. Cleasby, 1 M. & S. 676, 579. See Dickinson v. Xaul, 4 B. & Ad. 638. is Miller v. Bank, 57 Minn. 319, 59 N. W. 309. i Atkins v. Amber, 2 Esp. 493; Drlnkwater v. Goodwin, Cowp. 251. IT Drlnkwater v. Goodwin, Cowp. 251; Tolaud v. Murray, 18 Johns. (N. Y.) 24; Groover v. Warfield, 50 Ga. 644; Graham v. Duck-wall, 8 Bush (Ky.) 12. is Williams v. Millington, 1 H. Bl. 81; Wolfe v. Home, 2 Q. B. D. 355; Hulse v. Young, 16 Johns. (N. Y.) 1; Mlnturn v. Main, 7 N. Y. 220; Beller v. Block, 19 Ark. 566. 10 Fairlie v. Fenton, L. R. 5 Ex. 169; White v. Chouteau, 10 Barb. (N. Y.) 202; United States Tel. Co. v. Gildersleve, 29 Md. 232, 96 Am. Dec. 519. 20 Drinkwater Y. Goodwin, Cowp. 251; Bowstead, Dig. Ag. art. 120. Cf. Moliue Malleable Iron Co. v. Iron Co., 27 C. a A. 442, 83 Fed. 66. 390 LIABILITY OF THIRD PERSON TO AGENT. (Ch. 14 Defenses m Action by Agent. Since the right of the principal to sue is superior, the de- fendant may in a suit by the agent avail himself of any de- fense, in law or equity, which would have been good against the principal. Thus, a settlement with the principal is a good defense. 21 Under the statute of set-offs it has been held that the defendant cannot set off a debt due from the principal ; 22 but the contrary has also been held. 28 If, on the other hand, the agent by reason of a lien, as against the principal, upon the subject-matter, has a superior right to sue, a settlement with the principal is not a defense when such settlement would prejudice the agent's claim, 2 * unless the defendant was led by the terms or conditions of the contract, or by the conduct of the agent, to believe that the agent acquiesced in a settle- ment with the principal. 26 The defendant is also entitled to any defense which would be good against the plaintiff on the record, although it would not be good against the principal suing in his own name. 26 Thus, where an insurance broker sued on a policy effected in his name, payment to him by allowing him credit for premi- ums due from him to defendants, although it would not have constituted payment as between the insurers and the assured, was held a defense. "The plaintiff," said Denman, C. J., "though he sues as trustee of another, must, in a court of law, be treated in all respects as the party in the cause: if there is a defense against him, there is a defense against the cestui que trust who uses his name; and the plaintiff cannot *i Atkinson v. Cotesworth, 3 B. & C. 647. 2 isberg v. ^owden, 8 Ex. 852; Alsop v. Caines, 10 Johns. (N. T.) 396. zs Bliss v. Sneath, 103 Cal. 43, 36 Pac. 1029; Hayden v. Bank, 29 111. App. 458. 2* Robinson v. Rutter, 4 El. & B. 954. Grice v. Kendrick, L. R. 5 Q. B. 340. * Gibson v. Winter, 6 B. & Ad. 06; Holden v. Railroad Co., 73 Vt. 317, 50 Atl. 1096. 101) WHEN PROFESSED AGENT IS REAL PRINCIPAL. 391 be permitted to say for the benefit of another that his own act is void, which he cannot say for the benefit of himself." " Measure of Damages. The measure of damages in a suit by the agent is the same as in a suit by the principal, since the plaintiff will hold the amount recovered in trust for the latter.* 8 WHEN PROFESSED AGENT 18 REAL PRINCIPAL. 101. When a person who contracts professedly as agent for a named principal is in fact the real principal, he may sne on the contract if performance, in whole or in part, has been accepted by the other party with knowledge that he is the real principal. When a person who con- tracts professedly as agent of an undisclosed principal is in fact the real principal, he may (perhaps) sne on the contract, although there has been no recognition of him in the character of principal by the other party. Where a contract is made by an agent in the name of his principal, as a rule the principal, and he only, may sue there- on. The agent is not a party to the contract, and conse- quently may not maintain an action. 1 And where one who professes to contract as agent of a named principal is in fact the real principal, it would seem that the same rule should apply, and that, the contract being expressly with another person, the person contracting as agent could not maintain an action in whatsoever character.* Where the character and credit of the person who is named as principal may rea- sonably be considered as a material ingredient in the con- tract, it is conceded that the professed agent cannot, at least when the other party has not recognized him as the real principal, show himself to be such and maintain an action; IT Gibson v. Winter, 5 B. & Ad. 96. s Joseph v. Knox, 3 Camp. 320; United States Tel. Co. r. Glider- sieve, 29 Md. 232, 96 Am. Dec. 519; Groover v. Warfield, 50 Ga. 644; Evrit v. Bancroft, 22 Ohio St 172. 101. lAnte, p. 302. 2 See Hollman v. Pullin, 1 Cab. & E. 254. 392 LIABILITY OF THIRD PERSON TO AGENT. (Oil. 14 and it is probably true that in all executory contracts, unless part performance has been accepted with knowledge of the true principal, the rule is the same. 3 On the other hand, it has been held that when the plaintiff, professedly as agent for a named principal, contracted in writing to sell goods, and the buyer, with notice that he was the real principal, accepted and paid for part of the goods, the plaintiff could maintain an action for nonacceptance of the residue. 4 A distinction has been drawn between cases where the professed agent contracts as agent of a named and of an un- named principal. In the latter case it has been held that since the other party cannot have contracted in reliance upon the unnamed principal personally the ostensible agent can sue upon the contract, although there has been no recognition of him by the other party as real principal. 8 But where the Rayner v. Grote, 15 M. & W. 350; Schmaltz v. Avery, 16 Q. B. 655, per Patterson, J. It has been intimated, however, that the professed agent can sue, If before action he gives notice that he is the real principal. Bicker- ton v. Burrell, 5 M. & S. 383; Foster v. Smith, 2 Cold. (Term.) 474, 88 Am. Dec. 604; ante, p. 307. * Rayner v. Grote, 15 M. & W. 359; Whiting v. William H. Crawford Co., 93 Md. 390, 49 Atl. 615. Schmaltz v. Avery, 16 Q. B. 655. In that case Schmaltz & Co. signed a charter party as "agents of the freighter," a clause being inserted limiting their liability in view of the "charter being concluded on behalf of another party." It was held that Schmaltz & Co., who were themselves the freighters, might sue upon the contract. "The names of the supposed freight- ers not being inserted," said Patterson, J., "no inducement to enter Into the contract from the supposed solvency of the freighters can be surmised. * * * There is no contradiction of the charter party if the plaintiff can be considered as filling two characters, namely, those of agent and principal. A man cannot, in strict propriety of speech, be said to be agent to himself. Yet, in a contract of this description, we see no absurdity in saying that he might fill both characters; that he might contract as agent for the freighter, whoever that freighter might turn out to be, and might still adopt that character of freighter if he chose. There is nothing in the argument that the plaintiff's responsibility is ex- 102) LIABILITY FOE MONEY HAD AND RECEIVED. 393 contract is within the statute of frauds, it has been held that a written contract in such form is not a sufficient memo- randum, so as to entitle the professed agent to sue.* LIABILITY FOR MONEY HAD AND RECEIVED. 102. When an agent pays money for his principal nnder a mistake of fact or for a consideration which fail*, he may maintain an action for its recovery. "Where a man pays money by his agent, which ought not to have been paid, either the agent or the principal may bring an action to recover it back. The agent may, from the authority of the principal, and the principal may, as proving it to have been paid by his agent." * Thus, the agent may re- cover money paid under an illegal contract, but in ignorance of the illegality ; a or paid under inducement of fraud ; 3 or paid to a third person in exchange for a counterfeit bill, al- pressly made to cease 'as soon as the cargo Is shipped,' for that limitation plainly applies only to his character as agent; and being real principal, his responsibility would unquestionably continue after the cargo was shipped." See Mechem, Ag. 760. Where a broker signed a contract note, professedly as agent for an undisclosed principal, acting in fact upon his own behalf, of which the other party was not aware, it was held that he could not sue on the contract, because there was no memorandum to satisfy the statute of frauds; and some of the judges laid down that he could not sue because the contract was not with him. Sharman v. Brandt, L. R. 6 Q. B. 720. But where an agent signed a memorandum with the name of his principal, and the party sought to be charged, who had also signed, supposed he was contracting with the agent personally, and that the signature was his own name, it was held that the memorandum satisfied the statute; and that, if defendant sough^ to defend on the ground that his supposition was caused by fraud, the question was for the Jury, and could not be assumed as a basis for a ruling that the contract was void. Hunter v. Giddings, 97 Mass. 41, 93 Am. Dec. 54. S 102. i Per Lord Mansfield in Stevenson v. Mortimer, Cowp. 805. 2 Oom v. Bruce, 12 East, 224. Holt v. Ely, 1 E. & B. 795. 394 LIABILITY OF THIRD PERSON TO AGENT. (Cll. 14 though there was no authority to exchange such money with such third person.* LIABILITY FOR TOUTS. 1O3. An agent who is in the possession of or has a special property in the goods of his principal may maintain an action against a third person for trespass or con- version. The liability of third persons to the agent for torts is mainly confined to cases where his right of possession is invaded. 1 A factor or other agent who is in possession of the goods of his principal may maintain an action of tres- pass or trover * for injuries affecting his possession, and in case of conversion may recover the full value. 8 If an agent has a special property, as a factor to whom goods have been consigned, it is not essential to his right of recovery that he be in actual possession when his right is invaded. 4 An action lies on behalf of an employe against a person who maliciously and without justifiable cause induces his employer to discharge him. 1 Kent v. Bornstein, 12 Allen (Mass.) 342. | 103. i Story, Ag. 416. An agent who sells on commission may recover for a Hbelous statement causing loss of sales. Weiss v. Whittemore, 28 Mich. 366. * Burton v. Hughes, 2 Bing. 173, 176; Moore v. Robinson, 2 B. A Ad. 817; Robinson v. Webb, 11 Bush (Ky.) 464. Actual possession, pure and simple, will sustain an action for trespass. Jaggard, Torts, 670; Taylor v. Hayes, 63 Vt 475, 21 Atl. 610; Laing v. Nelson, 41 Minn. 521, 43 N. W. 476. * Mechanics' & Traders' Bank v. Bank, 60 N. Y. 40. * Fowler v. Down, 1 B. & P. 44, 47; Rooth v. Wilson, 1 B. & Aid. 59; Fitzhugh v. Wiman, 9 N. Y. 559; Beyer v. Bush, 50 Ala. 19. B Moran v. Dunphy, 177 Mass. 485, 59 N. B. 125, 52 L. R. A. 115, 83 Am. St. Rep. 289; Curran v. Galen, 152 N. Y. 33, 46 N. E. 297, 37 L. R. A. 802, 57 Am. St. Rep. 496; Chipley v. Atkinson, 23 Fla. 206, 1 Smith. 934, 11 Am. St. Rep. 367. 104) DUTIES OF AGENT TO PRINCIPAL. 395 PART IV RIGHTS AND LIABILITIES BETWEEN PRINCIPAL AND AGENT. CHAPTER XV. DUTIES OF AGENT TO PRINCIPAL. 104. Duties of Agent to Principal In General. 105. Duty to Obey Instructions. 106. Duty to Exercise Skill, Care, and Diligence. 107. Duty to Exercise Good Faith. 108. Duty to Account DUTIES OF AGENT TO PRINCIFAIr-IN GENERAL. 104. It is the duty of the agent (1) To obey instructions; (2) To exercise skill, care, and diligence; (3) To act in good faith; and (4) To account. The obligations of principal and agent are to a great extent determined by the contract of employment or the terms of the appointment. Their mutual undertakings may be express, but in most cases are to a greater or less extent to be implied from the nature and the circumstances of the particular agency. The peculiar obligations of some classes of agents, such as factors and brokers, are defined by usage. Certain duties, however, resting upon the parties, result from the very nature of the relation, and are common to all agencies, except so far as they may be modified by express agreement, or by the understanding of the parties to be im- plied from the particular circumstances. The duties of this character which rest upon the agent naturally fall under the four heads enumerated in the black-letter text. 396 DUTIES OP AGENT TO PRINCIPAL* (Ch. 15 Duty to Act in Person. The duty of the agent to act in person has been considered in the chapter treating of delegation by the agent. SAME DUTY TO OBEY INSTRUCTIONS. 1O5. It is the duty of the agent to obey the instructions of his principal, and if he fails to do so he is liable in damages for any resulting loss; except EXCEPTIONS: (a) Where obedience would require him to perform an illegal or immoral act; (b) Where a departure from instructions is justified by the occurrence of an unforeseen emergency, or perform- ance has, without the default of the agent, become im- possible. (c) Where obedience -would impair his security for advances made upon goods consigned to him for sale. Duty to Obey Instructions. Every agent is bound to execute the orders of his prin- cipal whenever, for a valuable consideration, he has under- taken, expressly or by implication, to perform them. It is his first duty to pursue the terms of his authority and to adhere strictly to his instructions. The duty of the agent to obey the instructions given by the principal with refer- ence to the agency is inherent in the very nature of the rela- tion. His right to act at all in the capacity of agent comes solely from the authority of the principal, and, as between them, the authority is inseparable from the instructions. A voluntary deviation by the agent from his instructions is at his peril, and, subject to the exceptions afterwards stated, 1 renders him liable to the principal for any resulting loss, 2 un- less the principal, with full knowledge of the facts, ratifies 105. Post, p. 402 et seq. 2 Whitney v. Express Co., 104 Mass. 152, 6 Am. Rep. 207; Froth- ingham v. Everton, 12 N. H. 239; Fuller v. Ellis, 39 Vt. 345, 94 Am. Dec. 327; Hays v. Stone, 7 Hill (N. Y.) 128; Blot v. Boiceau, 8 N. Y. 78, 51 Am. Dec. 345; Adams v. Robinson, 65 Ala. 586; Butts v. Phelps, 79 Mo. 302. 105) DUTT TO OBEY INSTRUCTIONS. 397 his acts.* It is no defense that the course pursued was rea- sonable or that it was intended for the benefit of the prin- cipal. 4 Nor, if loss results, will the agent be heard to say that the deviation was immaterial, unless he can show that the deviation did not contribute to the loss.* Same Implied Instructions Usage. The instructions may be implied as well as express, for the intention of the principal may be manifested by the nature and objects of the transaction, or may be inferable from the previous course of dealing between the parties or from other circumstances. 6 And when a trade usage or custom prevails, an intention on the part of the principal that it is to govern the manner of performance may often be implied. This implication will not prevail in the face of express in- structions which are inconsistent with it. 7 But in the ab- sence of express instructions it is to be implied that the prin- Ante, p. 86. * Butler v. Knight, L. R. 2 Ex. 109; Coker v. Roper, 125 Mass. 577; Rechtscherd v. Bank, 47 Mo, 181. Wilson v. Wilson, 26 Pa. 393; Walker v. Walker, 5 Heisk. (Tenn.) 425; Adams v. Robinson, 65 Ala. 586. Where a principal directed his agent to remit by mail in bills of $50 or $100, and the agent remitted in bills of $5, $10, and $20, which were never received, the agent was liable for the full amount. "It is not sufficient," said Lewis, O. J., "that the deviation was not material, if it appears that the party giving the instructions re- garded them as material, unless It be shown affirmatively that the deviation in no manner contributed to the loss. This may be a difficult task in a case like the present, but the defendant volun- tarily assumed it when he substituted his own plan for that pre- scribed by the plaintiff." Wilson v. Wilson, supra. 6 Story, Ag. 189. See, generally, chapter 7 as to construction of authority. T Robinson v. Mollett, L. R. 7 H. L. 802; Parsons v. Martin, 11 Gray (Mass.) 112; Douglass v. Leland, 1 Wend. (N. Y.) 490; Hutch- ings v. Ladd, 16 Mich. 493; Robinson Machine Works v. Vorse, 52 Iowa, 207, 2 N. W. 1108; United States Life Ins. Co. v. Advance Co.. 80 111. 549; Franklin Ins. Co. v. Sears (C. 0.) 21 Fed. 290; ante, p. 173. 398 DUTIES OF AGENT TO PRINCIPAL. (Ch. 15 cipal intends the agent to act according to usage; and, even where the principal has given express instructions, they may be interpreted in the light of usage, so far as it is not in con- flict with them. 8 Thus, an agent instructed to collect or to sell must ordinarily collect or receive payment in cash, for such an intention on the part of the principal is to be im- plied ; and if expressly instructed to collect in cash no usage will authorize him to disregard that instruction ; 10 but if not expressly instructed to that effect, and it is the usage of the particular business in which he is employed to accept a check in payment or to extend credit, he has implied authority so to do. 11 Liability for Disobedience Measure of Damages. Any failure on the part of the agent to obey the orders or to adhere to the instructions of his principal is a breach of duty which entitles the principal to recover at least nom- inal damages. 12 If the disobedience results in loss to the principal, he is entitled to recover substantial damages, meas- Bailey v. Bensley, 87 111. 556; post, p. 457. An attorney in fact authorized to sell land "for such sum or price and on such terms as to him shall seem meet" is only au- thorized to sell for money; and, if he accepts in payment bonds which prove worthless, he is liable for the money he should have received. Paul v. Grimm, 165 Pa. 139, 30 Atl. 721, 44 Am. St Rep. 648. Where a bank which had received from a depositor a check for collection accepted in payment a cashier's check, which was not paid, owing to the subsequent insolvency of the drawer, it was liable to the depositor for the amount. Fifth Nat. Bank v. Ash- worth, 123 Pa. 212, 16 Atl. 596, 2 L. R. A. 491. 10 Bliss v. Arnold, 8 Vt. 252, 30 Am. Dec. 467; Catlin v. Smith, 24 Vt. 85; Douglass v. Leland, 1 Wend. (N. Y.) 490; Barksdale v. Brown, 1 Nott. & McC. (S. C.) 517, 9 Am. Dec. 720; Hall v. Storrs, 7 Wis. 253; Wanless v. McCandless, 38 Iowa, 20. But see dark T. Van Northwick, 1 Pick. (Mass.) 343. i Russell v. Hankey, 6 T. R. 12; Farrar v. Lacy, 21 Ch. D. 42. See, also. Pope v. Westacott [1894] 1 Q. B. 272. 12 Frothingham v. Everton, 12 N. H. 239; Blot v. Boiceau, 3 N. Y. 78, 51 Am. Dec. 345; Adams v. Robinson, 65 Ala. 586. 105) DUTY TO OBEY INSTRUCTIONS. 399 ured by the amount of the loss. It must, of course, appear that a loss has actually resulted from the breach. For ex- ample, there can be no recovery of substantial damages for failure to insure a ship, if the principal had no insurable interest, or if the ship, in the course of the voyage, has so deviated that the insurance, had it been effected, would have been rendered void. 18 The loss must be the natural and proximate result of the disobedience, but it need not be the immediate result. Thus, where the loss is immediately caus- ed by an accident or the wrongdoing of a third person, if the property or interest which is the subject of the instruc- tions would not have been exposed to such risk but for the agent's disobedience, the loss is attributable to the disobedi- ence as the proximate cause. 1 * Same Illustrations. The following cases will serve to illustrate the nature of the agent's duty to obey instructions and the extent of his liability for disobedience: If an agent is instructed to in- sure property, and neglects to do so, he is liable to the prin- cipal for its value in the event of its being lost. 15 If an agent is instructed to sell shares when they reach a certain price, and fails to do so, he is liable for the difference between the value of the shares and the price which might have been so obtained. 16 If an agent, being directed to warehouse goods at a certain place, warehouses them at a different place," or, * Fourin v. Oswell, 1 Camp. 359; Alsop v. Colt, 12 Mass. 40. i Wilson v. Wilson, 26 Pa. 393. IB De Tastett v. Orousillat, 2 Wash. C. C. (U. S.) 132, Fed. Gas. No. 3,828; Shoenfeld v. Fleisher, 73 111. 404; Sawyer v. Mayhew, 51 Me. 398. So, if an agent of an insurance company fails to cancel a policy as directed, he is liable to the company for the amount it is com- pelled to pay thereon. Franklin Ins. Co. v. Sears (a 0.) 21 Fed. 290; Phoenix Ins. Co. v. Frissell, 142 Mass. 513, 8 N. E. 348. i Bertram v. Godfrey, 1 Knapp, P. C. 381. i Lilley v. Doubleday, 1 Q. B. D. 510. But where a factor neglected to sell cotton within a reasonable 400 DUTIES OF AGENT TO PRINCIPAL* (Ch. 15 t>eing directed to ship goods by a designated carrier or at a certain time, ships by another carrier or at another time, 18 and the goods are lost or destroyed while in the custody of the warehouseman or carrrier, the agent is liable for their value. If an agent, being directed to forward a claim to a certain person for collection, sends it to another person, he thereby renders himself liable for any resulting loss. 19 If an agent, being instructed to remit money by draft, sends the money in a letter, which is lost, 80 or, being instructed to send the money by express, remits by check, which becomes worthless by insolvency of the maker, 21 the agent is liable for the loss. If an agent, 'being ordered to sell for cash, sells on credit or accepts a check or note in payment, he as- sumes responsibility for collection of the indebtedness. 22 If an agent is authorized to sell goods for a certain price and sells for a less price, 28 or is authorized to sell goods in one lot and sells a part, 24 he is liable for the resulting loss. time after being instructed to sell, and it was destroyed by fire, the delay was not the proximate cause of the loss. Lehman T. Pritchett, 84 Ala. 512, 4 South. 601. "Wilts v. Morrell, 66 Barb. (N. Y.) 511, i Butts v. Phelps, 79 Mo. 302. o Foster v. Preston, 8 Cow. (N. Y.) 19S; Kerr v. Cotton, 23 Tex. 411. i Walker v. Walker, 5 Heisk. (Tenn.) 425. 12 Wiltshire v. Sims, 1 Camp. 258; Pope v. Westacott [1894] 1 Q. B. 272; Bliss v. Arnold, 8 Vt. 252, 30 Am. Dec. 467; Clark v. Roberts, 26 Mich. 506; Harlan v. Ely, 68 Cal. 522, 9 Pac. 947. And see notes 9 and 10, supra. 23 Duf resue v. Hutchinson, 3 Taunt 117; Sarjeant v. Blunt, 16 Johns. (N. Y.) 74. If the agent shows that at the time of sale and ever since the goods were worth no more than the price at which they were sold, the principal can recover only nominal damages. Blot v. Boiceau, **Levison v. Balfour (a C.) 34 Fed. 382. Whether an order to buy 100 bales of cotton must be executed as a whole turns upon the meaning in which the order is to be under- stood in the light of the circumstances. Johnston v. Kershaw, L. R. 2 Ex. 82. 105) DUTY TO OBEY INSTRUCTIONS. 401 Same Liability for Conversion. If an agent parts with the possession of his principal's goods contrary to his instructions, he may be liable for con- version as well as in contract." Thus, where an agent, who had received a note for negotiation with instructions not to let it go out of his reach without receiving the money, de- livered it to another to get it discounted, who appropriated the avails, it was held that the agent was liable for conver- sion. 26 So, when a factor in Buffalo was directed to sell wheat at a specified price on a particular day, or to ship it to New York, and did not sell or ship on that day, but sold it on the next day at the price named, it was held that the sale was a conversion. 27 On the other hand, it is held that an agent is not liable in trover for selling goods at a price be- low instructions.* 8 "The result of the authorities," said Savage, C. J., 2B "is that, if the agent parts with the property in a way or for a purpose not authorized, he is liable for a 3 N. Y. 78, 51 Am. Dec. 345; Frothingham v. Everton, 12 N. H. 239; Dalby T. Stearns, 132 Mass. 230. But in Switzer v. Oonnett, 11 Mo. 88, it was held that the agent Is responsible to the principal for the price fixed. Reynolds v. Rogers. 63 Mo. 17. The measure of damages in an action against a broker for selling stocks in violation of orders Is the highest intermediate value be- tween the sale and a reasonable time after the owner has received notice of it to enable him to replace the stocks. Galigher v. Jones, 129 U. S. 192, 9 Sup. OL 335, 32 L. Ed. 658. See Sedgwick, Dam. \ 822. Where an agent converts money which he Is directed to Invest In a particular security, which subsequently acquires great value, he is accountable for the value of such article. Short v. Skipwith. 1 Brock. 103, Fed. Cas. No. 12,809. Seyds v. Hay, 4 T. R. 260; Spencer v. Blackman, 9 Wend. (N. Y.) 167; Farrand v. Hurlbut, 7 Minn. 477 (Gil. 383). * Laverty v. Snethen, 68 N. Y. 523, 23 Am. Rep. 184. *T Scott v. Rogers, 31 N. Y. 676. s Dufresne v. Hutchinson, 3 Taunt 117; Sarjeant v. Blunt, 16 Johns. (N. Y.) 74. Laverty v. Snethen, 68 N. Y. 523, 23 Am. Rep. 184. THT.P.& A. 26 402 DUTIES OF AGENT TO PRINCIPAL. (Ch. 15 conversion, but if he parts with it in accordance with his authority, although at a less price, * * * he is not liable for a conversion of the property, but only in an action on the case for misconduct." Gratuitous Agent. A person who has undertaken gratuitously to perform an act on behalf of another is not bound to perform it, for his promise is without consideration. But, although he is not liable for nonfeasance, he is liable for misfeasance. 80 If he enters upon performance, he thereby impliedly undertakes and is bound to adhere to his instructions, and if he departs from them he is liable to the principal for any resulting loss. 81 Justification for Failure to Obey Instructions Emergency Impossibility. In cases of unforeseen emergency and extreme necessity the agent may be justified in departing from his instruc- tions, upon the ground that the instructions are not appli- cable to the emergency, and that authority is to be implied to act, in the exercise of a sound discretion, as the occasion demands. 82 Thus, if goods are perishable, and are in immediate danger *o Wilkinson v. Ooverdale, 1 Esp. 75; Balfe v. West, 13 0. B. 466; Dartnall v. Howard, 4 B. & C. 345; Thome v. Deas, 4 Johns. (N. Y.) 84; Smedes v. Bank, 20 Johns. (N. Y.) 372, 380; post, p. 410. i Walker v. Smith, 1 Wash. O. C. (U. S.) 152, Fed. Gas. No. 17,086; Short v. Skipwith, 1 Brock. (U. S.) 103, Fed. Gas. No. 12,809; Williams v. Higgins, 30 Md. 404; Passano v. Acosta, 4 La. 26, 23 Am. Dec. 470; Opie v. Serrill, 6 Watts & S. (Pa.) 264; Spencer v. Towles, 18 Mich. 9; Jenkins v. Bacon, 111 Mass. 373, 15 Am. Rep. 33; Lyon v. Tarns, 11 Ark. 189. If a person undertakes, even gratuitously, to invest money for another, and disregards his instructions as to the specific character of the security, he is liable if the investment fails. Williams v. Higgins, supra. 82 Forrestier v. Bordman, 1 Story (TJ. S.) 43, Fed. Gas. No. 4,945; Judson v. Sturges, 5 Day (Conn.) 556; Dusar v. Perit, 4 Bin. (Pa.) 361; Greenleaf v. Moody, 13 Allen (Mass.) 363; Bernard v. Maury, 20 Grat (Va.) 434; Foster v. Smith, 2 Cold. (Tenn.) 474, 88 Am. 105) DUTY TO OBEY INSTRUCTIONS. 403 of deterioration, and a sale is necessary to prevent a total or a partial loss, and there is no opportunity to communicate with the principal, the agent may deviate from his instruc- tions as to the time or price of sale. 88 So, an agent in- structed to place funds or property in a certain place, if there is reasonable ground of apprehension for their safety if so deposited, may be justified in depositing them elsewhere. 8 * A fortiori, if without the agent's fault performance be- come impossible, he will be excused for failure to comply with his instructions. 8 * Same Factor Might to Sell for Advances. Another exception exists in favor of a factor who has made advances. As a rule a factor, like any other agent, is bound to obey the orders of his principal ; but if he has made advances on account of the consignment, by which he acquires a special property therein, he has a right, unless there is an agreement to the contrary, to sell so much of the goods as may be necessary to reimburse such advances without regard to instructions, provided the principal fails to repay the advances upon reasonable notice, and, if he is Dec. 604; Bartlett v. Sparkman, 95 Mo. 136, 8 S. W. 406, 6 Am. St. Rep. 35; Story, Ag. 193. Where hay, which was sent during the war to New Orleans for sale, was seized by the military authorities of the United States, who refused to pay for it except in government certificates of In- debtedness, which were worth only 93 per cent of their face value, and the consignees, without communicating with the con- signors, but according to the custom of factors there, accepted the certificates and afterwards sold them, it was held that their con- duct was justified. Greenleaf v. Moody, supra. 3 Jarvis v. Hoyt, 2 Hun (N. Y.) 637. But, where a cargo of wheat sank in three feet of water, the agent, although authorized to employ means to save it, had no authority to sell it Foster r. Smith, 2 Cold. (Tenn.) 474, 88 Am. Dec. 604. * Drummond v. Wood, 2 Caines (X. Y.) 310. B Weakley v. Pearce, 5 Heisk. (Tenn.) 401; Greenleaf v. Moody, 13 Allen (Mass.) 3(53. Cf. Milbank v. Dennistoun, 21 N. Y. 3SG. 404 DUTIES OF AGENT TO PRINCIPAL. (Ch. 15 directed to make a sale at a time or for a price which would impair his security, he may refuse to obey the instructions to sell. 86 Same Illegal Act. If the instructions require the agent to perform an illegal or immoral act, he is not liable for failure to perform it, for the very agreement to perform such an act is void. 87 Upon much the same principle, if an agent is employed to make a contract for his principal which would be void for illegality, the agent is not liable for failure to make the contract, since the principal could have acquired no rights under it, and consequently suffers no legal damage by the fact that it was not made. 88 Ambiguous Instructions. If the instructions are ambiguous, so as to be susceptible of two meanings, and the agent complies with them accord- ing to his understanding of their meaning, he is not liable for failure to understand them as the principal intended and to act according to that understanding. 89 Brown v. McGran, 14 Pet. (U. S.) 479, 10 L. Ed. 550; Feild v. Farrington, 10 Wall. (U. S.) 141, 19 L. Ed. 923; Parker v. Brancker, 22 Pick. (Mass.) 40; Frothingham v. Everton, 12 N. H. 239; Mar- field v. Goodhue, 3 N. Y. 62; Hilton v. Vanderbilt, 82 N. Y. 591; Weed v. Adams, 37 Conn. 378; Phillips v. Scott, 43 Mo. 86, 97 Am. Dec. 309; Davis v. Kobe, 36 Minn. 214, 30 N. W. 662, 1 Am. St. Rep. 663; Lockett v. Baxter, 3 Wash. T. 350, 19 Pac. 23. Contra, Smart v. Bandars, 5 C. B. 895; De Comas v. Prost, 3 Moore, P. C. (N. S.) 158; ante, p. 223. ST Brexell v. Christie, Cowp. 395; Webster v. De Taset, 7 T. R. 157. See Goodhue v. McClarty, 3 La. Ann. 56. ss Cohen v. Kittel, 22 Q. B. D. 680; Webster v. De Taset, 7 T. R. 157. so De Tastett v. Crousillat, 2 Wash. C. C. (U. S.) 132, Fed. Cas. No. 3,828; Loraine v. Cartwright, 3 Wash. C. C. (U. S.) 151, Fed. Cas. No. 8,500; Courcier v. Ritter, 4 Wash. 0. C. (U. S.) 549, Fed. Oas. No. 3,282; Pickett v. Pearsons, 17 Vt 470; Bessent v. Harris, 63 N. C. 542; Minnesota Linseed Oil Co. v. Montague, 65 Iowa, 67, 21 N. W. 184; ante, p. 173. 106) DUTY TO EXERCISE SKILL, CARE, AND DILIGENCE. 405 SAME DUTY TO EXERCISE SKILL, CARE, AND DIL- IGENCE. 106. It is the duty of the agent to exercise in the performance of the agency snch skill, care, and diligence as the nature of his undertaking, to be inferred from all the circumstances of the case, reasonably demands, and if he fails to do so he is liable in damages for any re- sulting loss. The duty of the agent to be skillful, careful, and diligent is closely connected with his duty to obey instructions. By accepting the appointment the agent impliedly undertakes that he will exercise reasonable skill, care, and diligence in the performance of the agency. As a rule, it may be said that, where an agent receives compensation" for his services, that degree of skill, care, and diligence is required, and suf- fices, which is ordinarily exercised by persons of common capacity and prudence engaged in similar transactions. 1 It is obvious, however, that the degree of skill, care, and dili- gence which is reasonable, and for which the agent under- takes, is a question of fact, depending, not only upon the nature of the act to be performed, but upon all the circum- stances of the case from which the mutual understanding of the parties and the undertaking of the agent are to be in- ferred, such as the instructions communicated, the usages of trade and the customs of the particular business, the previous course of dealing between the parties, and the de- gree of skill which the agent professes. 9 Thus, if the trans- 106. i Varnum v. Martin, 15 Pick. (Mass.) 440; Holmes v. Peck, 1 R. I. 242; Gaither v. Myrick, 9 Md. 118, 66 Am. Dec. 316; Heinemann v. Heard, 50 N. Y. 35; Whitney v. Marline, 88 N. Y. 535; Wright v. Banking Co., 16 Ga. 38; Steiner v. Clisby, 103 Ala. 181, 15 South. 612; Lake City Flouring-Mill Co. v. McVean, 32 Minn. 301, 20 N. W. 233; Kepler v. Jessup, 11 Ind. App. 241, 37 K. E. 655; Isham v. Parker, 3 Wash. St. 755, 29 Pac. 835. 2 Solomon v. Barker, 2 F. & F. 726; Stimpson v. Sprague, 6 Greenl. (Me.) 470; Wilson v. Russ, 20 Me. 421; Page v. Wells, 37 Mich. 415; Stevens v. Walker, 55 111. 151; Johnson v. Martin, 11 La. Ann. 27, 66 Am. Dec. 193. 406 DUTIES OF AGENT TO PRINCIPAL. (Ch. 15 action is of a nature to require expert skill and knowledge, the agent impliedly undertakes, if there is nothing to indi- cate a different understanding, that he will exercise the skill and knowledge of an expert, and a decree of care and dili- gence based upon the skill and knowledge of an expert. 3 On the other hand, if the agent is not and does not profess to be an expert, and the principal, knowing that fact, never- theless sees fit to employ him, no undertaking to exercise the skill and knowledge of an expert can be implied, nor will the agent be held to a higher standard of performance than that upon which the principal has reason to rely. 4 This subject will be further discussed in considering the duties in this respect of gratuitous agents, which, although often affected by the circumstance that such agents serve with- out reward, are to be determined by the application of the same principles. It follows that, if the agent has exercised reasonable skill, Park v. Hamond, 4 Camp. 344; Godefroy v. Dalton, 6 Bing. 460; Lee v. Walker, L. R. 7 0. P. 121; Stanton y. Bell, 9 N. C. 145, 11 Am. Dec. 744; Varnum v. Martin, 15 Pick. (Mass.) 440; Stimp- son v. Sprague, 6 Greenl. (Me.) 470; Orooker v. Hutchinson, 1 Vt. 73; Holmes v. Peck, 1 R. I. 242; Leighton v. Sargent, 27 N. H. 460, 59 Am. Dec. 388 (physician); McFarland v. McClees (Pa.) 5 Atl. 50. A money lender by his business holds himself out as possessing competent skill to determine what reasonable care and prudence requires in lending for another. McFarland v. McClees, supra. Where an insurance broker was informed that goods on which he was instructed to effect a policy were loaded at a prior port from that from which the risk was to commence, he was liable for effecting a policy in common form "beginning the adventure * * * from the loading," since such a policy attached only on goods loaded at the port which was the terminus a quo of the risk. "Insurance brokers are bound," said Gibbs, C. J., "to know that this is the law, and to act accordingly for the benefit of their em- ployers. They are expected to display competent skill as well as diligence in their business." Park v. Hamond, supra. * Small v. Howard, 128 Mass. 131, 35 Am. Rep. 363; Felt v. School Dist, 24 Vt. 297. "A metropolitan standard is not to be applied to a rural bar." Weeks, Attys. 289. 106) DUTT TO EXERCISE SKILL, CAEE, AND DILIGENCE. 407 care, and diligence, he is not responsible for the consequences of his acts or omissions, although they result in loss which the exercise of a higher degree of these qualities might have prevented. He is not an insurer. If he has not been negli- gent, he is not liable for the loss of property by theft or fire. 5 In matters left to his discretion, if he has acted in good faith and with reasonable care, he is not responsible for mere errors of judgment. 6 Same Liability for Negligence Damages. Substantially the same rules in respect to the damages recoverable by the principal are applicable in an action for negligence as in an action for failure to obey instructions. 7 In other words, the measure of damages is the amount of the loss naturally and proximately resulting from the breach of duty. 8 Same Illustrations. A consideration in detail of what constitutes negligence upon the part of different classes of agents, such as factors, brokers, and attorneys, would involve a fuller discussion of the peculiar duties imposed upon them by law or custom than is within the scope of this book. A few examples will be enough to illustrate the foregoing principles. An agent Johnson v. Martin, 11 La. Ann. 27, 66 Am. Dec. 193; Furber v. Barnes, 32 Minn. 105, 19 N. W. 728. 6 Milbank v. Dennistoun, 21 N. Y. 386; Mclaughlin v. Simpson, 3 Stew. & P. (Ala.) 85; Long v. Pool, 68 N. C. 479; Getting v. Scudder, 71 111. 86; Stewart v. Parnell, 147 Pa. 523, 23 Atl. 838. i Ante, p. 398. Whiteman v. Hawkins, 4 O. P. D. 13; Neilson v. James, 9 Q. B. D. 546; Cassaboglou v. Gibb, 9 Q. B. D. 220; Bell v. Cunning- ham, 3 Pet (TJ. S.) 69, 7 L. Ed. 606; Ashley v. Root, 4 Allen (Mass.) 504; Mobile Bank v. Huggins, 3 Ala. 206; Ryder v. Thayer, 3 La. Ann. 149. An agent charged with the disbursement of funds is not liable for any loss occurring through his negligence, if the exercise of rea-* sonable care by the principal would have prevented the loss. Sioux City & P. R. Co. v. Walker, 49 Iowa, 273. 408 DUTIES OF AGENT TO PRINCIPAL. [Ch. 15 instructed to insure must effect insurance within a reasonable time, or notify his principal of his inability to do so, and must use reasonable care in selecting a sufficient insurer and in securing a sufficient policy; and if he fails in his duty in this regard he is liable to the same extent as the underwriters would have been had the insurance been duly effected." An agent authorized to invest must use reasonable care in se- lecting adequate security. 10 An agent authorized to sell on credit must use reasonable care to select a responsible pur- chaser. 11 An agent instructed to collect a claim must use reasonable diligence in demanding and enforcing payment, and is liable for the amount if by his neglect it is lost to the principal. 12 In the case of commercial paper, he must take all requisite steps to secure and preserve the rights of his principal against the various parties to the instrument, and must make due presentment for acceptance or payment, pro- test and give notice of dishonor, as the circumstances may require. 18 After collection the agent must use reasonable diligence in remitting the proceeds. 14 It is the duty of a factor to whom goods are consigned for sale without instruc- Mallough v. Barber, 4 Camp. 150; Park v. Hamond, 4 Camp. 344; Turpin v. Bilton, 5 M. & G. 455; Maydew v. Forrester, 5 Taunt. 615 (omitting to communicate material letter to underwrit- ers); De Tastett v. Crousillat, 2 Wash. C. C. (U. S.) 132, Fed. Gas. No. 3,828; Strong v. High, 2 Rob. (La.) 103, 38 Am. Dec. 195. 10 Whitney v. Martine, 88 N. Y. 535; Bank of Owensboro v. Bank, 13 Bush (Ky.) 526, 26 Am. Rep. 211; Bannon v. Wariield, 42 Md. 22; McFariand v. McClees (Pa.) 5 Atl. 50. " Greely v. Bartlett, 1 Greenl. (Me.) 172, 10 Am. Dec. 54; Phillips v. Moir, 69 111. 155; Frick & Co. v. Lamed, 50 Kan. 776, 32 Pac. 383. 12 Allen v. Suydham, 20 Wend. (N. Y.) 321, 32 Am. Dec. 555; First Nat. Bank v. Bank, 77 N. Y. 320, 33 Am. Rep. 618; Reed v. Northrup, 50 Mich. 442, 15 N. W. 543. " Allen v. Bank, 22 Wend. (N. Y.) 215, 34 Am. Dec. 289; First Nat. Bank v. Bank, 77 N. Y. 320, 33 Am. Rep. 618; Chapman v. McCi-ea, 63 Ind. 360. 14 Morgan v. Richardson, 13 Allen (Mass.) 410; Buell v. Chapin, 99 Mass. 594, 97 Am. Dec. 58. 106) DUTY TO EXERCISE SKILL, CARE, AND DILIGENCE. 409 tions as to the time of sale or the price to exercise a reason- able discretion in the sale, and if he does so his duty is per- formed; 1B but if he sells for a less price than he might with reasonable care and diligence have obtained, 16 or if he fails to sell within a reasonable time and the price of the goods falls, 17 he is liable for the loss. The extent of the obligation imposed upon the agent by his duty to use reasonable skill is well illustrated by cases involving the responsibility of attorneys to their clients. An attorney is liable to his client for any loss resulting from failure to possess and to apply with reasonable care and diligence to the matter in hand a reasonable knowledge of the law. He is required to have at least as great knowledge as is ordinarily possessed by attorneys of good standing en- gaged in similar transactions. 18 "On the other hand, he is not answerable for error in judgment upon points of new occurrence or nice or doubtful construction." * IB Marfield v. Goodhue, 3 N. Y. 72; Conway v. Lewis, 120 Pa. 215, 13 Atl. 826, 6 Am. St. Rep. 700; Given v. Lemoine, 35 Mo. 110. i Bigelow v. Walker, 24 Vt. 149, 58 Am. Dec. 156. " Atkinson v. Burton, 4 Busb (Ky.) 299. is Godefroy v. Dalton, 6 Bing. 460; Wilson v. Russ, 20 Me. 421: Holmes v. Peck, 1 R. I. 242; O'Barr v. Alexander, 37 Ga. 195; Stevens v. Walker, 55 111. 151; Kepler v. Jessup, 11 Ind. App. 241, 37 N. E. 655; Isham v. Parker, 3 Wash. St 755, 29 Pac. 835; Jami- son v. Weaver, 81 Iowa, 212, 46 X. W. 996. "He is liable for the consequences of ignorance or nonobservance of the rules of practice of this court, for want of care in the prepara- tion of the cause for trial, or of attendance thereon with his wit- nesses, and for the mismanagement of so much of the conduct of a cause as is usually and ordinarily allowed to his department of the profession." Godefroy v. Dalton, supra, per Tlndal, C. J. i Godefroy v. Dalton, 6 Bing. 460; Montrion v. Jeffrys, 2 a & P. 113; Watson v. Muirhead, 57 Pa. 161, 98 Am. Dec. 213; Citizens' Loan Fund & Savings Ass'n v. Friedley, 123 Ind. 143, 23 N. E. 1075, 7 L. R. A. 669, 18 Am. St. Rep. 320; Marsh v. Whitmore, 21 Wall. (U. S.) 178, 22 L. Ed. 482. See Barrows, Neg. 371 et seq. 410 DUTIES OF AGENT TO PRINCIPAL. (Ch. 3 5 Gratuitous Agent. Although a person who has without consideration promised to perform an act on behalf of another is not bound to per- form it, yet if he enters upon performance he is bound to conform to the authority 20 and to exercise a certain degree of skill and care. Or, as it is usually put, he is not liable for nonfeasance, but he is liable for misfeasance. The ground of this liability is somewhat obscure. 21 Where the principal delivers over to an agent something which is the subject of the agency, it is perhaps possible to find a consideration in the detriment which the principal suffers by parting with the control ; 22 but in many cases this element of consid- eration, if such it be, does not exist. It has sometimes been said that if the agent enters upon performance, the trust and confidence reposed is a sufficient consideration for his under- taking ; 28 but, if trust and confidence were to be deemed a consideration, trust and confidence reposed would be a sufficient consideration for a promise to perform, and render the agent liable for nonfeasance. It must be admitted that the responsibility of the gratuitous agent arises independently of any consideration to support his undertaking. Never- theless it seems that the trust and confidence reposed, al- though not to be regarded as a consideration, is the founda- tion of the agent's duty a duty which the law imposes upon other persons besides agents if they see fit so to enter upon the performance of gratuitous undertakings. 24 "It is well settled," said Ames, J., in a case in which a landlord who 20 Ante, p. 18. 21 See Anson, Contr. 333. 22 Coggs v. Bernard, 2 Ld. R. 909; Whitehead v. Greetham, 2 Bing. 464. zs Hammond v. Hussey, 51 N. H. 40, 12 Am. Rep. 41. 24 Stanton v. Bell, 9 N. C. 145, 153, 11 Am. Dec. 744; Benden, v. Manning, 2 N. H. 289; Philadelphia & Reading R. Co. v. Derby, 14 How. (U. S.) 468, 485, 14 L. Ed. 502; Gill v. Middleton, 105 Mass. 477, 7 Am. Rep. 548. "And therefore when I have reposed a trust in you upon your un- dertaking, if I suffer, when I have so relied upon you, I shall have my action." Per Powell, J., in Coggs v. Bernard, 2 Ld. R. 909. 106) DUTY TO EXERCISE SKILL, CARE, AND DILIGENCE. 411 had gratuitously undertaken to make repairs was held liable for personal injuries to the tenant, resulting from failure to use ordinary care and skill in making them, "that, for an in- jury occasioned by want of due care and skill in doing what one has promised to do, an action may be maintained against him by the party relying on such promise and injured by the breach of it, although there was no consideration for the promise." 25 The scope of the agent's duty and the degree of skill and care demanded of him are to be measured by the nature and degree of the confidence and trust which, under the circumstances of the case, the principal is justified in reposing, or, in other words, by the degree of skill and care which the agent by reasonable implication undertakes to use. 28 It has from early times been laid down that a gratuitous agent, 27 or bailee, 28 is liable only for gross negligence. Yet it has not been questioned that the degree of skill and care demanded depends upon the circumstances of the particular case, and that failure to exercise the degree of skill and care demanded is actionable negligence. 28 Judges and writers B Gill v. Middleton, 105 Mass. 477, 7 Am. Rep. 548. 26 See "Gratuitous Undertakings," by Joseph H. Beale, Jr., 5 Harv. L. R. 222. 27 Shiells v. Blackburne, 1 H. Bl. 159; Stanton v. Bell, 9 N. C. 145, 11 Am. Dec. 744; Hammond v. Hussey, 51 N. H. 40, 12 Am. Rep. 41; Grant v. Ludlow, 8 Ohio St. 1; Eddy v. Livingston, 35 Mo. 487. 88 Am. Dee. 122; Lyon v. Tarns, 11 Ark. 189; Stewart v. Butts, 45 111. App. 512. as Coggs v. Bernard, 2 Ld. R. 909; Giblin v. McMullen, L. R. 2 P. C. 317; Tracy v. Wood, 3 Mason (U. S.) 132, Fed. Gas. No. 14,130; Foster v. Bank, 17 Mass. 479, 9 Am. Dec. 168; Beardslee v. Richard- son, 11 Wend. (N. Y.) 25, 25 Am. Dec. 59G; Lampley v. Scott, 24 Miss. 528. 29 See cases cited supra. "Lawrence, being an agent acting without compensation, Is liable only for gross negligence. To define what constitutes gross negli- gence, so as to rentier the phrase more intelligible or exact, is diffi- cult, if not impossible, and all attempts to do so have, it would seem, heretofore failed. We are disposed to regard it as a question of fact, 412 DUTIES OP AGENT TO PRINCIPAL. (Ch. 15 to-day agree that the term "gross negligence" is misleading ; gross negligence being, as declared by Rolfe, B., no more than negligence "with the addition of a vituperative epi- thet." 80 In this view, negligence is simply failure to exercise that degree of skill and care which, under the circumstances, to be determined by reference to all the circumstances of the case, including the subject-matter and objects of the agency, and the known character, qualifications, and relations of the parties." Per Brinkeihoff, J., in Grant v. Ludlow, 8 Ohio St 1. so Wilson v. Brett, 11 M. & W. 113. See, also, Gill v. Middleton, 105 Mass. 477, 7 Am. Rep. 548; Preston v. Prather, 137 TJ. S. 604, 11 Sup. Ct 162, 34 L. Ed. 788; Isham v. Post, 141 N. Y. 100, 35 N. E. 1084, 23 L. R. A. 90, 38 Am. -St Rep. 766. As showing how the degree of care required is dependent upon the nature of the undertaking, see Philadelphia & Reading R. Co. v. Derby, 14 How. (U. S.) 468, 14 L. Ed. 502, involving the liability of a gratuitous carrier of passengers. "When carriers undertake," said Grier, J., "to convey persons by the powerful but dangerous agency of steam, public policy and safety require that they be held to the greatest possible care and diligence. * * * Any negligence in such cases may well deserve the epithet 'gross.' " "In each case the negligence, whatever the epithet we give it, is failure to bestow the care and skill which the situation demands, and hence it is more strictly accurate perhaps to call it simply negli- gence." New York Cent. R. Co. v. Lockwood, 17 Wall. (U. S.) 357, 21 L. Ed. 627, per Bradley, J. Similar views were expressed by Fuller, C. J., in Briggs v. Spauld- ing, 141 U. S. 132, 11 Sup. Ct. 924, 35 L. Ed. 662, a case involving the liability of bank directors who serve without compensation. "In any view," he says, "the decree of care to which these defendants were bound is that which ordinarily prudent and diligent men would exercise under similar circumstances, and in determining that the restrictions of the statute and the usages of business should be taken into account" A severer standard for bank directors was laid down in Hun v. Gary, 82 N. Y. 65, 71, 37 Am. Rep. 546, viz.: "The same degree of care and prudence that men prompted by self-interest gen- erally exercise in their own affairs." And see the dissenting opinion of Harlan, J., in Briggs v.* Spaulding, supra. On the other hand, in Swentzel v. Bank, 147 Pa. 140, 23 Atl. 405, 415, 15 L. R. A. 305, 30 Am. St. Rep. 718, it was held that a gratuitous bank director is amenable only for such gross negligence as amounts to fraud. 106) DUTY TO EXERCISE SKILL, CARE, AND DILIGENCE. 413 the agent undertakes to exercise. 81 The fact that the agent is unremunerated is but one of the circumstances to be con- sidered, with all the other circumstances, in determining the nature of his undertaking, and in very many cases the stand- ard of performance undertaken by gratuitous agents is no less high than that undertaken by paid agents. Thus, if an agent professes skill, he must exercise skill, whether he is paid or unpaid. If he undertakes, although gratuitously, to perform an act within the line of his profession or business, the principal is justified in relying upon him to exercise such skill and care as is demanded by the ordinary standard of performance of his profession or business, and the agent consequently undertakes for that standard of performance.* 2 On the other hand, a profession of adequate skill is more readily to be inferred when the agent undertakes to serve for reward than when he consents to serve as a matter of favor ; for the mere undertaking to serve for reward implies prima facie a profession that the services are worth the re- ward. 88 In every case an undertaking is to be implied that the agent will exercise whatever skill he possesses, for failure to do so would be failure to exercise even slight care. 34 So, too, the agent must use at least as great care as he takes in his own affairs ; 85 but his habitual care, if inadequate, is not to be taken as the measure of his undertaking, unless "The general principle that a mandatory is only liable for gross neglect implies strict fidelity on his part, and the exercise of such care and prudence as, with reference to the particular subject of the bailment and the circumstances of the particular case, may be requi- site for the performance of his undertaking." Colyar v. Taylor, 1 Cold. (Tenn.) 372, 379; Kirtland v. Montgomery, 1 Swan (Tenn.) 452; 5 Harv. L. R. 222. 32 Shiells v. Blackburne, 1 H. Bl. 159; Benden v. Manning, 2 N. H. 289; Williams v. McKay, 40 N. J. Eq. 189, 53 Am. Rep. 775; Mc- Nevins v. Lowe, 40 111. 209 (physician); Isham v. Post, 141 N. Y. 100, 35 N. E. 1084, 23 L. R. A. 90, 38 Am. St. Rep. 766. as Ante, p. 405. * Wilson v. Brett, 11 M. & W. 113. 8 Shiells v. Blackburne, 1 H. BL 159; Beal v. South Devon Ry., 3 H. & C. 337, 342. 414 DUTIES OF AGENT TO PRINCIPAL. (Ch. 15 the principal from his prior knowledge is not justified in rely- ing upon a higher degree of care. Notwithstanding the disuse of the term "gross negligence" there is, in effect, little difference between the later and the earlier cases. Thus, in Shiells v. Blackburn, 30 decided in 1789, a general merchant undertook without reward to enter at the custom house for exportation a parcel of leather be- longing to G., together with a parcel of his own. By agree- ment with G. he made one entry of both parcels, but by mistake entered them under a wrong denomination, in con- sequence of which the goods were seized. It was held that he was not liable for the loss. "If a man gratuitously un- dertakes," said Lord Loughborough, "to do a thing to the best of his skill, where his situation is such as to imply skill, an omission of that skill is imputable to him as gross negli- gence. If in this case a shipbroker, or a clerk in the custom house, had undertaken to enter the goods, a wrong entry would in them be gross negligence, because their situation and employment necessarily imply a competent degree of knowledge in making such entries; but when an applica- tion, under the circumstances of this case, is made to a gen- eral merchant to make an entry at the custom house, such a mistake is not to be imputed to him as gross negligence.'' And in a recent case in New York, 37 where a banker held himself out as dealing in choice stocks, and promised his customers careful attention in all financial transactions, it was held that he was bound to exercise the skill and knowl- edge of a banker engaged in loaning money for himself and his customers, although his services were rendered without compensation. "It does not follow," said the court, "that the banker was freed from the obligation of such diligence as he had promised to those who dealt with him, or was at liberty to withhold from his agency the exercise of the o i H. Bl. 159. 87 Isham v. Post, 141 N. T. 100, 35 N. E. 1084, 23 L. R. A. 90, 38 Am. St. Rep. 766. 107) DUTY TO ACT IN GOOD FAITH. 415 skill and knowledge which he held himself out to possess. Nothing, in general, is more unsatisfactory than attempts to define and formulate the different degrees of negligence ; but, even where the neglect which charges the mandatory is de- scribed as 'gross/ it is still true that, if his situation or employ- ment implies ordinary skill or knowledge adequate to the undertaking, he will be responsible for any losses or injuries resulting from the want of the exercise of such skill or knowl- edge." SAME DUTY TO ACT IN GOOD FAITH. 1O7. It I* the duty of the agent to exercise good faith and loyalty toward the principal in the transaction of the business intrusted to him. This requires (a) That he shall not assume any position in which his in- terests -will he antagonistic to those of the principal. More specifically (1) He cannot, without consent of the principal, act both as agent and as party in the same transac- tion; (2) He cannot, in a transaction requiring the exercise of discretion, act as agent for both parties without their consent; (3) He cannot acquire any interest in the subject-mat- ter of the agency nor any rights adverse to the principal based on a violation of instructions, a neglect of duty, or an abuse of the confidence re- posed in him; (4) He cannot, by direct or indirect means, make any profit from the agency except his compensation. (b) That he shall not assert the adverse interests or title of third parties to defeat the rights of his principal. (o) That he shall give notice to the principal of all facts relative to the business of the agency coming to his knowledge which may affect the principal's interests. In General. The duty of the agent to exercise good faith results from the fiduciary character of the relation. Of necessity, the principal must repose confidence in the agent, and must rely upon his good faith and loyalty to the interest which is com- 416 DUTIES OF AGENT TO PRINCIPAL. (Ch. 15 mitted to him. The agent must therefore act solely in the interest of his employer, and not in his own interest, or in the interest of another. No person while acting as agent may enter into any transaction in which he has any personal in- terest, or take a position in conflict with the interest of his principal, unless the principal, with full knowledge of all the facts, consents. 1 Whenever such a transaction is entered into in violation of this principle, the principal, when the facts come to his knowledge, may repudiate the transaction, or may adopt it and claim an account of the profit made by the agent. 8 Acting as Agent and Parly. It is a breach of the confidence upon which the relation rests for the agent to unite the inconsistent relations of agent and party in the same transaction. When the agent assumes to deal with himself in a matter in which he is expected to deal with third persons, his own interest and that of his prin- cipal are necessarily antagonistic ; and the principal may re- pudiate the transaction irrespective of whether or not it has resulted in loss and without regard to its bona fides. 8 An agent employed to buy may not buy from himself, 4 nor may 107. i Gillett v. Peppercorn, 3 Beav. 78; Michoud v. Girod, 4 How. (U. S.) 503, 555, 11 L. Ed. 1076; Wadsworth v. Adams, 138 U. S. 380, 11 Sup. Ct. 303, 34 L. Ed. 984; Keighler v. Manufacturing Co., 12 Md. 383, 71 Am. Dec. 600; Davoue v. Fanning, 2 Johns. Ch. (N. Y.) 252; Farnsworth v. Hemmer, 1 Allen (Mass.) 494, 79 Am. Dec. 756. 2 See Bowstead, Dig. Ag. 102. Gillett v. Peppercorn, 3 Beav. 78; Aberdeen Ry. v. Blakie, 2 Eq. R. 1281; Michoud v. Girod, 4 How. (U. S.) 503, 11 L. Ed. 1076; New York Cent. Ins. Co. v. Insurance Co., 14 N. Y. 85; Taussig v. Hart, 58 N. Y. 425; Maryland Fire T- S . Co. v. Dalrymple, 25 Md. 242, 89 Am. Dec. 779; People v. Board, 11 Mich. 222; Green v. Knoch, 92 Mich. 26, 52 N. W. 80. * Gillett v. Peppercorn, 3 Beav. 78; Bentley v. Craven, 18 Beav. 75; Bischoffsheim v. Baltzer (C. C.) 20 Fed. 890; Conkey v. Bond, 36 N. Y. 427; Disbrow v. Secor, 58 Conn. 35, 18 Atl. 981; Colbert v. Shepherd, 89 Ya. 401, 16 S. E. 246; Friesenhahn v. Bushnell, 47 Minn. 443, 50 N. W. 597. 107) DUTY TO ACT IN GOOD FAITH. 417 an agent to sell become the purchaser." Nor can evidence of custom be admitted to convert a broker employed to buy for his employer into a principal to sell to him, unless the employer knows and assents to the dealing on the footing of such custom. 8 Nor will the agent be permitted to ac- complish indirectly what he may not do directly, as by selling to a third person acting in his interest. Any person pur- chasing from the agent in the agent's interest, or with knowl- edge of his misconduct, stands in his shoes, and may be char- ged as trustee. 7 The rule applies to all agents, public 8 and private, and to all persons acting in a fiduciary capacity, such as trustees, executors, guardians, and the like." Oliver v. Court, Dan. 301; Bentley v. Craven, 18 Beav. 75; Jeff- ries v. Wiester, 2 Sawy. (U. S.) 135, Fed. Cas. No. 7,254; Copeland v. Insurance Co., 6 Pick. (Mass.) 198; Greenfield Sav. Bank v. Simons, 133 Mass. 415; Bain v. Brown, 56 N. Y. 285; Martin v. Moul- ton, 8 N. H. 504; Parker v. Vose, 45 Me. 54; Allen v. Doe, 31 Ga. 544; Crumley v. Webb, 44 Mo. 144, 100 Am. Dec. 304; Euneau v. Rieger, 105 Mo. 659, 16 S. W. 854; Francis v. Kerker, 85 111. 190; Hodgson v. Raphael, 103 Ga. 480, 30 S. E. 416; Dana v. Trust Co., 99 Wis. 663, 75 N. W. 429. The clerk of a broker employed to sell land, who has access to the correspondence with the seller, stands in such a relation of con- fidence to the latter that if he becomes the purchaser he is chargeable as trustee: Gardner v. Ogden, 22 N. Y. 327, 78 Am. Dec. 192. See, also, Hobday v. Peters, 28 Beav. 349; Poillon v. Martin, 1 Sandf. Ch. (N. Y.) 569. But if a sale to a third person is consummated the agency is so far terminated that the agent may agree to take the property from the purchaser and assume his obligations. Robertson v. Chapman, 152 U. S. 673, 11 Sup. Ct 741, 38 L. Ed. 592. e Robinson v. Mollett, L. R. 7 H. L. 802. Cf. De Bussche v. Alt, 8 Ch. D. 286; Butcher v. Krauth, 14 Bush (Ky.) 713. 7 Jones v. Hoyt, 23 Conn. 157; Martin v. Moulton, 8 N. H. 504; Hughes v. Washington, 72 111. 84; Fry v. Platt, 32 Kan. 62, 3 Pac. 781; McKay v. Williams, 67 Mich. 547, 35 N. W. 159, 11 Am. St Rep. 597; Cole v. Iron Co., 59 Hun, 217, 13 N. Y. Supp. 851; Fisher v. Bush, 133 Ind. 315, 32 N. E. 924. People v. Board. 11 Mich. 222. Eaton, Eq. 32L TIFF.P.& A.-27 418 DUTIES OF AGENT TO PRINCIPAL^ (Ch. 15 Same Knowledge and Consent of Principal. The law does not forbid dealings directly between princi- pal and agent with respect to the subject-matter of the agen- cy, but all such dealings are regarded with suspicion. When an agent enters into a contract with his principal he must make a full disclosure of all the material circumstances and of all the facts known to him relating to the subject-matter. If the principal seeks to impeach such a transaction, the bur- den of showing that no advantage was taken by the agent, and that it was entered into in good faith and after full dis- closure, rests upon the agent. 10 A transaction entered into by the agent in violation of his trust is, of course, capable of ratification; and if, after the principal has acquired full knowledge of the facts, he does not repudiate it within a reasonable time, ratification will be implied. 11 Acting as Agent for Both Parties. The duty of the agent to act solely with a view to the in- terest of his employer forbids him, in any transaction where the interests of the parties are adverse, from acting as agent for both parties, at least without their consent. Thus, an agent employed to sell may not ordinarily act as agent of the buyer, since the duty which the agent owes to the seller to sell for the best price is inconsistent with his duty to the buyer to buy on the lowest terms. When the agent assumes antagonistic positions as agent for both, either may repudiate the transaction ; 1S nor can the agent recover compensation 10 McPherson v. Watt, 3 App. Gas. 254; Edwards v. Myrick, 2 Hare, 60; Dunne v. English, L. R, 18 Eq. 524; Keith v. Kellam (C. C.) 35 Fed. 243; Farnam v. Brooks, 9 Pick. (Mass.) 212; Howell v. Ransom, 11 Paige (N. Y.) 538; Nesbit v. Lockman, 34 N. Y. 167; Fisher's Appeal, 34 Pa. 29; Uhlich v. Muhlke, 61 111. 499; Legendre v. Byrnes, 44 N. J. Eq. 372, 14 Atl. 621; Rochester v. Levering, 104 Ind. 562, 4 N. E. 203. 11 Marsh v. Whitmore, 21 Wall. (U. S.) 178, 22 L. Ed. 482; Hawley v. Cramer, 4 Cow. (N. Y.) 730; ante, p. 68. 12 Hesse v. Briant, 6 De G., M. & G. 623; New York Cent Ins. Co. v. Insurance Co., 14 N. Y. 85; Utica Ins. Co. v. Insurance Co., 17 107) DUTT TO ACT IN GOOD FAITH. 419 from either 18 unless both consent to the double agency. 14 But if there is no conflict between the interests of the two principals, as where the terms of sale have been fixed by the seller, or are to be fixed by agreement between the par- ties, and the duty of the agent is solely to bring buyer and seller together, so that nothing is left to his discretion, he may act as agent for both. 18 Barb. (N. Y.) 132; Shir land v. Iron Works Co., 41 Wis. 162; Fish v. Leser, 69 111. 394; Mercantile Mut Ins. Co. v. Insurance Co., 8 Mo. App. 408. An insurance agent who has been directed by his company to reduce a risk either by cancellation or reinsurance cannot reinsure In another company of which also he is agent, without its consent. Empire State Ins. Co. v. Insurance Co., 138 N. Y. 446, 34 N. E. 200. is Walker v. Osgood, 98 Mass. 348, 93 Am. Dec. 168; Rice v. Wood, 113 Mass. 133, 18 Am. Rep. 459; Bollman v. Loomis, 41 Conn. 581; Lynch v. Fallon, 11 R. I. 311, 23 Am. Rep. 458; Everhart v. Searle, 71 Pa. 256; Bell v. McConnell, 37 Ohio St 396, 41 Am. Rep. 528; Meyer v. Hanchett, 39 Wis. 415; Id., 43 Wis. 246; Atlee v. Fink, 75 Mo. 100, 43 Am. Rep. 385. "By engaging with the second, he forfeits his right to compensation from the one who first employed him. By the second engagement, the agent, if he does not in fact disable himself from rendering to the first the full quantum of services contracted for, at least tempts himself not to do so. And for the same reason he cannot recover from the second employer, who is ignorant of the first engagement And, if the second employer has knowledge of the first engagement, then both he and the agent are guilty of the wrong committed against the first employer, and the law will not enforce an executory con- tract entered into in fraud of the rights of the first employer." Bell v. McConnell, supra, per Mcllvaine, J. Eviuence of custom to charge double commission Is inadmissible. Farnsworth v. Hemmer, 1 Allen (Mass.) 494, 79 Am. Dec. 756; Raisin v. Clark, 41 Md. 158, 20 Am. Rep. 66. i* Bell v. McConnell, 37 Ohio St. 396, 41 Am. Rep. 528, and cases there cited. Contra, Lynch v. Fallon, 11 R. I. 311, 23 Am. Rep. 458; Meyer v. Hanchett, 43 Wis. 246 (semble). is Rupp v. Sampson, 16 Gray (Mass.) 398, 77 Am. Dec. 416; Mullen v. Keetzleb, 7 Bush (Ky.) 253; Orton v. Scofield, 61 Wis. 382, 21 N. W. 261; Collins v. Fowler, 8 Mo. App. 588; Nolte v. Hulbert, 37 Ohio St. 445; Ranney v. Donovan, 78 Mich. 318, 44 N. W. 276; 420 DUTIES OF AGENT TO PRINCIPAL. (Gil. 15 Acquvri/ng Adverse Interest* The agent may not acquire, without the consent of the principal, any interest in the subject-matter of the agency or any rights adverse to him based on a violation of instruc- tions, a neglect of duty, or an abuse of the confidence reposed. Any property or interest so acquired the agent will hold as trustee for the principal, who upon such terms of reimburse- ment and remuneration as equity may demand may compel a transfer to himself, or who may compel an account 6f prof- its. An agent employed to purchase property may not pur- chase in his own name or on his own behalf, and if he does so he will hold it as trustee. 16 And although he uses his own funds, he may be compelled upon tender of the pur- chase price and his reasonable compensation to convey to his principal. 17 So an agent employed to buy or to settle a claim will not be permitted, if he buys it in his own name, to hold it adversely to his principal, or to recover from him more than he actually paid. 18 Where the property thus adversely acquired by the agent is real estate, to which he takes title in his own name, and which he pays for with his own money, it is a disputed ques- Knauss v. Brewing Co., 142 N. Y. 70, 36 N. E. 867. But see Webb v. Paxton, 36 Minn. 532, 32 N. W. 749. i Lees v. Nuttall, 1 Russ. & M. 53, 2 Myl. & K. 819; Jenkins v. Eldredge, 3 Story (U. S.) 181, Fed. Gas. No. 7,266; Baker v. Whiting, 3 Sumn. (U. S.) 475, Fed.' Cas. No. 787; Parkist v. Alexander, 1 Johns. Ch. (N. Y.) 394; Sweet v. Jacocks, 6 Paige (N. Y.) 355, 31 Am. Dec. 252; Torrey v. Bank, 9 Paige (N. Y.) 649; Church v. Sterling, 16 Conn. 388; Matthews v. Light, 32 Me. 305; Wellford v. Chancellor, 5 Grat. (Va.) 39; Winn v. Dillon, 27 Miss. 494; Firestone v. Firestone, 49 Ala. 128; Rhea v. Puryear, 26 Ark. 344; Barziza v. Story, 39 Tex. 354; Vallette v. Tedens, 122 111. 607, 14 N. E. 52, ' Am. St. Rep. 502. IT Rose v. Hayden, 35 Kan. 106, 10 Pac. 554, 57 Am. Rep. 145; Boswell v. Cunningham, 32 Fla. 277, 13 South. 354, 21 L. R. A. 54. Reed v. Norris, 2 Myl. & C. 361; Smith v. Brotherline, 62 Pa. 461; Noyes v. Landon, 59 Vt. 569, 10 Atl. 342. 107) DUTY TO ACT IN GOOD FAITH. 421 tion whether if he denies the trust the principal can prove it by oral evidence. It has been declared that to permit the principal to compel the agent to convey the estate to him would be directly in the teeth of the statute of frauds, 19 which requires declarations or creations of trusts in land to be proved by writing signed by the party who declares the trust, 20 and this doctrine has very generally prevailed. 21 Many cases, however, hold, and it seems with the better rea- son, that, the trust arising from the previously established confidential relation, the agent may be charged as trustee as upon a trust arising by implication of law. 22 An agent may not use for his own benefit, and to the detri- ment of his principal, information obtained in the course of the agency. Thus, if an agent in the course of his em- ployment discovers a defect in his principal's title, he may not use the information to acquire the title for himself; 23 or if he discovers the existence of an outstanding charge, which he purchases at a discount, he can enforce it only for the amount actually paid. 24 So, where a confidential clerk, prior to the expiration of his employer's lease, secretly ob- tained a lease for his own benefit, he was compelled to trans- fer it to his employer. 28 i 2 Sugden, Vend. (9th Ed.) c. 15, 2. 20 29 Car. II, c. 3, 7. 21 James v. Smith [1891] 1 Ch. D. 384; Botsford v. Burr, 2 Johns. Ch. 406; Barnard v. Jewett, 97 Mass. 87; Collins v. Sullivan, 135 Mass. 461; Burden v. Sheridan, 36 Iowa, 125, 14 Am. Rep. 505; Sand- foss v. Jones, 35 Cal. 481. 22 Rose v. Hayden, 35 Kan. 106, 10 Pac. 554, 57 Am. Rep. 145 (an elaborate discussion); Boswell v. Cunningham, 32 Fla. 277, 13 South. 354, 21 L. R. A. 54. See Browne, St. Frauds (5th Ed.) 96. 23 Rlngo v. Binns, 10 Pet. (U. S.) 269, 9 L. Eu. 420; Case v. Carroll, 35 N. Y. 385; Galbraith v. Elder, 8 Watts (Pa.) 81; Smith v. Brother- line, 62 Pa. 461; Cameron v. Lewis, 56 Miss. 76. See, also, Cragin v. Powell, 128 U. S. 691, 9 Sup. Ct. 203, 32 L. Ed. 566. 2* Carter v. Palmer, 8 Cl. & F. 657. 20 Gower v. Andrew, 59 Cal. 119, 43 Am. Rep. 242; Davis v. Ham- lin, 108 111. 39, 48 Am. Rep. 541. Where a business manager secretly copied from his employer's or- 422 DUTIES OF AGENT TO PRINCIPAL. (Ch. 15 An agent may not found adverse rights against his prin- cipal upon any neglect of duty. Thus, an agent charged with the payment of taxes on land who neglects that duty can- not acquire a valid tax title, but his purchase will inure to the benefit of his principal, 26 and this although he has not been placed in funds to pay. 27 Nor can an agent take ad- vantage of his negligence to acquire rights which would have been secured to his principal by the exercise of proper skill and care. 28 May Not Make a Profit. Good faith demands that an agent shall not without the knowledge and consent of the principal make any profit out of the agency, beyond his stipulated compensation or a rea- sonable compensation, where none is fixed. All profits be- long to the principal, and must be accounted for. 29 "Where der book a list of names of customers, and after termination of the employment used the list in a similar business on his own account, he was liable in damages to his employer. Robt v. Green [1895] 2 Q. B. 1. See, also, Merryweather v. Moore [1892] 2 Ch. 518; Lamb v. Evans [1893] 2 Q. B. 1. 2e Matthews v. Light, 32 Me. 305; Oldhams v. Jones, 5 B. Mon. (Ky.) 458; Krutz v. Fisher, 8 Kan. 90; Murdoch v. Milner, 84 Mo. 96; Collins v. Rainey, 42 Ark. 531; Gonzalia v. Bartelsman, 143 111. 634, 32 N. E. 532; Woodman v. Davis, 32 Kan. 344, 4 Pac. 262; Geis- inger v. Beyl, 80 Wis. 443, 50 N. W. 501. 2T Barton v. Moss, 32 111. 50; Bowman v. Officer, 53 Iowa, 640, 6 N. W. 28; McMahon v. McGraw, 26 Wis. 614; Fox v. Zimmermann, 77 Wis. 414, 46 N. W. 533; Woodman v. Davis, 32 Kan. 344, 4 Pac. 262; Page v. Webb (Ky.) 5 S. W. 308. as An attorney employed to attach, procure judgment, and levy the same on the land attached, is estopped from denying the validity of his work, to his own profit; and when such attachment and levy are defective, and he purchases the land, his title inures to the judgment creditor. A record that discloses such relation of attorney and client is notice to a subsequent purchaser from the attorney. Briggs v. Hodgson, 78 Me. 514, 7 Atl. 387. 2 Hinchman v. E. I. Co., 1 Ves. Jr. 298; Morrison v. Thompson, L. R. 9 Q. B. 480; Parker v. McKenna, L. R. 10 Ch. 96; Jeffries v. Wiester, 2 Sawy. (U. S.) 135, Fed. Cas. No. 7,254; Northern P. R. Co. 107) DUTY TO ACT IN GOOD FAITH. 423 the profits are made by a violation of duty, it would be ob- viously unjust to allow the agent to reap the fruits of his own misconduct; and, where the profits are made in the ordi- nary course of the business of the agency, it must be pre- sumed that the parties intended that the principal should have the benefit thereof." 80 It is immaterial that the agent contributed his own funds and incurred all the risk, 81 and that the principal suffered no injury. 82 Nor will any usage which permits the agent to appropriate profits of the agency be upheld. 88 Thus, if an agent employed to sell purchases for himself and resells at an advance, he must account for the advance. 84 So, if he is employed to sell at not less than a given price, and he sells for a higher price. 85 An agent instructed to buy at a given price must account for the profit if he obtains the property for less. 38 He must account for v. Kindred (C. C.) 14 Fed. 77; Warren v. Burt, 7 C. C. A. 105, 58 Fed. 101; Button v. Willner, 52 N. Y. 312; Bain v. Brown, 56 N. Y. 285; Dodd v. Wakeman, 2G N. J. Eq. 484. so Story, Ag. 207. i Dutton v. Willner, 52 N. Y. 312. See Williams v. Stevens, L. R. 1 P. C. 352. sz Parker v. McKenna, L. R. 10 Ch. 96. ss Thompson v. Havelock, 1 Camp. 527; Diplock v. Blackburn, 3 Camp. 43. s* De Busshe v. Alt, 8 Ch. D. 286. SB Cutter v. Dernmon, 111 Mass. 474; Greenfield Sav. Bank v. Simons, 133 Mass. 415; Bain v. Brown, 56 N. Y. 285; Merryman v. David, 31 111. 404; Love v. Hfcss, 62 Ind. 255; Blanchard v. Jones, 101 Ind. 542; Kramer v. Winslow, 154 Pa. 637, 25 Atl. 766. An agent settling a claim for less than authorized must account for the difference. Judevine v. Town of Hard wick, 49 Vt. 180; Hitchcock v. Watson, 18 111. 289. But if an agent commissioned to sell is authorized to retain all over a certain price, he need not refund the excess. Anderson v. Weiser, 24 Iowa, 428. Of. Morgan v. Elford, 4 Ch. D. 352. An agent authorized to sell land and to keep all he might obtain above a specified sum was bound to inform his principal of facts afterwards discovered increasing the value of the land. Hegenmyer v. Marks, 37 Minn. 6, 32 N. W. 785, 5 Am. St. Rep. 808. 8 Kimber v. Barber, L. R. 8 Ch. 56; Northern P. R. Co. v. Kin- 424 DUTIES OF AGENT TO PRINCIPAL. (Ch. 15 any commission, discount, or personal benefit received from a third person. 87 An agent who is employed to give his whole time to his principal must account for any compen- sation received for services rendered to another. 88 May not Deny Principal's Title. The duty of loyalty forbids the agent as a rule to deny the title of his principal, or to set up the adverse title of a third person, to goods or money received by him from his principal or on his account. 89 He may, however, show that since the receipt of the property the principal has parted with the title, 40 or that he has himself been divested of pos- session by title paramount. 41 If the goods were wrongfully dred (C. C.) 14 Fed. 77; Bunker v. Miles, 30 Me. 431, 1 Am. Rep. 632; Kanada v. North, 14 Mo. 615; Ely v. Hanford, 65 111. 267; National Bank of Rising Sun v. Seward, 106 Ind. 264, 6 N. E. 635; Keyes v. Bradley, 73 Iowa, 589, 35 N. W. 656; Crump v. Ingersoll, 44 Minn. 84, 46 N. W. 141; Duryea v. Vosburgh, 138 N. Y. 621, 33 N. E. 932. si Turnbull v. Garden, 20 L. T. 218; Morrison v. Thompson, L. R. 9 Q. B. 480; Mayor of Salford v. Lever [1891] 1 Q. B. 168 (bribe). Otherwise of a mere gratuity. JBtna Ins. Co. v. Church, 21 Ohio St. 492. ss Thompson v. Havelock, 1 Camp. 527; Gardner v. McCutcheon, 4 Beav. 534; Leach v. Railroad Co., 86 Mo. 27, 56 Am. Rep. 408. One who uses in his own business property delivered to him for use in that of his employer is liable for the value of the use. Steb- bins v. Waterhouse, 58 Conn. 370, 20 Atl. 480. 3 Zaluta v. Viuent, 1 DeG., M. & G. 315; Nicholson v. Knowles, 5 Mad. 47; Collins v. Tillou, 26 Conn. 368, 68 Am. Dec. 398; Marvin v. Ellwood, 11 Paige (N. Y.)'365; Murray v. Vanderbilt, 39 Barb. (N. Y.) 140; Hancock v. Gomez, 58 Barb. (N. Y.) 490; Von Hurter v. Spengeman, 17 N. J. Eq. 185; Hungerford v. Moore, 65 Ala. 232; Day v. Southwell. 3 Wis. 657; Witman v. Felton, 28 Mo. 601. 40 Smith v. Hammond, 6 Sim. 10; Marvin v. Ellwood, 11 Paige (N. Y.) 365; Duncan v. Spear, 11 Wend. (N. Y.) 56; Roberts v. Noyes, 76 Me. 590; Snodgrass v. Butler, 54 Miss. 45. 41 Hardman v. Wilcox, 9 Bing. 382; Biddle v. Bond, 6 B. & S. 225; Hunt v. Maniere, 11 Jur. (N. S.) 28; Burton v. Wilkinson, 18 Vt. 185, 46 Am. Dec. 145; Robertson v. Woodward, 3 Rich. Law (S. C.) 251; Bliven v. Railroad Co., 36 N. Y. 403; Western Transp. Co. v. Barber, 56 N. Y. 544. 107) DUTT TO ACT IN GOOD FAITH. 425 obtained by the principal, and are claimed by the true owner, the agent may set up the title of the latter in an action brought by the principal. 42 And if money is obtained by the agent wrongfully, or is paid to him under a mistake o\ fact or for a consideration which fails, so that he is liable to repay it to the person from whom he obtained it, and he does so repay it, he may show the fact as a defense if called on by his principal to account. 48 If an agent has received money on behalf of his principal under an illegal contract, he must account for the money, and cannot set up illegality which the other party has waiv- ed ; 44 nor, if he has received money from his principal for an illegal purpose, which is executed, can he refuse to refund to the principal on demand. 4 ' Western Transp. Co. v. Barber, 56 N. T. 544; Biddle v. Bond, 6 B. & S. 225 (although the agent has not yielded possession to the claimant). But not If the agent had notice of the adverse claim when the goods were intrusted to him. Ex parte Dixon, 19 Ch. D. 86. Bowstead, Ag. 96. Where an agent sold a horse and received the price, and the sale was rescinded for the agenf s fraud and the price returned, he was not liable to the principal for the purchase money. Murray v. Mann, 2 Ex. 538. Ante. p. 376. 4* Tenant v. Elliott, 1 B. & P. 3; Bridger v. Savage, 15 Q. B. D. 363; Baldwin v. Potter, 46 Vt. 402; Norton v. Blinn, 39 Ohio St. 145; Gilliam v. Brown, 43 Miss. 641; Brooks v. Martin, 2 Wall. . Ed. 591; Cutter v. Gillette, 163 Mass. 95, 39 N. E. 1011; Sutherland v. Wyer, 67 Me. 64; Hamilton v. Love, 152 Ind. 641, 53 N. E. 181, 54 N. E. 437, 71 Am. St. Rep. 384. 11 Leatherberry v. Odell (C. C.) 7 Fed. 641; Howard v. Daly, 61 N. Y. 362, 19 Am. Rep. 285; Sutherland v. Wyer, 67 Me. 64; Horn v. Association, 22 Minn. 233. 12 Howard v. Daly, 61 N. Y. 362, 19 Am. Rep. 285. See, also, cases cited note 10. is Costigan v. Railroad Co., 2 Demo (N. Y.) 609, 43 Am. Dec. 758; Strauss v. Meertief, 64 Ala. 299, 38 Am. Rep. 8; Wood, Mast. & S. p. 250. i* Gandell v. Pontigny, 4 Camp. 375. IB Elderton v. Emmens, 6 C. B. 178; Goodman v. Pocock, 15 Q. B. 576; Howard v. Daly, 61 N. Y. 362, 19 Am. Rep. 285; Moody v. Leverich, 4 Daly (N. Y.) 401; Hamill v. Poute, 51 Md. 419; James v. Allen County, 44 Ohio St. 226, 6 N. E. 246, 58 Am. Rep. 821. is Strauss v. Meertief, 64 Ala. 299, 38 Am. Rep. 8; Allen v. En- gineers' Co., 196 Pa. 512, 46 Atl. 899. 113-115) RIGHT TO REMUNERATION. 451 proved doctrine, however, the employe, unless he elects to treat the contract as rescinded, is confined to an action for breach of contract ; and while in such an action the stipulated remuneration is, prima facie, the measure of recovery, this may be reduced, as has been explained, by the amount of what he has or ought to have earned. The same principles are applicable where the contract of employment, although not for a definite term, expressly or impliedly binds the employer not to revoke the authority before the transaction is completed or otherwise to prevent the agent from earning his commission. As we have seen, where the contract contemplates that the agent shall incur trouble and expense, a promise to pay a reasonable re- muneration for services actually rendered in the event of a revocation will readily be implied. 17 But the nature and terms of such an employment or the custom or usage of the particular business may be such as to indicate that it is the understanding that the authority shall not be revoked, or the agent otherwise be prevented from earning his com- mission, before the agent has completed the transaction, or, at least, until he has had a reasonable opportunity to com- plete it. Thus, it has been said that a broker employed to make a sale is usually entitled to a fair and reasonable op- portunity to perform, subject to the right of the principal to sell independently. 18 The right of the principal to revoke IT Ante, p. 448. is Sibbald v. Iron Co., 83 N. T. 378, 38 Am. Rep. 441; Inchebald v. Western Neilgherry Coffee, Etc., Co.. 17 C. B. (N. S.) 733; Queen of Spain v. Parr, 39 I/. J. Ch. 73; Simpson v. Lamb, 17 C. B. 603; Strong v. West, 110 Ga. 382, 35 S. E. 693. Where a contract with an agent for sale provided that after the agent had made an agreement for sale the owner should not inten- tionally defeat it, nor at any time withdraw the property from sale without giving 30 days' notice, and the owner having refused to be bound by an authorized agreement for sale, or to execute a deed, the agent delivered to the purchaser the contract of sale, which the latter accepted and was ready to perform, the agent was entitled to recover a sum equivalent to his commissions. Witherell v. Murphy, 147 Mass. 417, 18 N. E. 215. 452 DUTIES OP PRINCIPAL, TO AGENT. (Ch- 16 the authority is also subject to the requirements of good faith upon his part. Hence, if a broker has instituted nego- tiations which are approaching success, the principal is not entitled to revoke the authority with a view to concluding the bargain without his aid, and thus avoiding the commis- sions about to be earned. 19 The principal has, of course, always the right to terminate the agency for any gross breach of duty upon the part of the agent. 20 Same Revocation Jyy Operation of Law. As a rule the circumstances which by operation of law terminate the authority of the agent 21 also operate to dis- charge the contract of employment. Thus, upon the death of the employer, the agent is discharged from performance, 22 and he may recover only upon a quantum meruit to the ex- tent of his performance. So, upon the death 28 or physical or mental incapacity 24 of the agent, the contract is dischar- ged, and he or his personal representatives may recover up- on a quantum meruit, subject to the right of the principal i Sibbald v. Iron Co., 83 N< Y. 378, 38 Am. Rep. 441. 20 Sibbald v. Iron Co., 83 N. Y. 378, 38 Am. Rep. 441. If the broker procures an offer which is rejected, there being no agreement by which he is bound to accept it, and the negotiations are voluntarily abandoned and the agency is terminated, a sale to the person who made the offer does not render the owner liable for a commission. Fairchild v. Cunningham, 84 Minn. 521, 88 N. W. 15. Post, p. 454. 21 Ante, p. 143. 22 Farrow v. Wilson, L. R. 4 C. P. 744; Yorrington v. Greene, 7 R. I. 589, 84 Am. Dec. 578. Otherwise in case of bankruptcy. Lewis v. Insurance Co., 61 Mo. 534; Vanuxem v. Bostwick (Pa.) 7 Atl. 598. 23 Wolfe v. Howes, 20 N. Y. 197, 75 Am. Dec. 388; Clark v. Gil- bert, 26 N. Y. 279, 84 Am. Dec. 189; Coe v. Smith, 4 Ind. 79, 58 Am. Dec. 618; Underwood v. Lewis [1894] 2 Q. B. 306. 24 Robinson v. Davison, L. R. 6 Ex. 269; Boast v. Firth, L. R. C. P. 1 ; Fuller v. Brown, 11 Mete. (Mass.) 440; Fenton v. Clark, 11 Vt. 557; Hughes v. Wamsutta Mills, 11 Allen (Mass.) 201 (imprison- ment), but see Leopold v. Salkey, 89 111. 412, 31 Am. Rep. 93; Green 116) RIGHT TO REMUNERATION. 453 to have the recovery reduced by the amount of any loss which he may have suffered from the nonperformance of the contract. 28 The right to recover, except on a full per- formance, may, however, be excluded by the express terms of the contract.** SAME RENUNCIATION BT AGENT. 116. Where the agent, in breach of an entire contract of employment, renounces his authority, he can in most jurisdictions recover nothing, although in some juris- dictions he can recover upon a quantum meruit. If an agent without legal excuse abandons the employ- ment before full performance, he can recover nothing for his services, neither upon the contract of employment, be- cause under an entire contract performance is a condi- tion precedent to the right of recovery thereon, nor upon an implied contract, because the special contract controls the rights of the parties in respect to what has been done under it, and excludes any implied contract. 1 In some states, how- ever, the rule has been so far relaxed as to permit a recovery upon a quantum meruit to the extent of benefits actually conferred, the amount of the recovery, if any, being esti- v. Gilbert, 21 Wis. 395; Walsh v. Fisher, 102 Wis. 172, 78 N. W. 437. 43 L. R. A. 810, 72 Am. St Rep. 865 (violence by strikers). Prevalence of contagious disease is a discharge. Lakeman v. Pol- lard, 43 Me. 463, 69 Am. Dec. 77. But see Dewey v. School Dist, 43 Mich. 480, 5 N. W. 646, 38 Am. Rep. 206. See Clark, Contr. 683. 25 Patrick v. Putnam, 27 Vt. 759; Wolfe v. Howes, 20 N. Y. 197, 75 Am. Dec. 388. 2 Cutter v. Powell, 6 T. R. 320; Clark, Contr. 320. 116. i Stark v. Parker, 2 Pick. (Mass.) 267, 13 Am. Dec. 425; Olmstead v. Beale, 19 Pick. (Mass.) 528; Miller v. Goddard, 34 Me. 102, 56 Am. Dec. 638; Hansell v. Erickson, 28 111. 257; Thrift v. Payne, 71 111. 408; Peterson v. Mayer, 46 Minn. 468, 49 N. W. 245, 13 L. R. A. 72; Diefenback v. Stark, 56 Wis. 462, 14 N. W. 621, 43 Am. Rep. 719. Otherwise of an infant. Whitmarsh v. Hall, 3 Denio (N. Y.) 375; Widrig v. Taggart, 51 Mich. 103, 16 N. W. 251. 454 DUTIES OF PRINCIPAL TO AGENT. (Ch. 16 mated at the contract price, with deduction of what it would cost to procure a completion of the residue of the service and also of any damages sustained by reason of the breach. 1 Again, the right to remuneration for partial performance may be expressly or impliedly reserved, as where the con- tract provides that the agent may quit at any time upon notice. SAME AGENT'S MISCONDUCT OB BREACH OF DUTY. 117. Where the agent is guilty of a breach of any fiduciary duty, or where the principal derives no benefit from the agent's services in consequence of his gross negli- gence or other breach of duty, he can recover no re- muneration. It has already been pointed out that for a breach of the agent's duty to obey instructions, to exercise reasonable care and skill, to act in good faith, and the like, the principal may terminate the agency without incurring liability on that ac- count, 1 and the agent will, of course, lose all right to re- muneration for further services. A breach of duty may also have the effect of debarring the agent from recovering re- muneration for services already rendered. That such is the effect of violation of any duty arising from the fiduciary char- acter of the relation is universally recognized, 8 even if the transaction is adopted by the principal. 8 Thus, if the agent is guilty of fraud or bad faith, he forfeits all claim to com- pensation. 4 So if he makes a sale directly or indirectly to s Britton v. Turner, 6 N. H. 481, 26 Am. Dec. 713; McClay v. Hedge, 18 Iowa, 66; Parcell v. McComber, 11 Neb. 209, 7 N. W. 629, 38 Am. Rep. 366. See Wood, Mast. & S. 147. 117. i Ante, p. 452. Gray v. Haig, 20 Beav. 219; In re Owens, I. R. 7 Eq. 235. Solomans v. Fender, 3 H. & C. 639. If in ignorance of the fraud the principal pays, he may recover, McGar r. Adams, 65 Ala. 106. * Wadsworth v. Adams, 138 U. S. 380, 11 Sup. Ct. 303, 34 L. Ed. 984; Allen v. Pierpont (C. C.) 22 Fed. 582; Blair v. Shaeffer (C. C.) 117) BIGHT TO REMUNERATION. 455 himself or to a company in which he is interested." The right of the agent to compensation where he acts for both parties has already been considered.' A forfeiture of com- pensation may also result from negligence of the agent. If the agent is guilty of gross negligence in the conduct of the business intrusted to him, so that the principal derives no benefit therefrom, the agent is entitled to no remuneration; 7 but if, notwithstanding his negligence, the services are of some value after making allowance for the loss sustained, it seems that he can recover their reasonable value. 8 So ren- dering false accounts, or even gross neglect to keep ac- counts and preserve vouchers, works a forfeiture of commis- sions, 9 although a mere failure to render an account at the stipulated time, 10 or irregularity in the account when not fraudulent and admitting of explanation, will not necessarily work a total forfeiture, and may simply reduce the amount of the compensation by the amount of any necessary dam- 33 Fed. 218; Sea v. Carpenter, 16 Ohio, 412; Martin v. Bliss, 57 Hun, 157. 10 N. Y. Snpp. 886; Porter v. Silvers. 35 Ind. 295; Brannan v. Strauss, 75 111. 234; Segar v. Parrish, 20 Grat. (Va.) 672; Urqu- hart v. Mortgage Co., 85 Minn. 69, 88 N. W. 264. B Solomans v. Pender, 3 H. & C. 639; In re Owens, L R. 7 Eq. 235; Hofflein v. Moss, 14 C. C. A. 459, 67 Fed. 440; Murray v. Beard, 102 N. Y. 505, 7 N. E. 553; McGar v. Adams, 65 Ala. 106; Hobson v. Peake, 44 La. Ann. 383, 10 South. 762. Ante, p. 41& T Bracey v. Carter, 12 Ad. & E. 373; Denew v. Daverell, 3 Camp. 451; Hurst T. Holding, 3 Taunt 32; Fordyce v. Peper (C. C.) 16 Fed. 516; Dodge v. Tileston. 12 Pick. (Mass.) 328; Bledsoe v. Irvin. 35 Ind. 293; Fisher v. Dynes, 62 Ind. 348; Sumner v. Reicheniker, 9 Kan. 320. s Lee v. Clements, 48 Ga. 128; Rochester v. Levering, 104 Ind. 5G2, 4 N. E. 203. White v. Lincoln, 8 Ves. Jr. 363; Fordyce v. Peper (C. C.) 16 Fed. 516; Motley v. Motley, 42 N. C. 211; Ridgeway v. Ludlam, 7 N. J. Eq. 123; Smith v. Crews, 2 Mo. App. 269; Fish v. See- berger, 154 111. 30, 39 N. E. 982. 10 Sampson v. Iron Works, 6 Gray (Mass.) 120. 456 DUTIES OP PRINCIPAL TO AGENT. (Ch. 16 ages. 11 An agent is entitled to no compensation for an un- authorized transaction unless the principal ratifies it. 11 DUTY TO REIMBURSE AND INDEMNIFY. 118. It is the duty of the principal to reimburse the agent for all expenses, advances, and disbursements properly paid or incurred, and to indemnify him against the consequences of all acts properly done by him in the execution of the agency. Duty to Reimburse. "Speaking generally, the agent has the right to be reim- bursed for all his advances, expenses, and disbursements incurred in the course of the agency, made on account of or for the benefit of his principal, when such advances, ex- penses, and disbursements are reasonable, and have been properly incurred and paid without misconduct on the part of the agent." * The liability of the principal arises from an implied contract, a request to undertake an agency the proper execution of which may involve expenditure on the agent's part operating as an implied request to incur such expenditure and as an implied promise to repay. 1 It neces- sarily follows that the agent is not entitled to reimburse- ment in respect to any expenditure incurred without the ex- press or implied authority of the principal. 8 Nor is he en- titled to reimbursement in respect to any expenditure in- Jones v. Hoyt, 25 Conn. 374; Lee v. Clements, 48 Ga. 128. 12 Ante. p. 444. 118. i Bibb v. Allen, 149 U. S. 481, 13 Sup. Ct 950, 37 L. Ed. 819. per Jackson, J. See, also, Smith v. Lindo, 5 C. B. (N. S.) 587; Frixione v. Tagliaferro, 10 Moore, P. C. 175; Curtis v. Barclay, 7 D. & R. 539, 5 B. & C. 141; Bartlett v. Smith (C. C.) 13 Fed. 263; Rosenstock v. Tormey, 32 Md. 169, 3 Am. Rep. 125; Ruffner v. Hewitt, 7 W. Va. 585; Armstrong v. Pease, 66 Ga. 70. 2 Bibb v. Allen, 149 U. S. 481, 13 Sup. Ct. 950, 37 L. Ed. 819. Warwick v. Slade, 3 Camp. 127 (authority revoked); Barren v. Fitzgerald, 6 Bing. N. C. 201; Keyes v. Inhabitants of Westford, 17 Pick. (Mass.) 273. 118) DUTY TO BEIMBURSE AND INDEMNIFY". 457 curred in consequence of his own negligence or breach of duty. 4 Thus, where a solicitor undertook a prosecution, which failed in consequence of the negligent way in which the indictment was drawn, he was not entitled to recover his disbursements." Duty to Indemnify, The duty of the principal to indemnify the agent against losses and liabilities which are the consequences of the acts done by him in the execution of the agency rests upon the same ground." If the proper execution of the agency involves or may involve acts from which loss or liability may result, the request to undertake the agency operates as an implied promise to indemnify the agent against such loss or liability. 7 Thus, where an agent sold cotton and was obliged to refund the price to the purchaser on account of false packing by the principal, he was allowed to recover from him the amount so refunded. 8 If, in the proper execution of his authority, the agent becomes personally liable upon a contract made for his principal, the agent can look to the principal for any damages sustained in consequence." So, if an agent without notice of adverse title sells goods under instructions from his principal, who claims them as owner, and is compelled to pay to the true owner the value of the goods, the agent is entitled to indemnity. 10 And, where an agent is authorized to deal in a particular market or * Lewis v. Samuel, 8 Q. B. 685; Brown v. Clayton, 12 Ga. 574; Veltum v. Koehler, 85 Minn. 125, 88 N. W. 432. Lewis v. Samuel, 8 Q. B. 685. e Bibb v. Allen, 149 U. S. 481, 13 Sup. Ct. 950, 37 L. Ed. 819. i Hooper v. Treffey, 1 Ex. 17; Cropper v. Cook, L. R. 8 C. P. 199; Lacey v. Hill, Crawley's Claim, L. R. 18 Eq. 182; D'Arcy v. Lyle, 5 Bin. (Pa.) 441; Maltland v. Martin, 8(5 Pa. 120; Powell v. Trustees, 19 Johns. (N. Y.) 284; Denny v. Wheelwright. 60 Miss. 733; Save- land v. Green, 36 Wis. 612. But see Halbronn v. International Horse Agency [1903] 1 K. B. 270. Beach v. Branch, 57 Ga. 362. Greene v. Goddard, 9 Mete. (Mass.) 212. 10 Adamson v. Jarvis, 4 Bing. 66. See, also, Drummond v. Humphreys, 39 Me. 347; Castle v. Noyes, 14 N. Y. 329; post, p. 460. 458 DUTIES OF PRINCIPAL, TO AGENT. (Ch. 1C trade, he is thereby authorized to deal according to the established usage thereof, provided the usage is reasonable, and not inconsistent with his instructions; and if, in ac- cordance with such usage, he incurs expenses or liability, he is entitled to be reimbursed and indemnified on that ac- count. 11 Thus, where brokers were compelled by the rules of the New York Cotton Exchange, of which the principal had notice, to go into the market and buy cotton to cover their contracts for future delivery on their principal's ac- count, by reason of his failure to furnish margins, the bro- kers were entitled to recover the difference between the price at which the cotton was to be sold and the increased price so paid to cover the contracts. 12 No indemnity can be recov- ered for a loss incurred in consequence of the agent's neg- ligence or breach of duty. 13 11 Bayliffe v. Butterworth, 1 Ex. 425; Taylor v. Stray, 2 C. B. (N. S.) 197; Chapman v. Shepherd, L. R. 2 C. P. 228; Talcott v. Smith, 142 Mass. 542, 8 N. E. 413. Usage must be so general, long established, and notorious that knowledge of it may be presumed. Earl Fruit Co. v. Warehouse Co., 60 Minn. 351, 62 N. W. 439. is Bibb v. Allen, 149 U. S. 481. 13 Sup. Ct. 950, 37 L. Ed. 819. "It Is settled by the weight of authority that, where a principal sends an order to a broker engaged in an established market of trade for a deal in that trade, he confers authority upon the broker to deal according to any well-established visage in such market or trade, especially when such usage is* known to the principal, and is fair in itself, and does not change in any essential particular the contract between the principal and agent, or involves no departure from the instructions of the principal, provided the transaction * * * is legal in its character." Per Jackson, J. is Capp v. Topham, 6 East, 392 (mistake of law); Baily v. Bur- gess, 48 N. J. Eq. 411, 22 Atl. 733; Haskin v. Haskin, 41 111. 197. Where a stockbroker was instructed to carry over stock to the next settlement, but before the settling day became insolvent and was declared a defaulter, in consequence of which the stock was sold at a loss, the principal was not bound to indemnify him, the loss having 'been caused by the broker's insolvency. Duncan v. Hill, Duncan v. Beeson, L. R. 8 Ex. 242. Cf. Hartas v. Ribbons, 22 Q. B. D. 254. 119) ILLEGAL TRANSACTIONS. 459 ILLEGAL TRANSACTIONS. 119. An agent is not entitled to remuneration, reimburse- ment, or indemnity in respect to any transaction which is apparently, or to his knowledge, illegaL An agent, as a rule, cannot recover compensation for acts done in violation of law. If a statute or ordinance makes it unlawful for a particular class of agents to transact busi- ness without a license, such agent so transacting business cannot recover commissions for his services. 1 If the object of the agency is the performance of an apparently illegal act, the contract of employment is void, and there can be no re- covery. 2 Some examples of illegal agencies have already been given.* And since ignorance of the law is no excuse, if the act or transaction for which the agent is employed is prohibited at common law, or by statute or public policy, there can be no recovery notwithstanding that the agent is ignorant of the law, provided he has sufficient knowledge 119. i Cope v. Rowlands, 2 M. & W. 149 (broker); Polk v. Force, 12 Q. B. 666 (appraiser); Brunswick v. Growl, 4 Ex. 492 (solicitor whose certificate is not In force); Buckley v. Humason, 50 Minn. 195, 52 N. W. 385, 16 L. R. A, 423, 36 Am. St. Rep. 637. In Smith v. Lindo, 5 C. B. (N. S.) 587, it was held that, although an unlicensed broker could not sue for commission, he might re- cover money which he had been obliged to pay. 2 Illegal sale of offices. Stackpole v. Erie, 2 Wils. 133; Parsons v. Thompson, 14 Bl. 322; Waldo v. Martin, 4 B. & C. 319. Procuring government contracts by corrupt means. Providence Tool Co. v. Norris, 2 Wall. (U. S.) 45, 17 L. Ed. 868; Oscanyan v Arms Co., 103 U. S. 261, 26 L. Ed. 539; Elkhart County Lodge v. Crary, 98 Ind. 238, 49 Am. Rep. 746. On appointment to office. Meguire v. Corwine, 101 U. S. 108, 25 L. Ed. 899; Providence Tool Co. v. Norris, 2 Wall. (U. S.) 45, 17 L. Ed. 868; Gray v. Hook, 4 N. Y. 449. Lobbying. Trist v. Child, 21 Wall. (U. S.) 441, 22 L. Ed. 623; Mc- Bratney v. Chandler, 22 Kan. 692, 31 Am. Rep. 213. Combination to corner market Samuels v. Oliver, 130 111. 73, 22 N. E. 499. Ante, p. 92. 460 DUTIES OP PRINCIPAL TO AGENT. (Ch. 10 of the facts to be charged with knowledge that the act or transaction is illegal. Thus, an agent who is employed to sell intoxicating liquor where such sale is illegal cannot re- cover remuneration under any circumstances. 4 On the oth- er hand, an agent who is employed in a transaction which is apparently legal may recover remuneration notwithstanding that by reason of facts of which he is ignorant the act is illegal. Thus, an agent employed to sell goods who is ig- norant of the fact that they belong to a person other than his principal may recover compensation notwithstanding that his sale was a conversion. 6 So, a broker who in good faith negotiates a contract for future delivery of merchandise will be allowed to recover his commissions, notwithstanding the actual intent of the parties to speculate in margins without actual delivery, and the consequent illegality of the trans- action as a gaming or wagering contract, provided he is not privy to the illegal character of the agreement ; although if he is privy to the unlawful design, and brings the parties together for the purpose of entering into an illegal agree- ment, he is particeps criminis, and cannot recover. 9 The same distinctions govern the right of the agent to Bixby v. Moor, 51 N. H. 402. Post, p. 461. Irwin v. Williar, 110 U. S. 499, 4 Sup. Ct. 160, 28 L. Ed. 225; Harvey v. Merrill, 150 Mass. 1, 22 N. E. 49, 5 L. R. A. 200, 15 Am. St. Rep. 159: Barnes v. Smith, 159 Mass. 344, 34 N. E. 408; Mohr v. Miesen, 47 Minn. 228, 49 N. W. 862. Gaming and wagering contracts are in the United States generally held to be illegal as against public policy. Irwin v. Williar, supra, and cases cited. In England such contracts were held not t6 be illegal. By 8 & 9 Viet. c. 109, they were rendered null and void, but not made illegal, and notwithstanding the act money paid by the agent in pursuance of such a contract was recoverable from the principal. Read v. Anderson, 13 Q. B. D. 779; Thacker v. Hardy, 4 Q. B. D. 685; Knight v. Lee [1893] 1 Q. B. 41. Since the Gaming Act 1892 (55 Viet. c. 9), however, no compen- sation, reimbursement, or indemnity is recoverable by the agent in respect to such a contract. Tatam v. Reeve [189S] 1 Q. B. 44. See Bowstead, Dig. Ag. arts. 65, 69. 119) ILLEGAL TRANSACTIONS. 461 recover reimbursement and indemnity. If the transaction is apparently or to his knowledge illegal, he cannot recover; but if otherwise, he can. 7 An agent employed to buy smug- gled goods cannot recover his advances made in the pur- chase ; nor can a broker who effects illegal insurance re- cover the premiums which he has paid. 9 An agent employed to sell goods which he knows to belong to a third person or to commit a trespass upon land cannot recover indemnity if he is compelled to respond in damages to the owner of the goods or of the land; but if he has no knowledge of the adverse title, and sells the goods or enters upon the land under direction of his principal, who claims as owner, and a recovery is subsequently had against him tor damages for the conversion or trespass, he is entitled to indemnity. 10 So, if a broker in good faith negotiates a contract for future delivery of merchandise under the circumstances mentioned in the last paragraph, he may recover reimbursement for his advances or indemnity for liability which he has incur- red in execution of the authority, notwithstanding that by reason of the illegal intent of the parties to which he was i Bibb v. Allen. 149 U. S. 498, 13 Sup. Ct. 950, 37 L. Ed. 819. Ex parte Mather, 3 Ves. 373. Allkins v. Jupe, 2 C. P. D. 375. 10 Adamson v. Jarvis, 4 Blng. 66 (auctioneer having no knowledge of defect of title); Drummond v. Humphreys, 39 Me. 347 (cutting tim- ber on land not owned by principal); Coventry v. Barton, 17 Johns. (X. Y.) 142, 8 Am. Dec. 376; Howe v. Railroad Co., 37 N. Y. 297; Moore v. Appleton, 26 Ala. 633; Nelson v. Cook, 17 111. 443. "Every man who employs another to do an act which the employer appears to have a right to authorize him to do undertakes to indem- nify him from all such acts as would be lawful If the employer had the authority he pretends to have." Adamson v. Jarvis, supra, per Best, C. J. The rule that one wrongdoer cannot sue another for contribution does not apply to cases of indemnity where one employs another to do acts not unlawful In themselves, for the purpose of asserting a right. See Adamson v. Jarvis, supra; Merry weather v. Nixan, 8 Term R. 186; Betts v. Gibbina, 2 Ad. & E. 57. 462 DUTIES OP PRINCIPAL, TO AGENT. (Ch. 16 not privy the transaction is illegal, but if he is privy there- to he cannot recover. 11 BIGHTS OF SUBAGENT. 120. Where a subagent is employed on behalf of the prin- cipal, and privity of contract exists between them, the snbagent may look to the principal for remuneration, reimbursement, and indemnity; bnt otherwise he must look to his immediate employer. Where a subagent is employed without authority of the principal, since no privity of contract exists between them, the subagent must look solely to his immediate employer for compensation, reimbursement, and indemnity. 1 Even if the employment is authorized, the right of the subagent to look to the principal will depend upon whether the agent was authorized to employ the subagent upon the principal's be- half and to create privity of contract between them, or was merely authorized to employ a subagent upon his own be- half and responsibility. 2 In the first case the subagent can look to the principal, 8 but in the latter he can look only to the agent. 4 The same principles apply where the authority of an agent to employ a subagent is derived from ratifi- 11 Cases cited In note 6, supra. 120. i Schmaling v. Tomlinson, 6 Taunt 147; Sims v. Brittain, 1 N. & M. 594; Johnson v. Steamship Co., 5 Cal. 407; Cleaves v. Hoyt, 33 Me. 341; Atlee v. Fink, 75 Mo. 100, 43 Am. Rep. 385; Hib- bard v. Peck, 75 Wis. 619, 44 N. W. 641. a Ante, p. 123 et seq. Keay v. Fen wick, 1 C. P. D. 745; Lincoln v. Battelle, 6 Wend. (N. Y.) 475; McConnell v. McCormick, 12 Cal. 142; Cotton States Life Ins. Co. v. Mallard, 57 Ga. 64. Unless exclusive credit is given to the principal, the agent also is liable. Story, Ag. 386, 387; Wilkins v. Duncan, 2 Litt. (Ky.) 168: Miles v. Mays, 15 Colo. 133, 25 Pac. 312; Taylor v. Nostrand, 134 N. Y. 108, 31 N. E. 246. < Hill v. Morris, 15 Mo. App. 322; Corbett v. Schumacker, 83 111. 403. 121) PERSONAL REMEDIES OF AGENT. 463 cation. 8 If the employment purported to be of the sub- agent as agent of the principal, ratification with knowledge that such was the employment would create privity of con- tract and render the principal liable to the subagent ; * but, if the employment was upon behalf of the agent, ratification would have no such effect. 1 PERSONAL REMEDIES OF AGENT. 121. The agent may maintain an action at law against his principal for the recovery of his remuneration, reim- bursement, and indemnity, and, if the accounts are so eomplicated that they cannot be disposed of in an action at lair, may have an account taken in a court of equity. It follows from what has been said that the agent has a right to recover from his principal whatever may be due him on account of his remuneration, reimbursement, or in- demnity by action at law ; and he may avail himself of any such claims or demands, when sued for the funds of his principal in his hands, by way of recoupment, set-off, or counterclaim. 1 In a proper case he may have an account- ing in a court of equity ; 2 but the right on the part of the agent to an accounting in equity, unlike the right of the principal to such an accounting, 3 arises only when the accounts are of so complicated a nature that they cannot be properly and conveniently gone into by a jury.* Ante, p. 125. Keay v. Fenwick, 1 C. P. D. 745; Mason v. Clifton, 3 F. & F. 899. See, also, Dewing v. Button. 48 W. Va. 576, 37 S. E. G70. Cf. Grace v. Insurance Co., 10 Blatchf. (U. S.) 433, Fed. Cas. No. 5,648. 7 Hoinan v. Insurance Co., 7 Mo. App. 22. See, also, Hansback v. Corrigan, 7 Kan. App. 479, 54 Pac. 129. 121. i Story, Ag. 350. Padwick v. Hurst, 18 Beav. 575; Harrington v. Churchward, 29 L. J. Ch. 521. Ante, p. 435. Padwick v. Stanley, 9 Haro, 627; Smith v. Levoux, 1 H. & M. 464 DUTIE3 OF PRINCIPAL TO AGENT. (Ch. 16 LIEN OF AGENT PARTICULAR LIEN. 122. The agent lias a particular lien upon the goods and chattels of the principal lawfully in his possession as agent for what is due him as agent in respect to the property subject to the lien, unless the existence of nch lien is inconsistent with the express or implied agreement of the parties. SAME-GENERAL LIEN. 123. In addition to his particular lien, an agent may have a general lien upon the goods and chattels of the princi- pal lawfully in his possession as agent for any general balance of accounts due him as agent, independently of what is due him in respect to the property subject to the lien. A general lien, unless conferred by stat- ute, arises only by express or implied agreement, ex- cept in favor of factors, insurance brokers, bankers, attorneys at law, and some other classes of agents who by usage have a general lien. SAME LIEN POSSESSORY. 124. The lien of an agent is possessory, and consists In the right to retain possession of the goods and chattels subject thereto until satisfaction of the debts or ob- ligations thereby secured. Lien of Agent Particular or General. In addition to his personal remedies for the recovery of his remuneration, reimbursement, and indemnity the agent has the right of lien. A lien at common law may be de- nned as the right to retain possession of a thing until a debt due to the person retaining possession is satisfied. A lien may be particular or general. Where the right is to re- tain the thing which is the subject of the lien for charges or demands growing out of or connected with that identical thing, the lien is particular. Where the right is to retain the thing not only for charges or demands growing out of or connected with that particular thing, but for a general 122-124) LIEN OF AGENT. 465 balance due from the owner, the lien is general. Unless there is an express or implied agreement to the contrary, an agent has a particular lien upon the goods, chattels, and funds of his principal intrusted to him in the course of the agency or rightfully coming into his possession as agent. The lien of the agent is merely a particular lien, unless there is an express agreement for a general lien, or unless an agreement for a general lien is to be implied from a pre- vious course of dealing or other circumstances, 1 or unless he belongs to a class of agents who have a general lien. Thus, an auctioneer has a particular lien upon the goods intrusted to him for sale and upon their proceeds for his commissions and the charges of sale, 2 a broker employed to procure a loan has a particular lien for his commissions upon the proceeds of the loan, 3 but neither has a general lien. On the other hand, factors, 4 insurance brokers, 5 so- licitors and attorneys, 6 bankers, 7 and some other classes of agents, 8 have a general lien. The general lien of these class- es of agents has its origin in the general usage of trade, which has become so fixed that the courts take notice of it without proof. A general lien is sometimes conferred upon 123, 33 L. J. Ch. 167; Skilton v. Payne, 18 Misc. Rep. 332, 42 N. Y. Supp. Ill; Johnston v. Berlin, 35 Misc. Rep. 146, 71 N. Y. Supp. 454. 122-124. i Bock v. Gorrisson, 30 L. J. Ch. 39; McKenzie v. Nevius, 22 Me. 138, 38 Am. Dec. 291. 2 Robinson v. Rutter, 4 El. & B. 954; Wolfe v. Home, 2 Q. B. D. 355. Vinton v. Baldwin, 95 Ind. 433. An agent who obtains possession from carrier by paying freight has lien for reimbursement White v. Railway Co., 90 Ala. 254, 7 South. 910. * Post, p. 46ft. B Mann v. Forrester, 4 Cowp. 60; Westwood v. Bell, 4 Camp. 349: Moody v. Webster, 3 Pick. (Mass.) 424; McKenzie v. Nevius, 22 Me. 138, 38 Am. Dec. 291. Post, p. 467. i Post, p. 466. s Wharfingers. Vaylor v. Mangles, 1 Ksp. 109; Spears Y. Hartley, 8 Esp. 81. Packers. In re Witt, 2 Ch. D. 489. TIFF.P.& A. 30 466 DUTIES OP PRINCIPAL, TO AGENT. (Ch. 1C certain classes of agents by statute. 9 A consideration of liens peculiar to these various classes of agents is beyond the scope of this book, but a few words may be said as to the lien of factors, bankers, and attorneys. A factor has a general lien upon the goods of his prin- cipal in his possession and upon the proceeds of such as are lawfully sold by him, and upon the securities given there- for for the general balance of the accounts between him and his principal, as well as for his charges, advances, and ob- ligations made or incurred upon the particular goods. 10 The lien extends to all sums for which he has become liable as surety. 11 A banker has a general lien upon all notes, bills, checks, and other securities deposited with him by his customer for the balance due him upon general account. 12 Indeed, the right of the banker in respect to securities indorsed or other- wise negotiated and deposited with him is greater than that of a mere possessory lien, since he is, in effect, a holder for value to the extent of all advances and acceptances, present and future, made by him for his customer in excess of the cash balance which may stand to his credit ; and the banker may sue and recover upon the securities, at least to the amount of the balance due him. 1 * Story, Ag. 375. o Story, Ag. 376; Krujrer v. Wilcox, Ambler. 252; Godin v. London Assurance Co., 1 W. Bl. 103, 1 Burrows, 489; Stevens v. Biller, 25 Ch. D. 31; Jarvis v. Rogers, 15 Mass. 389, 396; Knapp v. Alvord. 10 Paige (N. Y.) 205, 40 Ana. Dec. 241; Bryce v. Brooks, 26 Wend. (N Y.) 374; Winter v. Coit, 7 N. Y. 288, 57 Am. Dec. 522; Nagle v. Mc- Feeters, 97 N. Y. 196; Jordan v. James, 5 Ohio, 99; McGraft v. Rugee, 60 Wis. 406, 19 N. W. 530, 50 Am. Rep. 378; Johnson v. Clark, 20 Ind. App. 247, 50 N. E. 762. 11 Drinkwater v. Goodwin, Cowp. 251. See Hidden v. Waldo, 55 N. Y. 294. 12 Story, Ag. 380; Miser v. Currie, 1 App. Cas. 554; London Chartered Bank v. White, 4 App. Cas. 413; Brandao v. Barnett, 12 C. & F. 787; Swift v. Tyson, 16 Pet (U. S.) 1, 21, 10 L. Ed. 805. 13 Scott v. Franklin, 15 East, 428; Percival v. Frempton, 2 C., M. & R. 180. 122-124) LIEN OF AGENT. 467 An attorney at law or solicitor has a general lien upon all documents and papers, chattels and money, belonging to his client, of which he obtains possession in his professional ca- pacity. 1 * In addition to his general or retaining lien, an at- torney has a so-called "charging" lien upon any judgment obtained by him for his client, for his costs and disburse- ments incurred in the particular action, which by the aid of the court he may actively enforce. 10 To a great extent the second lien, and to some extent the first, are regulated by statute. 1 * The existence of a general lien, however, as well as of a particular lien, may be disproved by proof of an ex- press or implied agreement inconsistent with it. 17 The rules which will be stated in the succeeding sections are applicable to both classes of liens. Same Property must be i/n Lawful Possession. The lien, being possessory, cannot come into existence un- less the agent obtains possession. 18 Thus, where a factor bought goods on behalf of his principal, but it was agreed that the goods should remain upon the premises of the seller at a rent to be paid by the principal, and the agent upon request of the seller, but without authority from his prin- cipal, removed the goods to his own premises, the possession continued in the principal, and the agent was not entitled to a lien. 1 * So, where a factor accepted bills upon the faith of a consignment, and both he and the principal became bank- i* Re Broomhead, 5 D. & L,. 52; In re Paschal, 10 Wall. (TT. S.) 483, 19 L. Erl. 992; McPherson v. Cox, 96 U. S. 404, 24 L. Ed. 746; In re Wilson & Greig (D. C.) 12 Fed. 235; Bowling Green Say. Bank v. Todd, 52 N. Y. 489; In re Knapp, 85 N. Y. 284; Hurlbert V. Brigham, 56 Vt 368. IB Barker v. St. Quentin, 12 M. & W. 451. See Jones, Liens, 113 et seq., 153 et seq. if post, p. 469. is Kinloch v. Craig, 3 T. R. 119, 783; Taylor v. Robinson, 2 Mos. 730; Elliot v. Bradley, 23 Vt. 217; Sawyer v. Lorillard, 48 Ala. 332. Taylor v. Robinson, 2 Mos. 730. 468 DUTIES OP PRINCIPAL TO AGENT. (Ch. 16 rupt before arrival of the goods, the factor's trustee in bank- ruptcy had no lien, the goods having never been in the fac- tor's possession. 20 Constructive possession, however, is suf- ficient. 21 The lien does not come into existence unless the thing upon which it is sought to be asserted is obtained by the agent lawfully. A lien cannot be acquired by a wrongful or unauthorized act. Thus, an agent can have no lien upon goods which he obtains from his principal by mis- representations. 22 So, where an agent who was employed by a ship's husband without authority made the freight pay- able to himself, he had no lien upon the freight received by him for a debt due from his principal. 8 ' Same Possession must be Acquired in Same Capacity. Possession must have been obtained in the same capacity in which the agent claims the lien. 2 * The lien is confined not only to what is due him as agent, but to what is due him as agent in the capacity in which he claims the lien. "A man is not entitled to a lien because he happens to fill a v character which gives him such a right, unless he has re- ceived the goods, or done the act, in the particular character to which the right attaches." 25 Thus, the lien does not ex- tend to a debt incurred before the commencement of the agency. 26 So the general lien of a factor or solicitor, or banker, does not extend to a thing of which he obtains pos- session as agent in another capacity. 27 If a factor insures a ship on behalf of his principal, a transaction which is sepa- o Kinloch v. Craig, 3 T. R. 119. 21 Elliot v. Bradley, 23 Vt. 217; Heard v. Brewer, 4 Daly (N. Y.) 13G. 22 Madden v. Kempster, 1 Camp. 12. as Walshe v. Provan, 8 Ex. 843. 2* Houghton v. Matthews, 3 B. & P. 485; Dixon v. Rtansfield, 10 C. B. 398. 25 Per Jervis, O. J., in Dixon v. Stansfield, 10 C. B. 398. 28 Houghton v. Matthews, 3 B. & P. 485. 27 Dixon v. Stansfield, 10 C. B. 398; Stevenson v. Blukelock, 1 M. & S. 535; In re Gallaud, 31 Ch. D. 296. 122-124) LIEN OF AGENT. 469 rate from his duties as factor, his general lien does not ex- tend to the policy of insurance, because he does not obtain possession in his capacity as factor. 28 So, securities or valu- ables left with a banker for safe custody are not subject to his general lien, which is confined to what is deposited with him in his capacity as banker. 29 Same No Inconsistent Agreement. Neither does the lien come into existence if there is any agreement, express or implied, clearly inconsistent with its existence. 80 Thus, if a factor agrees to deal with the pro- ceeds of goods in a particular way, his general lien is ex- cluded. 81 So, where an insurance policy was deposited with bankers, with an agreement charging it with overdrafts not to exceed a specified amount, the bankers' general lien was excluded. 82 To exclude the lien, however, it must appear that the agreement is clearly inconsistent. 88 The lien is ex- cluded by implication if the property is delivered to the agent with express directions, or for a special purpose, inconsist- ent with its existence. 84 Thus, if an agent accepts goods Dixon v. Stansfleld, 10 C. B. 398. No lien on muniments of title casually left at bank after re- fusal to loan thereon. Lucas v. Dorrien, 7 Taunt. 278. 30 Cowell v. Simpson, 16 Ves. 275; Bock v. Gorrison, 30 L. J. Ch. 39; Wylde v. Radford, 33 L. J. Ch. 51; Oilman v. Brown, 1 Mason (U. S.) 191, Fed. Gas. No. 5,441. i Walker v. Birch, 6 T. R. 258. 2 In re Bowes, 33 Ch. D. 586. Brandao v. Barnett, 12 C. & F. 787, 3 C. B. 519; Jones v. Pepper- come, 28 L. J. Ch. 158; Colmer v. Ede, 40 L. J. Ch. 185; Fisher v. Smith, 4 App. Cas. 1 (agreement for monthly settlement does not affect lien of insurance broker for premiums, on policies in his hands); Stevens v. Billet, 25 Ch. D. 31 (general lien of factor not excluded be- cause he acts under special instructions to sell in principal's name and at fixed price); Haebler v. Luttgen, 61 Minn. 315, 63 N. W. 720. See Bowstead, Dig. Ag. 185. 3* Buchanan v. Findlay, 9 B. & C. 738; Re Cullen, 27 Beav. 51 (money received by solicitor to pay off mortgage). Where goods were consigned to a factor for sale, with a state- 470 DUTIES OF PRINCIPAL TO AGENT. (Ch. 16 with directions to hold them or to apply their proceeds sub- ject to the order of, or to deliver them to, a third person, he cannot set up his general lien in opposition to the direc- tions. 35 So, where exchequer bills were deposited at a bank to be kept in a box under lock and key, and were after- wards intrusted to the banker with instructions to obtain the interest on them, and to get them exchanged for new bills, and to deposit the new bills in the boxes as before, it was held that the banker's lien did not attach upon the old or the new bills, the special purpose for which they were intrusted to him being inconsistent with a general lien. 38 As in the case of the lien of the seller, giving credit or ac- cepting a negotiable instrument in conditional payment 37 is a waiver of the lien, which revives, however, if the goods still remain in the agent's possession when the credit expires or the paper is dishonored. 88 Same Ownership of Principal. In order that the agent may acquire a lien, not only must the possession be in him, but the ownership must be in the principal. The lien can attach only upon a thing in re- spect to which, as against third persons, the principal has a right to create a lien. 89 If, when the thing comes into the ment that the goods would cover a bill of exchange in favor of a third person, and with a request to honor the bill, and the factor refused to accept the bill on presentment, the goods were appropriated to meet it, and the third person had a lien therefor in priority to the factor's general lien. Frith v. Forbes, 4 De Gex, F. & J. 409. as Walker v. Birch, 6 T. R. 258; Weymouth v. Boyer, 1 Ves. Jr. 416; Jarvis v. Rogers, 15 Mass. 389, 395. 6 Brandao v. Barnett, 12 C. & F. 787, 3 O. B. 519. 87 Cowell v. Simpson, 16 Ves. 275; Rait v. Mitchell, 14 Camp. 146; Hewison v. Guthrie, 2 Bing. (N. S.) 755; Chandler v. Belden, 18 Johns. (N. Y.) 157, 9 Am. Dec. 193; Hutchins v. Olcutt, 4 Vt. 549, 24 Am. Dec. 634; Au Sable River Boom Co. v. Sanborn, 36 Mich. 358; Jones, Liens, 1003. ss Stevenson v. Blakelock, 1 M. & S. 535. s Bryce v. Brooks, 26 Wend. (N. Y.) 374. No lien can attach on the books of a company, because the direct- 122-124) LIEN OF AGENT. 471 agent's possession, the ownership of the principal has been divested, no lien can arise. 40 On the other hand, if the lien has once attached, it cannot be affected by any subsequent act of the principal or by his bankruptcy. 41 The rule that the thing upon which the lien attaches must be owned by the principal does not apply to money and negotiable instru- ments, the usual privileges attaching to negotiable paper in favor of bona fide purchasers for value without notice pro- tecting the agent to the extent of his lien. 41 Same for What Obligations Lien Attaches. The lien attaches only to certain and liquidated demands, and not to those which sound only in damages and can be ascertained only through the intervention of a jury. Hence the lien does not extend to a demand for an indemnity against future contingent claims or damages. 48 Such a lien can be created only by special contract. But the obligation need not be due. Thus a factor, or other agent, who has accepted bills on the faith of a consignment or of goods in his possession has a lien for the amount of bills not yet due as well as of those which he has paid. 44 ore have no power to create a lien that could interfere with th*Ir use. Re Capital Fire Ins. Ass'n, Ex parte Beall, 24 Ch. D. 408; Re Anglo-Maltese H. D. Co., 54 L. J. Ch. 730. o Copeland v. Stein, 8 T. R. 199 (goods consigned to factor after bankruptcy of principal). 41 Robson v. Kemp, 4 Esp. 233; Godwin v. Assurance Co., 1 W. Bl. 103. 42 Brandao v. Barnett, 12 C. & P. 787, 3 C. B. 519; Bosanquet v. Dudman, 1 Stark. 1; Jones v. Peppercorne, 28 L. J. Ch. 158; Misa v. Currie, 1 App. Cas. 554; Swift T. Tyson, 16 Pet (U. S.) 1, 21, 10 L. Ed. 865. 43 Story, Ag. 364. 44 Hammond v. Barclay, 2 East, 227; In re Pavy's Pat F. P. Go., 1 Ch. D. 631; ante, p. 466. 472 DUTIES OF PRINCIPAL TO AGENT. (Ch. 1 Same Termination of Lien. The lien is terminated if the agent voluntarily gives up possession, 48 unless he is induced to do so by fraud 4 Fetrow v. Wiseman, 40 Ind. 148, 155 95 Field v. Stagg, 52 Mo. 534, 14 Am. Rep. 435 25 Fielding v. Kymer, 2 B. & B. 639 22H Fifth Ave. Bank v. Railroad Co., 137 N. Y. 231. 33 N. E. 378, 19 L. R. A. 331, 33 Am. St. Rep. 712 29:! Fifth Nat. Bank v. Ashworth, 123 Pa. 212, 16 Atl. 596, 2 L. R. A. 491 398 Finn v. Railroad Corp., 112 Mass. 524, 17 Am. Rep. 128 387 Finnegan v. Lucy, 157 Mass. 439, 32 N. E. 656 91 Finney v. Insurance Co., 5 Mete. (Mass.) 192, 38 Am. Dec. 397. ... 83 Firbank's Ex'rs v. Humphreys, 18 Q. B. D. 54, 60 371, 37., Firestone v. Firestone, 49 Ala. 128 420 First Nat Bank v. Babbidge, 160 Mass. 563, 36 N. E. 462 264 v. Bank, 56 Neb. 149, 76 N. W. 430 35 77 N. Y. 320, 33 Am. Rep. 618 408 V. Bissell (C. C.) 2McCrary, 73,4 Fed. 694 142 v. Butler, 41 Ohio St. 519, 52 Am. Rep. 94 131 T. Free, 67 Iowa, 11, 24 N. W. 566 15 V. Hall, 44 N. Y. 395, 4 Am. Rep. 698 308, 351 v. Kilbourne, 127 111. 573, 20 N. E. 681, 11 Am. St. Rep. 174. . 429 V. Loyhed. 28 Minn. 396, 10 N. W. 421 341 V. Shaw, 61 N. Y. 283 321-323 CASES CITED. 515 Page First Nat. Bank T. Sprague, 34 Neb. 318, 51 N. W. 846, 15 L. R. A. 498, 33 Am. St. Rep. 644 129 y. Town of Alt. Tabor, 52 Vt. 87, 36 Am. Rep. 734 115 v. Wallis, 80 Hun, 435, 30 N. Y. Supp. 83 346 150 N. Y. 455, 44 N. E. 1038 341, 346 First Unitarian Soe. v. Faulkner, 91 U. S. 415, 23 L. Ed. 283 256 Fish v. Kempton, 7 C. B. 687 310 v. Leser, 69 111. 394 419 v. Seeberger, 154 111. 30, 39 N. E. 982 45o Fisher v. Bush, 133 Ind. 315, 32 N. E. 924 417 v. Campbell, 9 Port. (Ala.) 210 33 v. Drewett, 48 L. J. Ex. 32 ... 445 v. Dynes, 62 Ind. 348 455 v. Smith, 4 App. Cas. 1 469, 474, 475 Fisher's Appeal, 34 Pa. 29 418 Fisk v. Light Co., 3 Colo. App. 319, 33 Pac. 70 217 Fiske v. Eldridge, 12 Gray (Mass.) 474 348 v. Holmes, 41 Me. 441 62, 81 Fitzhugh v. Wiman, 9 N. Y. 559 394 Fitzmaurice v. Bagley, 6 El. & B. 8G8 62 Fitzsimmons v. Joslin, 21 Vt. 129, 52 Am. Dec. 46 296 Flanagan v. Brown, 70 Gal. 254, 11 Pac. 706 154 Flanders v. Putney, 58 N. H. 358 206 Flauigan v. Crull, 53 111. 352 227 Flatt v. Osborne, 33 Minn. 98, 22 N. W. 440 208 Fleckner v. Bank, 8 Wheat. 338, 360, 363, 5 L. Ed. 631 58, 82, 220, 221 Fleet v. Murton, L. R. 7 Q. B. 126 360, 361 Fleming v. Insurance Co., 42 Wis. 616 219 Flemyng v. Hector, 2 M. & W. 172 Ill, 112 Fletcher v. Elevator Co., 12 S. D. 643, 82 N. W. 184 201 v. Heath, 7 B. & C. 517 316 Y. Nelson, 6 N. D. 94, 69 N. W. 53 210 v. Railroad Co., 109 Mich. 363, 67 N. W. 330 251 Flexner v. Dickerson, 72 Ala. 318 95 Floyd v. Day, 3 Mass. 403, 3 Am. Dec. 171 435 Floyd Acceptances, In re, 7 Wall. (U. S.) 666, 19 L. Ed. 169 198 Fluker v. Railroad Co., 81 Ga. 461, 8 S. E. 529, 2 L. R. A. 843, 12 Am. St. Rep. 328 328 Fogg v. Pew, 10 Gray (Mass.) 409, 71 Am. Dec. 662 248 v. Railroad Corp., 148 Mass. 513, 20 N. E. 109, 12 Am. St. Rep. 583 279 T. Virgin, 19 Me. 352, 36 Am. Dec. 757 .344 516 OASES CITED. Page Foley v. Hill, 1 Ph. 399 437 Fonda v. Van Home, 15 Wend. (N. Y.) 631, 30 Am. Dec. 77.... 94 Foote v. Bank, 17 Utah, 283, 54 Pac. 104 261 Ford v. Danks, 16 La. Ann. 119 142 v. Williams, 21 How. (U. S.) 287, 16 L. Ed. 36 233, 304, 305 Fordyce v. Peper (O. C.) 16 Fed. 516 428, 455 Forney v. Shipp, 49 N. C. 527 364 Forrestier v. Bordinan, 1 Story (U. S.) 43, Fed. Gas. No. 4,945. . 402, 426 Forsyth v. Day, 41 Me. 382 333,341 46 Me. 176 54 Forward v. Insurance Co., 142 N. Y. 382, 37 N. E. 615, 25 L. R. A. 637 219 Foster v. Bank, 17 Mass. 479, 9 Am. Dec. 168 411 v. Bates, 1 D. & L. 400, 12 M. & W. 226 57 v. Graham, 166 Mass. 202, 44 N. E. 129 304 v. Hoyt, 2 Johns. Cas. (N. Y.) 327 474 V. Persch, 68 N. Y. 400 361 v. Preston, 8 Cow. (N. Y.) 198 400 V.Rockwell, 104 Mass. 167 69 v. Smith, 2 Cold. (Tenn.) 474, 88 Am. Dec. 604 392, 402, 403 v. Wiley, 27 Mich. 245, 15 Am. Rep. 185 281 Fourin v. Oswell, 1 Camp. 359 399 Fowle v. Kerchner, 87 N. C. 47 357 Fowler v. Armour, 24 Ala. 194 449 v. Atkinson, 6 Minn. 578, 579 (Gil. 412) 348, 355 v. Down, 1 B. & P. 44, 47 394 Fox v. Railroad Co., 86 Iowa, 368, 53 N. W. 259, 17 L. R. A. 289 122 v. Zimmermann, 77 Wis. 414, 46 N. W. 533 422 Fradley v. Hyland (C. C.) 37 Fed. 49, 52, 2 L. R. A. 749 55, 243 Frame v. Coal Co., 97 Pa. 309 309 Francis v. Kerker, 85 111. 190 417 Frank v. Jenkins, 22 Ohio St. 597 68 Frankland r. Johnson, 147 111. 520, 35 N. E. 480, 37 Am. St. Rep. 234 343 Franklin v. Robinson, 1 Johns. Ch. (N. Y.) 157 442 Franklin Ins. Co. v. Sears (C. C.) 21 Fed. 290 397, 39n Franklin Min. Co. v. Harris, 24 Mich. 115 141 Fraser v. Wyckoff, 63 N. Y. 445 446 Fred W. Wolf Co. v. Salem, 33 111. App. 614 428 Freeman v. Cook, 2 Ex. 654 34 v. Otis, 9 Mass. 272, 6 Am. Dec. 66 367 v. Robinson, 38 N. J. Law, 383, 20 Am. Rep. 399 41 T. Rosher, 13 Q. B. 780 72, 73 CASES CITED. 517 Page Freeman's Nat. Bank v. Tube- Works, 151 Mass. 413, 24 N. E. 779, 8 L. R. A. 42, 21 Am. St Rep. 461 199 Frelinghuysen v. Nugent (C. C.) 36 Fed. 229, 239 325 French v. Price, 24 Pick. (Mass.) 13 113 Frenkel v. Hudson, 82 Ala. 158, 2 South. 758, 60 Am. Rep. 736. .. 264 Freyer v. McCord, 165 Pa. 539, 30 Atl. 1024 287 Frick & Co. v. Lamed, 50 Kan. 776, 32 Pac. 383 408 Friedlander v. Railroad Co., 130 U. S. 416, 9 Sup. Ct. 570, 32 L. Ed. 991 200, 290, 294 Friesenhahn v. Bushnell, 47 Minn. 443, 50 N. W. 597 416 Frink v. Roe, 70 Cal. 296, 11 Pac. 820 154, 172 Frith v. Cartland, 34 L. J. Ch. 301 325 v. Forbes. 4 De Gex, F. & J. 409 470 Frixione v. Tagliafferro, 10 Moore, P. C. 175 87, 456 Frothingham v. Everton, 12 N. H. 239 396, 398, 401, 404 Fry v. Platt, 32 Kan. 62, 3 Pac. 781 417 Frye v. Tx>ckwood, 4 Cow. (N. Y.) 454 378 Fuentes v. Montis, L. R. 4 C. P. 93 319 Fullam v. Inhabitants, 9 Allen (Mass.) 1 244, 333 Fuller v. Bennett, 2 Hare, 294 260 v. Brown, 11 Mete. (Mass.) 440 452 v. Ellis, 39 Vt. 345, 94 Am. Dec. 327 396 y. Hooper, 3 Gray (Mass.) 334, 341 308, 345 v. Wilson, 3 Q. B. 68, 1009 296 Fullwood v. State, 67 Miss. 554, 7 South. 432 298 Fultz v. Wimer, 34 Kan. 576, 9 Pac. 316 442 Furber v. Barnes, 32 Minn. 105, 19 N. W. 728 407 Furneaux v. Esterly, 36 Kan. 539, 13 Pac. 824 208 G Gadd v. Houghton, 1 Ex. D. 357 357, 358, 366 Gaffney v. Hayden, 110 Mass. 137, 14 Am. Rep. 580 107 Gage v. Allison, 1 Brev. (S. C.) 495, 2 Am. Dec. 682 146 Gaillard v. Smart, 6 Cow. (N. Y.) 385 228 Gaines v. Miller, 111 U. S. 395, 4 Sup. Ct. 426, 28 L. Ed. 466 61 Gaither v. Myrick, 9 Md. 118, 66 Am. Dec. 316 405 Galbraith v. Elder, 8 Watts (Pa.) 81 421 Gale v. Leckie, 2 Stark. 107 92 Galigher v. Jones, 129 U. S. 192, 9 Sup. Ct. 335, 32 L. Ed. 658. . . 401 Galland, In re, 31 Ch. D. 296 468 Gandell v. Pontigny, 4 Camp. 375 450 Gansen v. Morton. 10 B. & C. 731 (1830) 161 518 CASES CITED. Page Gardner v. Allen, 6 Ala. 187, 41 Am. Dec. 45 309 v. Baillie, 6 T. R. 591 171 v. Davis, 2 C. & P. 49 387 v. Gardner, 5 Cush. (Mass.) 483, 52 Am. Dec. 740 21, 22, 28 v. McCutcheon, 4 Bear. 534 424 v. Ogden, 22 N. Y. 327, 78 Am. Dec. 192 417 Garland v. Wells, 15 Neb. 298, 18 N. W. 132 25 Garratt v. Culluiu (1710) stated In Scott v. Surman, Willes, 400 304 Garrey v. Stadler, 67 Wis. 512, 30 N. W. 787, 58 Am. Rep. 877. .. 442 Garth v. Howard, 8 Bing. 451 248 Garton v. Bank, 34 Mich. 279 351 Gausen v. Morton, 10 B. & C. 731 157 Geisinger v. Beyl, 80 Wis. 443, 50 N. W. 501 422 Gelatt v. Ridge, 117 Mo. 553, 23 S. W. 882, 38 Am. St. Rep. 083. . 86 General Convention of Congregational Ministers v. Torkelson, 73 Minn. 401, 76 N. W. 215 213 George v. Clagett, 7 T. R. 359 309 v. Gobey, 128 Mass. 289, 35 Am. Rep. 376 301 v. School Dist, 6 Mete. (Mass.) 497 115 George Whltechurch, Limited, v. Cavanagh, 85 L. T. (N. S.) 349 [1892] A. C. 117 289 Georgia Pac. R. Co. v. Propst, 83 Ala. 518, 3 South. 764 122 85 Ala. 203, 4 South. 711 122 Gerdes v. Moody, 41 Cal. 335 336 Gerhart v. Peck, 42 Mo. App. 644 29 German Fire Ins. Co. v. Grunert, 112 111. 68, 1 N. E. 113 216 Gerrish v. Maher, 70 111. 470 214 Gettins v. Scudder, 71 111. 86 407 G. H. Montague, The, 4 Blatchf. 461, Fed. Gas. No. 5,377 207 Gibbs v. Dickson, 33 Ark. 107 332 Giblin v. McMulleu, L. R. 2 P. C. 317 411 Gibson v. Hardware Co., 94 Ala. 346, 10 South. 304 32, 34 v. Winter, 5 B. & Ad. 96 390, 391 Gilbert v. Deshon, 107 N. Y. 324, 14 N. E. 318 194, 196, 197 v. Holmes, 64 111. 548 134, 154 v. How, 45 Minn. 121, 47 N. W. 643, 22 Am. St. Rep. 724 168 Gilbraith v. Llneberger, 69 N. C. 145 37 Gilchrist v. Clarke, 86 Tenn. 583, 8 S. W. 572 446 Gill v. Bicknell, 2 Cush. (Mass.) 355 225 v. Kymer, 5 Moore, 503 223 v. Mlddleton, 105 Mass. 477, 7 Am. Rep. 548 410-412 Gillespie v. Worford, 2 Cold. (Tenn.) 632 103 Gillet v. Logan County, 67 111. 256 93 CASES CITED. 519 Page Gillett Y. Peppercorn, 3 Bea v. 78 416 Gilley v. Gilley, 79 Me. 292, 9 Atl. 623, 1 Am. St. Rep. 307 41 Gilliam v. Brown, 43 Miss. 641 425 Gillow v. Aberdare, 9 T. L. R. 12 134 Gilman v. Brown, 1 Mason (U. S.) 191, Fed. Gas. No. 5,441 469 Oilman Linseed Oil Co. v. Norton, 89 Iowa, 434, 56 N. W. 663, 48 Am. St. Rep. 400 205, 316 Given v. Lemoine, 35 Mo. 110 409 Glaspie v. Keator, 5 C. C. A. 474, 56 Fed. 203 327 Gleason v. Warner, 78 Minn. 405, 81 N. W. 206 41 Glor v. Kelly, 49 App. Div. 617, 63 N. Y. Supp. 339 74 Glover v. Langford (1892) 8 Times Law R. 628 366 Gobb v. Railway, 3 E. & E. 672 273 Goddard v. Railway, 57 Me. 202, 2 Am. Rep. 39 275 Godefroy v. Dalton, 6 Bing. 460 406, 409 Godin v. Assurance Co., 1 W. Bl. 103, 1 Burrows, 489 466 Godwin v. Assurance Co., 1 W. Bl. 103 471 v. Francis, L. R. 5 C. P. 295 373, 374 Golson v. Ebert, 52 Mo. 260 50 Gonzalia v. Bartelsman, 143 111. 634, 32 N. E. 532 422 Goodenough v. Thayer, 132 Mass. 152 357 Goodenow v. Tyler, 7 Mass. 36, 5 Am. Dec. 22 222 Goodhue v. McClarty, 3 La. Ann. 56 404 Goodman v. Pocock, 15 Q. B. 576 449, 450 Goodspeed v. Bank, 22 Conn. 530. 58 Am. Dec. 439 279 Goodtitle v. Woodward, 3 B. & Aid. 689 80 Goodwin v. Bowden, 54 Me. 424, 425 163, 164, 379 v. Robarts, 1 App. Cas. 476 317 Gordon v. Brewster, 7 Wis. 355 449 v. Bulkeley, 14 Serg. & R. (Pa.) 331 21 v. Insurance Co., 2 Pick. (Mass.) 249 42 v. Potter, 17 Vt. 348 41 Goss v. Helbing, 77 Cal. 190, 19 Pac. 277 37 v. Stevens, 32 Minn. 472, 21 N. W. 549 62, 64, 86 Gossler v. Schepeler, 5 Daly (N. Y.> 476 476 Gottschalk v. Smith, 156 111. 377, 40 N. E. 937 436 Gould v. Lead Co., 9 Cush. (Mass.) 338, 57 Am. Dec. 50 257 Gowan v. Bush, 22 C. C. A. 196, 76 Fed. 349 184 Gower v. Andrew, 59 Cal. 119, 43 Am. Rep. 242 421 Grace v. Insurance Co., 16 Blatchf. (U. S.) 433, Fed. Cas. No. 5,648 463 Grady v. Insurance Co., 60 Mo. 116 119, 121 520 CASES CITED. Page Graf ton Nat. Bank v. Wing, 172 Mass. 513, 52 N. E. 1067, 43 L. R. A. 831, 70 Am. St Rep. 303 346 Graham v. Duckwall, 8 Bush (Ky.) 12 222, 224, 389 v. Holt, 25 N. C. 300, 40 Am. Dec. 408 24 v. Institution, 46 Mo. 186 214 v. Williams, 114 Ga. 716, 40 S. E. 790 77 Granger v. Batchelder, 54 Vt. 248, 41 Am. Rep. 846 228 v. Hathaway, 17 Mich. 500 376 Grant v. Beard, 50 N. H. 129 47 v. Ludlow, 8 Ohio St 1 411, 412 v. Norway, 10 C. B. 665 200, 222, 289 Gratitudine, The, 3 Rob. Adm. 240 42 Gratz v. Improvement Co., 27 C. C. A. 305, 82 Fed. 381, 40 L. R. A. 393 139 Grau v. McVicker, 8 Biss. (U. S.) 13, Fed. Gas. No. 5,708 358 Graul v. Strutzel, 53 Iowa, 715, 6 N. W. 119, 36 Am. Rep. 250. . 207 Graves v. Horton, 38 Minn. 66, 35 N. W. 568 15, 33, 257 Gray v. Agnew, 95 111. 315 223 v. Gutteridge, 3 C. & P. 40 377 v. Haig, 20 Beav. 219 428, 454 V. Hook, 4 N. Y. 449 93, 459 Great Western Ry. v. Willis, 18 C. B. (N. S.) 748 252 Greely v. Bartlett, 1 Greenl. (Me.) 172, 10 Am. Dec. 54 223, 408 Green v. Bartlett, 14 C. B. (N. S.) 681 446 V.Clark, 5 Denio (N. Y.) 497, 502 87 T. Cole, 127 Mo. 587, 30 S. W. 135 139 v. Gilbert, 21 Wis. 395 452 V. Hinkley, 52 Iowa, 633, 3 N. W. 688 15, 33 v. Hopke, 18 C. B. 549 181 V. Knoch, 92 Mich. 26, 52 N. W. 80 416 V. Kopke, 18 C. B. 549 366 V. Lucas, 33 L. T. (N. S.) 584 445 V. Mules, 30 L. J. C. P. 343 441 v. Williams, 21 Kan. 64 434 Greenberg v. Lumber Co., 90 Wis. 225, 63 N. W. 93, 28 L. R. A. 439, 48 Am. St. Rep. 911 383 Greene v. Goddard, 9 Mete. (Mass.) 212 457 Greenfield Bank v. Crafts, 4 Allen (Mass.) 447 51, 53 Greenfield Sav. Bank v. Simons, 133 Mass. 415 417, 423 Greenleaf v. Moody, 13 Allen (Mass.) 363 402, 403 Greentree v. Rosenstock, 61 N. Y. 583 436 Gregg v. Baldwin, 9 N. D. 515, 84 N. W. 373 261 Gregory v. Piper, 9 B. & C. 591 268 CASES CITED. 621 Page Grice v. Kendrick, L. R. 5 Q. B. 340 390 Griffin v. Ransdell, 71 Ind. 440 102 Griggs v. Selden, 58 Vt v 561, 5 Atl. 504 37 v. Swift, 82 Ga. 392, 9 S. E. 1062, 5 L. R. A. 405, 14 Am. St Rep. 176 144 Grindley v. Barker, 1 B. & P. 229 114 Grinnell v. Buchanan, 1 Daly (N. Y.) 538 119 Grist v. Backhouse, 20 N. C. 496 308 Griswold v. Gebbie, 126 Pa. 353, 17 Atl. 673, 12 Am. St. Rep. 878 286, 287 Groff v. Ramsey, 19 Minn. 44 (Gil. 24) 23 Grojan v. White, 2 Stark. 443 307 Groover v. Warfield, 50 Ga. 644 389, 391 Grove v. Dublois, 1 T. R. 112 437 v. Harvey, 12 Rob. (La.) 221 81 v. Hodges, 55 Pa. 504 63 Grumley v. Webb, 44 Mo. 444, 100 Am. Dec. 304 417 Grund v. Van Vleck, 69 111. 479 54 Guelich v. Bank, 56 Iowa, 434, 9 N. W. 328, 41 Am. Rep. 110 128, 129 Guernsey v. Cook, 117 Mass. 548 358 Guerreiro v. Peile, 3 B. & Aid. 616 207, 316 6 B. & Aid. 616 223 Guesnard v. Railroad Co., 76 Ala. 453 177 Guichard v. Morgan, 4 Moore, 36 223 Guilford v. Stacer, 53 Ga. 618 213 Gulick v. Grover, 33 N. J. Law, 463, 467, 97 Am. Dec. 728 33, 169, 171, 216 Gundlach v. Fischer, 59 111. 172 133 Gunn v. Roberts, L. R. 9 C. P. 331 72 Gunnis v. Erhart, 1 H. Bl. 290 226 Gunther v. Ullrich, 82 Wis. 220, 52 N. W. 88, 33 Am. St. Rep. 32 287 Gurley v. Armstead, 148 Mass. 267, 19 N. E. 389, 2 L. R. A. 80, 12 Am. St. Rep. 555 381 Guthrie v. Armstrong, 5 B. & Aid. 628 113 v. Imbrie, 12 Or. 182, 6 Pac. 664, 53 Am. Rep. 331 347 Guyon v. Lewis, 7 Wend. (N. Y.) 26 244 Gwilliam v. Twist [1895] 1 Q. B. 577 122 [1895] 2 Q. B. 84 122 Gwyn y. Railroad Co., 85 N. 0. 429, 39 Am. Rep. 708 476 522 CASES CITED. H Page Haas v. Damon, 9 Iowa, 589 433 v. Society, 80 111. 248 ." 251 Haebler v. Luttgen, 61 Minn. 315, 63 N. W. 720 469 2 App. Div. 390, 37 N. Y. Supp. 794 433 Hagan v. Eailroad Co., 3 R. I. 88, 62 Am. Dec. 377 275 Hagedorn v. Oliverson, 13 East, 274 83 2 M. & S. 485 57 Haile v. Peirce, 32 Md. 327, 3 Am. Rep. 139 340 Haines v. Tohlmann, 25 N. J. Eq. 179 213 Halbronn v. International Horse Agency (1903) 1 K. B. 270. .. 457 Hale v. Woods, 10 N. H. 470, 34 Am. Dec. 176 333 Haley v. Belting Co., 140 Mass. 73, 2 N. E. 785 244 Hall v. Bishop, 3 Daly (N. Y.) 109 109 v. Bliss, 118 Mass. 554, 19 Am. Rep. 476 108, 149, 158 v. Cockrell, 28 Ala. 507 367 v. Crandall. 29 Cal. 567, 89 Am. Dec. 64 369 V. Finch, 29 Wis. 278, 9 Am. Rep. 559 18 v. Gambrill (C. C.) 88 Fed. 709 154 V.Hall, 44 N. H. 293 443 v. Harper,' 17 111. 82 69 Y. Insurance Co., 23 Wash. 610, 63 Pac. 505, 51 L. R. A. 288, 83 Am. St. R*ep. 844 219 v. Lauderdale, 46 N. Y. 72 372 v. Peck, 10 Vt. 474 432 v. Storrs, 7 Wis. 253 '. 178, 398 v. Wallace, 88 Cal. 434, 26 Pac. 360 29 v. White, 123 Pa. 95, 16 Atl. 521 66 Hallett's Estate, In re, 13 Ch. D. 696 324, 325 Halliday v. Stuart, 151 U. S. 229, 14 Sup. Ct. 302, 38 L. Ed. 141. . 228 Halsted v. Rabb, 8 Port. (Ala.) 65 436 Haluptzok v. Railroad Co., 55 Minn. 446, 57 N. W. 144, 26 L. R. A. 739 18, 116 Ham v. Boody, 20 N. H. 411, 51 Am. Dec. 235 81 Hamburgh, The, Br. & Lush. 253 42 Hamill v. Foute, 51 Md. 419 450 Hamilton v. Love, 152 Ind. 641, 53 N. E. 181, 54 N. E. 437, 71 Am. St. Rep. 384 450 Hamlin v. Schulte, 34 Minn. 534, 27 N. W. 301 446 v. Sears, 82 N. Y. 327 54 Hamrnett v. Brown, 60 Ala. 498 432, 433 CASES CITED. 523 Page Hammond v. Barclay, 2 East, 227 471, 473 v. Hannin, 21 Mich. 374, 4 Am. Rep. 490 21, 23, 64 v. Hussey, 51 N. H. 40. 12 Am. Rep. 41 410, 411 Hancock v. Gomez, 58 Barb. |N. Y.) 490 424 Haney v. Caldwell, 35 Ark. 156 141 Hankins v. Baker, 46 N. Y. 666 82 Hanks v. Drake, 49 Barb. (N. Y.) 186 87 Hannan's Empress Gold Mining & D. Co. [1896] 2 Ch. 643 162 Hanover R. Co. v. Coyle, 55 Pa. 396 253 Hansback v. Corrigan, 7 Kan. App. 479, 54 Pac. 129 463 Hanscom v. Railroad Co., 53 Minn. 119, 54 N. W. 944, 20 L. R. A. 695 44 Hansell v. Erickson, 28 111. 257 453 Hardee v. Hall, 12 Bush (Ky.) 327 176 Hardeman v. Ford, 12 Ga. 205 72 Hardin v. Insurance Co., 90 Va. 413, 18 S. E. 911 37 Hardman v. Wilcox, 9 Bing. 382 424 Hardwick v. Vernon, 14 Ves. 504 435 Hardy v. Express Co. (Mass.) 65 N. E. 375 378 v. Waters, 38 Me. 450 96, 97 Hare v. Bailey, 73 Minn. 409, 76 N. W. 213 213 Harlan v. Ely, 68 Gal. 522, 9 Pac. 947 207, 400 Harland v. Lilieuthal, 53 N. Y. 438 109 Harnickell v. Orndorff, 35 Md. 341 146 Harper v. Bank, 54 Ohio St. 425, 44 N. E. 97 239, 245 v. Goodsell, L. R. 5 Q. B. 422 171 v. Little, 2 Greenl. (Me.) 14, 11 Am. Dec. 25 144, 145 Harriman v. Stowe, 57 Mo. 93 383 Harrington v. Churchward, 29 L. J. Ch. 521 463 v. Dock Co., 3 Q. B. D. 548 93 Harris v. Johnston, 54 Minn. 177, 55 N. W. 970, 40 Am. St. Rep. 312 169 Harrison v. Jackson, 7 T. R. 207 21 v. McHenry, 9 Ga. 164, 52 Am. Dec. 435 49 Harrod v. McDaniels, 126 Mass. 413 71 Harsant v. Elaine, 56 L. J. Q. B. 511 430, 435 Hart v. Ten Eyck, 2 Johns. Ch. (N. Y.) 62 429 Hartas v. Ribbons, 22 Q. B. D. 254 458 Hartford Fire Ins. Co. v. Farrish, 73 111. 166 219 v. Wilcox, 57 111. 180 146, 172 Hartley's Appeal, 53 Pa. 212, 91 Am. Dec. 207 , . . . 154 Hartlove v. William Fait Co., 89 Md. 254, 43 Atl. 62 69 Hartop, Ex parte, 12 Ves. 352 181, 361, 362 524 CASES CITED. Page Hart's Appeal, 32 Conn. 520 434 Harvey v. Merrill, 150 Mass. 1, 22 N. E. 49, 5 L.. B. A. 200, 15 Am. St Rep. 159 93,460 V. Smith, 179 Mass. 592, 61 N. B. 217 158 v. Turner, 4 Rawle (Pa.) 222 426 Haselar v. Lemogue, 5 C. B. N. S. 530 62 Haskell v. Starbird, 152 Mass. 117, 25 N. E. 14, 23 Am. St. Rep. 809 287, 288 Haskin v. Haskin, 41 111. 197 458 Haskins v. Royster, 70 N. C. 601, 16 Am. Rep. 780 329 Hastings v. Bangor House, 18 Me. 436 66 v. Dollarhide, 24 Gal. 195 96 v. Pearson [1892] 1 Q. B. 62 322 Hatch v. Coddington. 95 U. S. 48, 24 L. Ed. 339 38, 138 v. Squires, 11 Mich. 185 256 v.Taylor, 10 N. H. 538, 547 193, 195, 196, 237 Hatfield v. Phillips, 9 M. & W. 647 318 v.Reynolds, 34 Barb. (N. Y.) 612 213 Hatzfield v. Gulden, 7 Watts (Pa.) 152, 31 Am. Dec. 750 93 Hauss v. Niblack, 80 Ind. 407 65 Hauxhurst v. Hovey, 26 Vt. 544 434 Haverill Mut. Fire Ins. Co. v. Newhall, 1 Allen (Mass.) 130 348 Hawkins v. Chace, 19 Pick. (Mass.) 502, 505 29 v. McGroarty, 110 Mo. 550, 19 S. W. 830. 64 v.Walker, 4 Yerg. (Tenn.) 188 431 Hawks v. Dunn, 1 Tyr. 413, 1 C. & J. 519 476 Hawley v. Cramer, 4 Cow. (N. Y.) 730 418 v. Keeler, 53 N. Y. 116 113 Hawtayne v. Bourne, 7 M. & W. 595 43, 122, 218 Hay v. Goldschmidt, 2 Smith (Eng.) 79 171 Hayden v. Bank, 29 111. App. 458 390 Hayes v. Crane, 48 Minn. 39, 50 N. W. 925 358, 360, 361 v. Stone, 7 Hill (N. Y.) 128 396 Hazard v. Spears, 43 N. Y. 469 69 43 N. Y. 485 87 Hazeltine v. Miller, 44 Me. 177 217 Heald v. Hendy, 89 Cal. 632, 27 Pac. 67 217 v. Kenworthy, 10 Ex. 739 241 Heard v. Brewer, 4 Daly (N. Y.) 136 468 v. Pilley, 4 Ch. App. Cas. 548 21 Heath v. Goslin, 80 Mo. 310, 50 Am. Rep. 505 112 v. Nutter, 50 Me. 378 21, 63 V.Paul, 81 Wis. 532, 51 N. W. 876 218 v. Stoddard, 91 Me. 499, 40 Atl. 547 205 CASES CITED. 525 Page Hedden v. Griffin, 136 Mass. 229, 49 Am. Rep. 25 382 Hedin v. Institution, 32 Minn. 146, 64 N. W. 158, 35 L. R. A. 417, 54 Am. St Rep. 628 382 Heenan v. Nash, 8 Minn. 407 (Gil. 363), 83 Am. Dec. 790 354 Heffner v. Brownell, 70 Iowa, 591, 31 N. W. 947 347 Heffron v. Pollard. 73 Tez. 96, 11 S. W. 165, 15 Am. St. Rep. 764 367 Hefner v. Vandolab, 62 111. 483, 14 Am. Rep. 106 51 Hegenmyer v. Marks, 37 Minn. 6, 32 N. W. 785, 5 Am. St. Rep. 808 230, 423, 426 Heinemann y. Heard, 50 N. Y. 35 405 Hellings v. Russell, 33 L. T.