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A TREATISE
ON THE
LAW OF AGENC1 7
INCLUDING NOT ONLY A DISCUSSION OF THE GENERAL SUBJECT
SPECIAL CHAPTERS ON
7"
By FLOYD R. MECHEM, LL.D.
AUTHOR OF MECHEM ON PUBLIC OFFICERS, MECHEM ON SALES, ETC. ; FORMERLY TAPPAN
PROFESSOR OF LAW IN THE UNIVERSITY OF MICHIGAN ; PROFESSOR OF LAW
IK THE UNIVERSITY OF CHICAGO
SECOND EDITION
IN TWO VOLUMES.
VOLUME II
CHICAGO
CALLAGHAN AND COMPANY
1914
T/IKOA r TO 77 A J.
3HT
Entered according to Act of Congress, in the year 1888, by
FLOYD R. MECHEM,
In the office of the Librarian of Congress, at Washington.
C'/1U1J1 l/h Mr! X njL'l 7J )] [ J J/x ,s I k.-i r^lUi I A
Copyright, 1914,
by
FI.OYD R. MECHEM.
Mj&S-^&r
19 14
Cm A KAl
TABLE OF CONTENTS, VOL. II.
CHAPTER V.
THE DUTIES AND LIABILITIES OF THE PRINCIPAL TO THIRD
PERSONS
[References are to sections: 1-1705, Vol. I; 1706-2588, Vol. II.]
Purpose of chapter 1706
I. THE LIABILITY OF THE PRINCIPAL UPON CONTRACTS MADE BY AN AGENT
In general 1707
1. The Contractual Liability of the Disclosed Principal
In general 1708
Principal liable on contracts made in his name by his authority 1709
Principal liable on informal contracts not expressly charging agent's
responsibility 1710
Informal entries or charges against agent not conclusive 1711
Principal may often be liable though agent also bound 1712
Written contract in agent's name Principal not liable 1713
Same subject Principal liable 1714-1716
Principal not liable where credit given exclusively to agent 1717
For what contracts and contractual act* of agent is principal liable. . . 1718
Qui facit per alium, facit per se 1719
Principal liable for acts and contracts within scope of authority 1720
Third person must ascertain agent's authority 1721
What constitutes authority 1722
Secret instructions and restrictions of principal or secret motives
of agent Mistake of agent 1723
General and special agents 1724
Special agent's authority must be strictly pursued 1725
Effect of ratification 1726
Performance of unlawful act not enforced 1727
Principal not bound where agent had an adverse interest 1728
2. The Contractual Liability of an Undisclosed Principal
Preliminary considerations as to liability 1729, 1730
General rule Undisclosed principal liable when discovered 1731
Rule applies to all simple contracts 1732
Parol evidence to identify the principal 1733
Does not apply to contracts under seal 1734, 1735
Does not apply to negotiable instruments 1736
Exceptions to the general rule 1737
Of the first exception Change in accounts Misleading conduct 1738
Thompson v. Davenport 1739
Heald v. Kenworthy 1740
IV TABLE OF CONTENTS
[References are to sections: 1-1705, Vol. I; 1706-2588, Vol. II.]
Armstrong v. Stokes 1741
Irvine v. Watson In the Queen's Beiich 1742
Irvine v. Watson In the Court of Appeal 1743
What is misleading conduct 1744
- Delay, etc 1745-1747
The rule in the United States 1748
General conclusions 1749
Of the second exception "Election" 1750
Theories of election 1751
Knowledge necessary 1752, 1753
What constitutes an election 1754
I. Before discovery of principal 1755
II. After discovery of principal . . 1 '.'}?. .'MH^i'TJ .-i 1 . 1 . 1 . ;'?. IfH'.'l'j'A W. 1756
Presenting claim 1757
Commencement of act ion 1758
Taking judgment against agent 1759
Taking agent's note 1760
Charging goods to agent 1761
Mere delay Statute of limitations . . .'I 1 . . . . 1 ?lll . n . L J 1762
Intermediate party must have been agent and not principal 1763
Alleged agent must have been really such 1764-1766
- "Apparent" authority "A 1 .!? .???. . . . . 1767, 1768
Right of assignee of other party against principal V???V?.f. : 1769
Apparent agent the real principal rXXfl'* 1770
Excluding principal's liability by terms of contract 1771
Cases in which the agent may not be liable 1772
II. BESPONSIIULITY OF THE PRINCIPAL FOR THE AGENT'S STATEMENTS, REPRESENTA-
TIONS AND ADMISSIONS
In general 1773
Agent's authority must be first shown 1774
Authority cannot be shown by agent's admissions 1775
Representations by agent .- .?I : J'.*7?. J .^ f J'. ''.'?. k .... 1776
Principal liable for statements and representations expressly author-
ized : : 1777
Statements of agent expressly authorized to give, or referred to for,
information 1778
Statements of agent impliedly referred to for information 1779
Statements of agent made as incidents of his position General man-
ager General agents, etc 1780
Statements of agent made as incident to an authorized act Res gestae 1781
Various statements of the doctrine 1782
Limitations upon the rule 1783
Further limitations 1784
-How question determined 1785
Effect of these statements not dependent upon their being true 178R
Statements showing notice to or knowledge by the agent 1787
Statements of agent made to modify, qualify or explain the act 1788
Illustrations . , 1789
TABLE OF CONTENTS V
[References are to section*: 8 1-1705, Vol. I; 8 1706^2588, Vol. II.]
Statements indicative of the agent's state of mind 1790
Words themselves constituting or aggravating the wrong 1791
Admissions of agent generally not competent to charge principal 1792
Declarations and admissions of agent as part of res gestae 1793
Meaning of res gestae as here u^ed 1794
What sort of statements admissible 1796
What embraced within res gestae 1796
How admissibility determined 1797
Illustrations of what has been called part of the res gestae Inadmis-
sible declarations 1798
Illustrations Admissible declarations 1799
When principal bound by agent's representation of extrinsic facts upon
which authority dep&nds 1800
Illustrations Bills of lading Warehouse receipts Certified
checks 1801
III. THE EFFECT UPON THE PRINCIPAL'S EIGHTS AND OBLIGATIONS OF NOTICE TO OR
KNOWLEDGE IN HIS AGENT
In general 1802
General rule No.tice to the agent is notice to the principal 1803
Illustrations 1804
The theory of the rule a. Identification 1805
6. Conclusive presumption of communication 1806
I. Notice acquired during agency 1807
II. Knowledge acquired prior to agency 1808
Requirements of present knowledge 1809-1811
What is meant by notice acquired "during the agency" or "prior
to agency" '. 1812
The resulting rule 1813
The first exception Privileged communications 1814
The second exception Agent acting adversely to principal 1815
Reasons for the exception 1816
Further of these reasons 1817-1821
The true exception 1822-1824
Applicability of exception to corporate agents 1825
The third exception Collusion of party claiming benefit of notice .... 1826
Who can avail himself of the notice 1827
What notice includes Actual and constructive notice 1828, 1829
Agent must be agent of person to whom notice is to be imputed 1830
Rule applies only to notice respecting matters within agent's authority 1831
Notice after termination of authority does not bind 1832
Notice must be of some material matter 1833
Notice must come to someone who is an agent 1834
Ratification 183~>
Releasing agent from duty Enlarging it 1836
Agent of two principals .-*h<a> 1837-1839
Two agents of same principal 1840
ivuil .'
VI TABLE OF CONTENTS
[References are to section*: 1-1705, Vol. I? 170<^25S8, Vol. II.]
Notice to snbagent when notice to principal 1841
Notice of what sort of facts imputed .>.;: i'JlyU'pWiP. g?'. 1842
These rules apply to corporations Notice to agent .33$.-l l *.<Vl!*&- 1843
What officer or agent -;l r i.'Jv; *tft'3 .WiVr-. 1844
Ordinary exceptions apply here .-. wl'i'i 1845-1847
When notice must be acquired 1848-1850
When notice to director is notice to corporation 1851-1853
Notice to stockholder not notice to the corporation 1854
IV. THE LIABILITY OF THE PRINCIPAL FOR HIS AGENT'S TORTS AND CRIMES
In general 1855
Theories of liability 1856, 1857
1. Did Relation of Principal and Agent or of Master and Servant Exist
Necessity for existence of the relation 1858
When relation exists 1859
Several masters of one servant General and special master
Lending servants Adopting servants of others 1860
Servant performing his own master's business under direction of
master's employer 1861
Furnishing persons to be employed as servants 1862
Tests for determining question 1863
Court or jury 1864
Contractual agreement as to who shall be principal 1865
Strangers assisting servants 1866-1869
Independent contractors 1870, 1871
Subagents 1872
2. Liability for Acts Expressly Directed
Principal liable for acts expressly directed 1873
3. Liability for Negligent Act of Servant or Agent
Liable for agent's negligent act in course of employment 1874
Liability dependent upon agency 1875
Rules stated 1876, 1877
Forms of negligence 1878
What meant by course of employment 1879
Not merely a question of time or place 1880
Master's prohibition or warning not conclusive 1881
Intention to benefit the master not the test 1882
Principal's ignorance or good faith will not exonerate him 1883
Ordinary and natural attributes in the light of the event 1884
The question of apparent powers 1885
Illegal or unlawful acts 1886
Application of rules 1887
Illustrations 1888
Further illustrations 1889-1891
Forbidden acts 1892, 1893
Act of servant having large degree of discretion 1894
TABLE OF CONTENTS vii
[Reference** are to sections: 1-1705, Vol. I; ITOe-ZJIS^ Vol. II.]
Servant combining his own business with that of master 1895
Servant using master's vehicle, implement, etc., upon servant's
business Facilitating master's business 1896
Servant under immediate direction of patron of master 1897
Master not liable for negligence not in course of employment 1898
Departure from service Detour 1899
Distinction between a mere detour and a departure 1900
Illustrations 1901-1904
Resumption of service after departure 1905, 1906
Comments on these views 1907, 1908
Other acts not within course of employment 1909-1911
Further illustrations 1912
Injuries to servants' invitees 1913
Negligence when servant off duty 1914, 1915
How question determined 1916
Master's liability for acts of independent contractor 1917-1920
Effect of ratification 1921
4. Liability for Trespass or Conversion
Liable for trespass or conversion in course of employment 1922
Special cases 1923
Illustrations 1924
Not liable if acts were not within course of employment 1925
5. Liability for Wilful or Malicious Acts of Servant
In general 1926-1929
Special classes of cases 1930
I. Where the master owed the plaintiff a special duty 1931
Non-delegable duties 1932
Rule applied to carriers of passengers 1933
Illustrations of the carrier cases 1934
Plaintiff provoking assault 1935
Limitations of doctrine 1936
Servant a public officer 1937
Servant insane 1938
Application to other cases Difficulty of determining classes 1939-1944
II. Where master confides to servant the care of a dangerous instru-
mentality 1945-1950
III. Where the master entrusts to servant performance of duties in-
volving the use of force 1951
Breach of instructions no defense 1952
Master not liable for servant's personal malice 1953
Act must have been within course of employment 1954
Use of force must have been authorized 1955
Other limitations 1956
IV. Master's liability for malicious acts in other cases 1957
Illustrations .-. .'.:. 1958-1972
False imprisonment and unauthorized arrest 1973, 1974
Vlll TABLE OF CONTENTS
[Reference* are to ne<-(l<ii M : g 1-1705, Vol. I; SS 17O6-2588, Vol. II.]
Unfounded prosecutions 1975
Malicious prosecution 1976
Assaults 1977, 1978
Shooting 1979
Slander and libel 1980, 1981
How question decided Court or jury 1982
Ratification 1983
6'. Liability for Fraudulent Acts and Representations
Liability for agent's fraudulent act 1984, 1985
Agent's fraud supplemented by some act or omission of the prin-
cipal 1986
Liability of principal for agent's false or fraudulent representations.. 1987
No liability for representations if any representation is outside
authority 1988
Representations within apparent authority 1989
Liability for representations not made for principal's benefit.... 1990
Representations concerning facts which condition authority 1991, 1992
Liability by ratification or adoption of act 1993
Effect of misrepresentations Remedies 1994
Action of deceit 1995,. 1996
Effect of fraud not avoided by recitals in contract that there was none 1997
?'. Liability for Penal or Criminal Acts of Agent
What here involved 1998
a. Civil Liability
Principal's civil liability for agent's criminal or penal act -. 1999
Civil liability for statutory torts committed in course of employment 2000
No civil liability for acts not in course of employment 2001
Usury 2002, 2003
Liability by ratification 2004, 2005
b. Criminal or Penal Liability
Principal's criminal liability for agent's criminal or penal acts 2006
Penal acts 2007
Illustrations 2008
Contrary holdings 2009
8. Matters Relating to Procedure
Joinder of principal and agent in one action 2010
Weight of authority permits joinder 2011
Master cannot be held if servant not liable 2012
The measure of damages against the principal Compensation 2013
Exemplary damages 2014
Exemplary damages not allowed 2015
Exemplary damages allowed 2016
Unsatisfied judgment against agent no bar to action against principal 2017
Principal or master liable although other's negligence also contributed 2018
TABLE OF CONTEXTS IX
CHAPTER VI.
THE DUTIES AND LIABILITIES OF THIRD PERSONS TO THE AGENT
[References are to sections: 8 1-17O5, Vol. I; 170O-2588, Vol. II.]
What here involved . 2019
I. IN CONTRACT
In general Right of action in principal alone 2020
Considerations affecting this rule 2021
How cases may be classified 2022
Agent may sue when principal has clothed him with title or authority
for that purpose 2023
Agent may sue on contract made with him personally 2024
Undisclosed principal 2025
Disclosed principal 2026
When agent only can sue 2027
Statutes requiring suit by real party in interest 2028
Assignees of bankrupt agent 2029
Illustrations of rule permitting agent to sue 2030-2032
Agent may sue when he has a beneficial interest 2033
What meant by rule 2034
What interest suffices 2035, 2036
Although agent may thus sue, principal may usually sue or control ac-
tion 2037
Action on sealed contract, negotiable instrument, or contract made
with agent personally must be in agent's name 2088
Agent's rights depend upon the contract 2039
Right of assumed agent to show himself principal 2040
1. Where he contracted for a named principal 2041, 2042
2. Where he contracted for an unnamed principal 2043
Agent may recover money paid by him under mistake or illegal con-
tract 2044
What defenses open to third person 2045
Set-off 2046
Admissions Discovery 2047
What damages agent may recover on contract 2048
n. IN TORT
Agent may sue for personal trespass 2049
When agent may sue for injuries to principal's property 2050
TABLE OF CONTENTS
CHAPTER VII.
THE DUTIES AND LIABILITIES OF THIRD PERSONS TO THE
PRINCIPAL
{References are to sections: 1-1705, Vol. I; 88 1706-25S8, Vol. II. J
In general 2051
The rule stated 2052
1. Right to Sue on Contracts Made fty Agent
a. The Disclosed Principal
In general , 2053
May sue on contracts in the name of the principal 2054
May usually sue on contracts made in his behalf but in agent's name 2055
May sue on contracts made on his account without authority but sub-
sequently ratified 2056
But principal must take contract as he finds it 2057
Defenses of other party based upon dealings with agent 205S
&. The Undisclosed Principal
May sue on contracts made in his behalf but in agent's name 2059
One of several undisclosed principals cannot sue on entire con-
tract 2060
One of several apparently joint parties may show himself to be the
real principal 2061
Right of one who contracted as agent to show himself to be the
real principal 2062
What actions included 2063
Exceptions Instruments under seal 2064
Negotiable instruments 2065
Principal's remedies here Rescission Enforcement of trust 2066
How when contract involves elements of personal trust and confidence 2067
What contracts do involve personal elements 2068
Contracts of suretyship 2069
Principal cannot sue where terms of contract exclude him or where
contract is solely with agent personally 2070, 2071
Principal's right of action usually superior to agents 2072
Principal's rights governed by the contract 2073
When principal subject to defenses which could have been made against
agent a. Those arising out of terms of contract itself 2074
-
b. Payment to agent 2075, 207G
- c. Set-off of claims against agent 2077, 2078
Limitations of rule 2079
Performance by agent 2080
Release by agent 2081
TABLE OF CONTENTS XI
[References are to *<< iou: 8 1-1705, Vol. I; 170 2588, Vol. II.]
Assignment by agent 2082
Repudiation of unauthorized contract by other party 2083
How principal affected by agent's fraud 2034
How principal affected by notice to or knowledge of his agent 2085
Principal's action Measure of damages 2086
Third person cannot set up agent's want of authority to dispute prin-
cipal's right 2087
2. Right to Recover- Money Paid or Used by Agent
In general .'V* V .V-i^i 2088
o. Money Wrongly Paid on Principal's Account
Right to recover money wrongly paid on principal's account 2089
b. Money Wrongfully Appropriated to Agent's Usea
Principal's right to recover money wrongfully disposed of by agent
on agent's account 2090-2094
Illustrations Bank deposits 2095-2100
Other illustrations 2101-2103
Further illustrations Restrictive indorsements 2104
3. Right to Recover Property
In general 2105, 2IO&
Principal's title cannot be divested except by his consent or voluntary
act 210T
Recovery of property disposed of by agent in excess of authority 2108
Recovery of property wrongfully disposed of by one alleged to be os-
tensible agent or owner '. 2109
Possession as evidence of ownership or authority 2110
Money Negotiable paper 2111
Possession confided to recognized sales agent 2112-2114
Possession coupled with indicia of ownership 2115
Principal may lose through agent's fraud 2116
But other party must have acted in good faith and with reason-
able prudence 2117
Illustrations Pickering v. Busk 2118
McNeil v. The Tenth National Bank 2119
Commercial Bank v. Armsby 2120
Calais Steamboat Co. v. Van Pelt 2121
Nixon v. Brown 2122
Other cases Title put in agent's name Instruments delivered in
blank 2123
Limitations on doctrine in general 2124
Limitations on rule of McNeil v. Tenth National Bank 2125
Notice of principal's right from descriptive words in document.. 2126
Rule of McNeil v. Tenth National Bank does not apply to ordinary
chattels 2127
Possession under the Factor's Acts 2128
Xll TAI5LE OF COXTEXTS
fUeferenoen are to Mectionn: gg 1-1705, Vol. I; gg 1700-Z588, Vol. II.]
Principal may recover his property appropriated to payment of agent's
debts or seized by agent's creditors 2129
Right to recover securities wrongfully released 2130
Right to recover property wrongfully sold to third person for the
agent's benefit 2131
4. Right to Recover for Torts
Principal may recover for injuries to his interests by third person's
torts 2132
For enticing agent away 2133
For preventing agent from performing 2134
For personal injury to agent causing loss of service 2135
Third person not liable to principal for agent's fraud or neglect 213fi
5. Remedies for Double Dealing
How when third person conspires with agent 2137
How when agent in secret employment of the other party 2138, 213M
One of two principals not liable to other for defaults of their common
agent 2140
6. Collusiveness upon Principal of Judgment against Agent
Principal not bound by judgment respecting property rights against
agent in action to which he was not a party 2141
Otherwise as to contract rights 2142
TABLE OF CONTENTS Xlll
BOOK V
PARTICULAR CLASSES OF AGENTS
CHAPTER I.
DuA
OF ATTORNEYS AT LAW
[References are to HIM- (Ions: 1-1705, Vol. I; 1706-2588, Vol. II.]
Scope of chapter 2143
.
1. OF THE OFFICE
Who meant by attorney at law 2144
Attorney at law defined 2145
Is an officer of the court 2146
Who may be 2147
Party may appear in person 2148
May not appear 'by agent 2149
,
II. OF THE RELATION OF ATTORNEY AND CLIENT
/. A. Relation of Agency
Rules of agency govern 2150
2. Plow Created
No formal power necessary 2151
III. APPEARANCE PRESUMPTIVELY AUTHORIZED
Presumption of authority 2152
The presumption not conclusive 2153
a. While Proceedings Are Pending
1. Opposite party may require production of authority 2154
2. What evidence sufficient 2155
3. Client may dispute authority 215(5
6. In Actions upon the Judgment
1. Foreign judgments 2157
2. Domestic judgments 2158
IV. IMPLIED AUTHORITY OF ATTORNEY
In general 2159
Has general control of conduct of suit 2160
Presumption of authority 2161
What included 2162
What not included. . 2163
xiv TABLE OF CONTENTS
[References are to section*: 88 1-1705, Vol. I; gg 1706-2588, Vol. II.]
Can not delegate his powers 2164, 2165
May not employ counsel '.! ; .i.i( }.U. 2166
May employ subordinates 2167
Authority to institute action 2168
Authority to incur expense on client's account 2169
Authority to bind client by contracts 2170
Authority to bind clients by bonds. 2171-2174
Authority to bind client by receipt of notice Notice to attorney as no-
tice to client 2175-2177
Authority to bind client by admissions 2178, 2179
Authority to receive payment : 7/. .? 2180, 2181
After judgment 2182
JO
What constitutes payment 2183
Authority to enforce judgment 2184-2186
Ratification 2187
V. DUTIES AND LIABILITIES OF ATTORNEY TO CLIENT
Bound to highest honor and integrity 2188
Duty to disclose adverse interests Must not assume antagonistic po-
sitions 2189
Duty to remain loyal Incapacities resulting 2190
Effect on opposite party ... 2191
Duty to use reasonable care and skill 2192
Errors in law or judgment 2193-2195
Negligence in collecting 2196, 2197
Negligence in bringing suit 2198-2200
Negligence in trial of action 2201
Negligence in examining titles 2202
Neglect in preparing contracts, etc 2203
Neglect of partners, clerks, etc 2204
Neglect of subagent in collecting 2205
Liability for exceeding authority, or violating instructions 2206
Liability for money collected 2207
When action may be brought 2208
J Statute of limitations 2209
Liability for interest 2210
Attorney liable through acting gratuitously 2211
The burden of proof and measure of damages 2212
VI. LIABILITY OF ATTORNEY TO TIIIBD PERSONS
Not liable for breach of duty owing to client only 2213
Cases in* which he would be liable 2214, 2215
Liable where he contracts personally 2216
Liability for clerk's, officer's, witnesses's and other fees 2217
Liability to third person in tort 2218-2223
Liability for words written or spoken 2224
Liability for money received 2225
TABLE OF CONTENTS XV
[References are to sections: SS 1-1T05, Vol. I; 1706-2588, Vol. II.]
VII. LIABILITY OF CLIENT TO THIRD PERSON
In contract 2226
In tort 2227, 2228
VIII. LIABILITY OF CLIENT TO ATTORNEY
1. Attorney's Right to Reimbursement and Indemnity
Attorney entitled to reimbursement and indemnity 2229
2. Attorney's Right to Compensation
a. In General
Attorney entitled to compensation 2230
Attorney may sue for compensation 2231
1. Where There Was a Special Contract
In general 2232
Parties may agree upon amount of compensation 2233
Where such a contract is fairly made it is conclusive 2234
Extra compensation 2235
Contracts for contingent compensation 2236
What contracts champertous 2237
Statutory changes 2238
The effect of champerty 2239
What contracts barratrous 2240
Quantum meruit when contract void for champerty 2241
Agreements restricting settlement 2242
Contracts for contingent fees do not defeat settlement by client 2243
But attorney may recover from client 2244
2. Where There Was No Special Contract
Attorney entitled to statutory or usual rate, if any, otherwise to rea-
sonable value of his services 2245
What evidence admissible 2246
What evidence not admissible 2247
6. When Compensation Deemed to be Earned
In cases of ordinary retainer 2248
Compensation under express contract earned when undertaking sub-
stantially performed 2249
Lack of success no defense 2250
Negligence or bad faith may be shown 2251
Fees forfeited by breach of trust 2252
How when attorney abandons service 2253
What will justify abandonment 2254
When discharged by client 2255
In violation of agreement 2256
XVI TABLE OF CONTENTS
[Reference* are to Meetioni: gf 1-17O5, Vol. I) 17O6-25S8, Vol. II.J
What will justify discharge .................................... 2257
Effect of death of attorney or client ................................ 2258
Irrevocable power Powers coupled with an interest ........ 2259, 2260
Right to interest ............................... . .................. 2261
When attorney's claim barred by limitation .............. t .......... 2262
3. Attorney's Right to Lien
Two kinds of lien .................................................. 2263
1. The General or Retaining Lien
General nature of this lien ......................................... 2264
Declared by statute in some states .................................. 22G5
What this lien adheres to .......................................... 2266
a. Upon papers ............................................... 2267
- b. Upon property .............................................. 2268
-- c. Upon money ...m^-} -p. ........................................ 2269
What charges the lien secures ........................... ...... ..... 2270
Against what parties lien prevails .................................. 2271
How lien may be lost ................... .- v > \- ..........
TT 11 i ^
How lien may be waived ........................................... 2273
Enforcement of lien ............................................... 2274
2. The Special or Charging Lien
General nature of this lien .......................................... 2275
In what states it exists ............................................. 2276
Whom this lien protects ......... ., ..^ ^ fcv ^Maoft- mni^-r ......... 2277
What this lien protects ............................................. 2278
When lien attaches ................................................. 2279
To what the lien attaches .......................................... 2280
How lien protected Settlement Set off Notice .................... 2281
- Abandonment Discharge . .................................... 2282
How lien enforced .................................................. 2283
If the judgment has resulted in a fund ............... , x ..^,. ..... 2284
Statute of limitations, etc ...................................... 2285
Liens by contract Equitable protection independent of lien ........... 228G
How lien lost or waived ..... ....................................... 2287
By what law governed ............................................. 2288
IX. DEALINGS BETWEEN ATTORNEY AND CLIENT
In general Good faith and perfect fairness required ................ 2289
Purchases from and sales to client Adverse purchases .............. 2290
- Private purchases by the attorney of the client's property ...... 2291
- Gifts from client to attorney ................................... 2292
- Other dealings ................................................ 2293
- Contracts for compensation made after relation exists .......... 2294
TABLE OF CONTENTS XV11
[Deference* are to Kectlons: 1 1705, Vol. 1} g 170 afiss, Vol. II.]
X. PRIVILEGED COMMUNICATIONS
Confidential communications privileged 2297, 2298
What communications included By client to attorney 2299, 2300
By attorney to client 2301
Under what circumstances privileged No suit need be pending
Must be confidential 2302
Criminal acts 2303
- Fraudulent or illegal acts 2304
Non confidential communications 2305
Non-professional employments 2306
Collateral facts 2307
Relation of attorney and client must exist 2308
Attorney as scrivener 2309
Communications must have been made to an attorney 23KJ
Privilege is the client's Waiver 2311
How long it continues 2312
Attorney may disclose for his own protection 2313
XI. TERMINATION OF THE RELATION
By operation of law 2311
By act of the parties 2315
Notice of termination. .... 231G
CHAPTER II.
OF AUCTIONEERS
Purpose of this chapter 2317
1. Of the Auctioneer
Definition 2318
Who may be 2319
Whose agent he is 2320
2. How Authorized
Like other agents 2321
3. Auctioneer's Implied Authority
To fix terms of sale 2322
To accept the bid 2323
To make the necessary memorandum 2324
To receive the price 2325
To sue in his own name for the price 2326
None To delegate his authority 2327
b
XV111 TABLE OF CONTENTS
[RefrnceM are to Ke<>tlon: 88 1-17O5, Vol. I: 88 170O-2588, Vol. II.]
None To sell on credit 2328
None To rescind or alter sale 2329
None To sell at private sale 2330
None To bid for himself '*.&.$'. 2331
None To warrant quality 2332
--31:' . iii;a o'.- a iflbttW
4. Auctioneer's Duties and Liabilities to Principal
Bound for reasonable skill and diligence 2333
To act with loyalty and good faith .Mf>>*r>i< 2334
To obey instructions f!tK*"xvKi-flh 25535
To account for proceeds 2336
To take care of goods .**(. i'aatto ixw ^HfwMij-ld'H' 2337
To sell for cash only 2338
To sell to third parties only 2339
To sell in person *.. .>vt 2340
To disclose his principal 2341
5. Auctioneer's Duties and Liabilities to Third Persons
Liable where he conceals principal 2342
Liable where he exceeds his authority 2343
Liable where he contracts personally 2344
Liability for selling property of stranger 2345
Not liable for not holding auction as advertised 2346
Liable for refusing to surrender properly bought 2347
Liability for money received 2348
6. Auctioneer's Rights Against his Principal
Compensation Reimbursement Indemnity 2349
Recoupment of damages of principal 2350
Auctioneer's lien 2351
Cannot dispute principal's title 2352
T. Auctioneer's Rights against Third Persons
Right to sue bidder 2353
Right to sue wrong-doer 2354
8. Principal's Rights against Third Persons
To recover purchase price 2355
Where bidder refuses to complete purchase 2356
9. Rights of Third Persons against Principal
Principal's liability for auctioneer's acts 2357
Liability for breach of contract 235S
Liability for not holding sale, withdrawing property, etc 2359
Liability for failure of title to goods sold . 2360
TABLE OF CONTENTS xix
CHAPTER III.
OF BROKERS
[Reference* are to flections: 88 1-1705, Vol. I; 88 1700-2588, Vol. II.]
iiJl'tr. liea
Purpose of this chapter . . 2361
. OiflUii vV.
I. DEFINITIONS AND DIVISIONS
Brokers In general 2362
Different kinds of brokers 2363
Bill and note-brokers 2364
Exchange-brokers 2365
Insurance-brokers 2366
Distinctions 2367-2369
Broker's duties to employer 2370
Right to sue 2371
Right to lien iC .4Wl .'J'K ;3(it& 2372
Merchandise brokers 2373
As agent of both parties 2374
How authorized 2375
When special agent 2376
When not authorized to sign 2377
"Bought and sold notes" in the English practice. 2378
English rules governing "bought and sold notes 2379, 2380
"Bought and sold notes" in the United States 2381
Pawnbrokers 2382
Real estate brokers 2383
Ship brokers 2384
Stock brokers 2385
New York rules governing relation 2386
Broker a pledgee 2387
Massachusetts rule 2388
New York view generally adopted Substitution of other shares Re-
pledge 2389
<J irfSift A .
PI. APPOINTMENT AND TERMINATION
Appointed like other agents 2390
How authority terminated 2391
III. IMPLIED AUTHORITY OF BROKERS
In general 2392
How affected by usage 2393
Local usages or customs 2391
Usual and necessary authority 2395
Authority to make and sign necessary memorandum 2396
Effect of instructions 2397
XX TABLE OF CONTENTS
[References are to sections: SS 1-1705, Vol. I; g 1706-2688, Vol. II.]
Acting for both parties 2398
May not delegate his powers 2309
Usually must act in the name of his principal 2400
Implied authority to fix the price , 2401
Terms of sale ,^.,._ t .^., .,>. r<r*-*.,*>> 2402
May sell with warranty When 2403
When may sell on credit 2404
No authority to receive payment 2405
No authority to rescind or arbitrate 2406
No authority to accept or waive performance 2407
Authority to sell property purchased by him ^frrrtf *}r.- bm>(- T.T 240S
Authority to pledge property ?(Tr*w-*f\tc !'! 2409
IV. DUTIES AND LIABILITIES TO PRINCIPAL
Reasonable skill and diligence required 2410
Fidelity to his principal Concealing facts Dealing with or for him-
self 2411
Acting for both parties 2412
How when mere "middle man" 2413
Duty to obey instructions ,rf. }<>.}> 2414
Illustrations ,{ WM . w > 2415
Imperiling broker's security 241G
Duty to keep and render accounts and to pay proceeds and deliver
property 2417
V. DUTIES AND LIABILITIES TO THIBD PERSONS
Not liable when he contracts for a principal disclosed 2418
Liability when principal concealed 2419
Liable when he expressly charges himself 2420
Liable when he acts without authority 2421
Liability for money received (. ,-f*ic- 2422
When guilty of a conversion 2423
VI. BIGHTS OF BKOKER AGAINST PRINCIPAL
1. Right to Compensation
Entitled to compensation 2424
How amount determined 2425
Broker must show employment Volunteer Ratification 2426
Broker must have performed undertaking 2427
Real estate broker Nature of his undertaking 2428, 2429
Usually need not conclude a binding sale Find purchaser ready, will-
ing and able to buy 2430
When is such a purchaser "found?" 2431, 2432
Contract in particular cases may require less 2433
Contract with broker need not be in writing 2434
Broker must be procuring cause May be such though not present at.
sale Directness of cause 2435, 2436
TABLE OF CONTENTS XXI
[References are to Hectiong: 1-1705, Vol. I; g 1706-2588, Vol. II.]
Must be on terms required 1. Where terms were prescribed 2437
2. Where no terms were prescribed 2438
Must be within time limited 2439
Readiness and willingness of purchaser 2440
Pecuniary responsibility of purchaser 2441
Abandonment by broker before success 2442
Must be sale, not mere option or conditional contract 2443
Must be sale, not exchange 2444
Sale by principal in person Exclusive agencies 2445
Giving time 2446
Broker's right not defeated, how Principal's default 2447
Buyer's default 244S
Revocation of authority 2449
Reasonable time in which to find purchaser 2450
Definite time Contract for 2451
When such contract exists Consideration for 2452-2454
Performance liberally viewed in order to avoid hardships to broker 2455
Employment of two or more brokers 2456
When one entitled How determined 2457
Same subject Interpleader 2458
Abandonment by one broker Termination of his authority 2459
Duty to notify principal, when purchaser found 2460
How much compensation broker entitled to Quantum meruit 2461
At what time commission payable 2462
Broker to sell chattels 2463
Abandonment by one broker Termination of his authority 2459
Revocation of authority 2465
Several brokers 2466
Broker to effect loan 2467
Broker to effect exchange 2468
Bringing parties to terms 2469
Failure of contract 2470
Broker to purchase land 2471
Broker to find a tenant 2472
Other cases within the same principles 2473
Commissions from both parties 2474
How in case of mere middle-man 2475
How affected by misconduct 2476
How affected by disloyalty, double dealing, etc 2477
No compensation where undertaking illegal 2478
How when not licensed 2479
2. Right to Reimbursement and Indemnity
Entitled to reimbursement 2480
Needless expenses Illegal transactions 2481
How when undertaking not performed 2482
S. Right to a Lien
No general lien 2483
XX11 TAIJLE OF CONTENTS
[Reference* are to lectlona: gg 1-1705, Vol. I; gg 1706 2588, Vol. IT.]
Liens in special cases Stock brokers^ Real estate brokers Insurance
brokers 2484
Equitable liens 2485
No lien except for debt due from principal 2486
VII. RIGHTS OF BROKER AGAINST THIRD PKKSOXS
1. In Contract
In general, no right of action on contracts 2487
When he may sue 2488
What defenses may be made when broker sues 2489
2. In Tort
May recover when he sustains injury in the line of his business 2*90
VIII. RIGHTS OF PRINCIPAL AGAINST THIRD PERSONS
Same as in other cases of agency 2491
No set-off of broker's debts or obligations 2492
Right to recover money and property 2493
IX. BIGHTS OF THIRD PERSONS AGAINST PRINCIPAL
Same as in other cases of agency 2494
No remedy if broker did not act as defendant's agent 2495
CHAPTER IV.
OF FACTORS
Purpose of this chapter 2496
I. DEFINITIONS AND DISTINCTIONS
Factor or commission merchant defined 2497, 2498
Distinction between factor and purchaser 2499
H. HOW APPOINTED
Same as other agents 2500
in. IMPLIED AUTHORITY OF FACTORS
In general 2501
How affected by usage 2502
To fix price and terms 2503
To sell on credit 2504
To sell in his own name 2505
To warrant quality 2506
To warrant title 2507
To receive payment 2508
To pledge 2509, 2510
Under factor's act.. 2511
TABLE OF CONTENTS XX111
[Reference* are to neotlons: 1-1705, Vol. I; S 1700-2588, Vol. II.]
To pay his own debts 2512
To barter or exchange 2513
To delegate his authority 2514
To compromise or compound the debt 2515
To submit to arbitration 2516
To rescind sale 2517
To extend time of payment 2518
To receive anything but money in payment 2519
rn l * vi ocon
To make negotiable paper 2520
To insure property 2521
To sell to himself 2522
IV. DUTIES AND LIABILITIES TO PRINCIPAL
To use reasonable care and prudence 2523
To be loyal to his principal's interest 2524
To obey instructions 2525
Instructions to sell 2526
Factor's right to sell, or to decline to sell, for his own protection 2527
The measure of damages 2528, 2529
Instructions to sell for cash 2530
Instructions to insure 2531
Duty to inform principal 2532
Duty to sell only to responsible purchaser 2533
Del credere commission 2534
Factor's duty to care for property 2535
Unforeseen contingency Sudden emergency 2536
General duty as to sales 2537
Duty as to place of sale 2538
Duty as to time of sale 2539
Duty as to price 2540
Duty in collecting price 2541
Factor's duty in keeping account 2542
Not obliged to keep funds separate 2543
Factor's duty to account for money and property 2544, 2545
Set-off 2546
Conclusiveness of accounts 2547
Duty in remitting money 2548
When principal may sue factor 2549
Liability for acts of sub-agents 2550
V. BIGHTS OF FACTOR AGAINST PRINCIPAL
a. Commissions
Factor entitled to compensation 2551
When factor may have commissions from both parties 2552
When commission earned Upon what computed 2553
b. Reimbursement
Factor entitled to reimbursement 2554, 2555
XXIV TABLE OF CONTENTS
[HefereneM are to aeetionii: g 1-17O5, Vol. I; 88 1TO-25S8, Vol. II. J
- Interest upon advances ....................................... 2556
- Collusiveness of accounts ..................................... 2557
c. Indemnity
Factor entitled to indemnity against losses .......................... 2558
d. Lien
Factor entitled to lien ............................................. 2559
When lien does not exist ........................................... 2560
Nature of the lien ..................... 2561
. .....
When lien attaches ............................................ 2562-2564
Who may confer lien ............................................... '2565
How lien may be lost .............................................. 2566
How lien enforced ......... ....................... ^^ uWsnrwwr 2567
VI. BIGHTS OF FACTOR AGAINST THIRD PERSONS
a. In Contract
May sue for price of goods sold ................................ 2568, 2569
- Defences .............................. ........................ 2570
May sue on contracts made in his name ............................. 2571
&. In tort
May maintain trespass, replevin or trover .......................... 2572
Actions against carriers ........................................... 2573
VII. BIGHTS OF PRINCIPAL AGAINST THIRD PERSONS
a. In Contract
May sue for price of goods sold ..................................... 2574
- What defenses principal subject to ............................. 2575
Right to follow property ....................................... 2576, 2577
b. In Tort
For injuries to or conversion of the goods .......................... 2578
Vm. RIGHTS OF THIRD PERSONS AGAINST PBINCIPAI,
Same as in other cases ............................................. " 2579
How when principal undisclosed ................................... 2580
How when exclusive credit given to the factor ....................... 2581
IX. BIGHTS OF THIRD PERSONS AGAINST FACTOB
Same as in other cases ........................................... 2582
When liable for conversion ......................................... 2583
How in case of foreign factor ..................................... 2584
X. HOW RELATION TERMINATED
As in other cases of agency Revocation by principal ................ 2585
Renunciation by agent ........................................ 2586
- Lapse of time, etc .............................................. 2587
- - War, death, bankruptcy ....................................... 2588
THE LAW OF AGENCY
BOOK IV.
OF THE RIGHTS, DUTIES AND LIABILITIES ARISING OUT
OF THE RELATION
(Continued)
CHAPTER V
THE DUTIES AND LIABILITIES OP THE PRINCIPAL TO THIRD
PERSONS
1706. Purpose of chapter.
I. THE LIABILITY OF THE PRINCIPAL
UPON CONTRACTS MADE BY AN
AGENT.
1707. In general.
1. The Contractual Liability of the
Disclosed Principal.
1708. In general.
1709. Principal liable on contracts
made in his name by his
authority.
1710. Principal liable on informal
contracts not expressly
charging agent's responsi-
bility.
1711. Informal entries or
charges against agent not
conclusive.
1712. Principal may often be liable
though agent also bound.
1713. - Written contract in
agent's name Principal
not liable.
1714-1716. Same subject
Principal liable.
1717. Principal not liable where
credit given exclusively to
agent.
1718. For what contracts and con-
tractual acts of agent is
principal liable.
1719. Qui facit per alium, facit per
se.
1720. Principal liable for acts and
contracts within scope of
authority.
1721. Third person must ascertain
agent's authority.
1722. What constitutes authority.
1723. Secret instructions and
restrictions of principal or
secret motives of agent
Mistake of agent.
1724. General and special agents.
1725. Special agent's authority
must be strictly pursued.
1726. Effect of ratification.
THE LAW OF AGENCY
[BOOK IV
1727. Performance of unlawful act
not enforced.
1728. Principal not bound where
agent had an adverse inter-
est.
2. The
1729.
1731.
1732.
1733.
1734,
1736.
1737.
1738.
1739.
1740.
1741.
1742.
1743.
1744.
1745-
1748.
1749.
1750.
1751.
1752,
1754.
1755.
1756.
Contractual Liability of an
Undisclosed Principal.
1730. Preliminary considera-
tions as to liability.
General rule Undisclosed
principal liable when dis-
covered.
Rule applies to all simple
contracts.
Parol evidence to identify the
principal.
1735. Does not apply to con-
tracts under seal.
Does not apply to negotiable
instruments.
Exceptions to the general
rule.
Of the first exception
Change in accounts Mis-
leading conduct.
Thompson v. Davenport.
Heald v. Kenworthy.
Armstrong v. Stokes.
Irvine v. Watson In
the Queen's Bench.
Irvine v. Watson In
the Court of Appeal.
What is misleading con-
duct.
1747. Delay, etc.
The rule in the United
States.
General conclusions.
Of the second exception
"Election."
Theories of election.
1753. Knowledge neces-
sary.
What constitutes an election.
I. Before discovery of prin-
cipal.
II. After discovery of prin-
cipal.
1757. Presenting claim.
1758. Commencement of ac-
tion.
1759. - - Taking judgment
against agent.
1760. Taking agent's note.
1761. Charging goods to agent.
1762. Mere delay Statute of
limitations.
1763. Intermediate party must
have been agent and not
principal.
1764-1766. Alleged agent must
have been really such.
1767, 1768. "Apparent" author-
ity.
1769. Right of assignee of other
party against principal.
1770. Apparent agent the real prin-
cipal.
1771. Excluding principal's liabil-
ity by terms of contract.
1772. Cases in which the agent may
not be liable.
II. RESPONSIBILITY OF THE PRINCIPAL
FOB THE AGENT'S STATEMENTS,
REPRESENTATIONS AND ADMIS-
SIONS.
1773. In general.
1774. Agent's authority must be
first shown.
1775. Authority cannot be shown
by agent's admissions.
1776. Representations by agent.
1777. Principal liable for state-
ments and representations
expressly authorized.
1778. Statements of agent of agent
expressly authorized to
give, or referred to, for in-
formation.
1779. Statements of agent implied-
ly referred to for informa-
tion.
1780. Statements of agent made as
incidents of his position
General manager General
agents, etc.
1294
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES
1781.
1782.
1783.
1784.
1785.
1786.
1787.
1788.
1789.
1790.
1791.
1792.
1793.
1794.
1795.
1796.
1797.
1798.
1799.
1800.
Statements of agent made as
incident to an authorized
act Res gestae.
Various statements of
the doctrine.
Limitations upon the
rule.
Further limitations.
How question deter-
mined.
Effect of these statements not
dependent upon their being
true.
Statements showing notice to
or knowledge by the agent.
Statements by agent made to
modify, qualify or explain
the act.
Illustrations.
Statements indicative of the
agent's state of mind.
Words themselves constitut-
ing or aggravating the
wrong.
Admissions of agent gener-
ally not competent to
charge principal.
Declarations and admissions
of agent as part of res ges-
tae.
Meaning of res gestae
as here used.
What sort of statements
admissible.
What embraced within
res gestae.
How admissibility de-
termined.
Illustrations of what has
been called part of the res
gestae Inadmissible decla-
rations.
Illustrations Admissi-
ble declarations.
When principal bound by
agent's representation of
extrinsic facts upon which
authority depends.
1801. Illustrations Bills of
lading Warehouse receipts
Certified checks.
III. THE EFFECT UPON THE PRINCIPAL'S
RIGHTS AND OBLIGATIONS OF NO-
TICE TO OR KNOWLEDGE IN HIS
AGENT.
1802.
1803.
1804.
1805.
1806.
1807.
1808.
1809-
1812.
In general.
General rule Notice to the
agent is notice to the prin-
cipal.
Illustrations.
The theory of the rule
a. Identification.
b. Conclusive
1813.
1814.
1815.
1816.
1817-
1822-
1825.
1826.
1827.
1828,
presump-
tion of communication.
I. Notice acquired during
agency.
II. Knowledge acquired prior
to agency.
1811. Requirement o f
present knowledge.
What is meant by notice
acquired "during the
agency" or "prior to
agency."
The resulting rule.
The first exception Privi
leged communications.
The second exception Agent
acting adversely to princi-
pal.
Reasons for the excep-
tion.
-1821. - - Further of these
reasons.
-1824. The true exception.
Applicability of excep-
tion to corporate agents.
The third exception Collu-
sion of party claiming
benefit of notice.
Who can avail himself of the
notice.
1829. What notice includes
Actual and constructive no-
tice.
1295
THE LAW OF AGENCY
[BOOK iv
1830. Agent must be agent of per-
son to whom notice is to be
imputed.
1831. Rule applies only to notice
respecting matters within
agent's authority.
Notice after termination of
authority does not bind.
Notice must be of some
1832.
1833.
1834.
material matter.
Notice must come to some-
one who is an agent.
1835. Ratification.
1836. Releasing agent from duty
Enlarging it.
1837-1839. Agent of two principals.
1840. Two agents of same principal.
1841. Notice to subagent when no-
tice to principal.
1842. Notice of what sort of facts
imputed.
1843. These rules apply to corpora-
tions Notice to agent.
1844. What officer or agent.
1845-1847. Ordinary excep-
tions apply here.
1848-1850. When notice must
be acquired.
1851-1853. When notice to di-
rector is notice to corpo-
ration.
1854. Notice to stockholder
not notice to the corpora-
tion.
18C1.
1862.
1863.
1864.
1865.
1866-
1870,
1872.
Servant performing his
own master's business un-
der direction of master's
employer.
Furnishing persons to
be employed as servants.
Tests for determining
question.
Court or jury.
Contractual agreement as to
who shall be principal.
1869. Strangers assisting serv-
ants.
1871. Independent contract-
ors.
Subagents.
IV. THE LIABILITY OF THE PRINCIPAL
FOB HIS AGENT'S TORTS AND
CRIMES.
1855. In general.
1856, 1857. Theories of liability.
1. Did relation of Principal and Agent
or of Master and Servant Exist.
1858. Necessity for existence of the
relation.
1859. When relation exists.
1860. Several masters of one
servant General and spe-
cial master Lending serv-
ants Adopting servants of
others.
1296
Liability for Acts Expressly Di-
rected.
1873. Principal liable for acts ex-
pressly directed.
Liability for Negligent Act of
Servant or Agent.
1874. Liable for agent's negligent
act in course of employ-
ment.
1875. . Liability dependent upon
agency.
1876, 1877. Rules stated.
1878. Forms of negligence.
1879. What meant by course
of employment.
1880. Not merely a question of time
or place.
1881. Master's prohibition or warn-
ing not conclusive.
1882. Intention to benefit the mas-
ter not the test.
1883. Principal's ignorance or good
faith will not exonerate
him.
1884. Ordinary and natural attri-
butes in the light of the
event.
1885. The question of apparent pow
ers.
1886. Illegal or unlawful acts.
1887. Application of rules.
1888. Illustrations.
1889-1891. Further illustrations.
1892, 1893. Forbidden acts.
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES'
1894. Act of servant having
large degree of discretion.
1895. Servant combining his
own business with that of
master.
1896. Servant using master's
vehicle, implement, etc.,
upon servant's business
Facilitating master's busi-
ness.
1897. Servant under immedi-
ate direction of patron of
master.
1898. Master not liable for negli-
gence not in course of em-
ployment.
1899. Departure from service De-
tour.
1900. Distinction between a
mere detour and a depart-
ure.
1901-1904. Illustrations.
1905, 1906. Resumption of
service after departure.
1907, 1908. Comments on these
views.
1909-1911. Other acts not
within course of employ-
ment.
1912. Further illustrations.
1913. Injuries to servant's in-
vitees.
1914. 1915. Negligence when serv-
ant off duty.
1916. How question deter-
mined.
-:1917-1920. Master's liability for
acts of independent con-
tractor.
1921. Effect of ratification.
4. Liability for Trespass or Conver-
sion.
1922. Liable for trespass or can-
version in course of em-
ployment.
1923. Special cases.
"1924. Illustrations.
1925. Not liable if acts were not
within course of employ-
ment.
82 1297
Liability for Wilful or Malicious
Acts of Servant.
1926-1929. In general.
1930. Special classes of cases.
1931. I. Where the master owed
the plaintiff a special duty.
1932. Non-delegable duties.
1933. Rule applied to carriers
of passengers.
1934. Illustrations of the car-
rier cases.
1935. Plaintiff provoking as-
sault.
1936. Limitations of doctrine.
1937. Servant a public officer.
1938. Servant insane.
1939-1944. Application to oth-
er cases Difficulty of de-
termining classes. '!! ,10
1945-1950. II. Where master con-
fides to servant the care of
a dangerous instrumental-
ity.
1951. III. Where the master en-
trusts to servant perform-
ance of duties involving the
>9btovj; use of force.
1952. Breach of instructions
no defense.
1953. Master not liable for
servant's personal malice.
1954. Act must have been
within course . pf employ-
ment.
1955. Use of force must have
been authorized.
1956. Other limitations.
1957. IV. Master's liability for ma-
licious acts in other cases.
1958-1972. Illustrations.
1973, 1974. False imprison-
ment and unauthorized ar-
rest.
1975. Unfounded prosecutions.
1976. Malicious prosecution.
1977. 1978. > Assaults.
1979. Shooting.
1980, 1981. Slander and libel.
1982.
1983.
How question decided Court
or jury. .j Tjiiju 'io ^
Ratification.
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES
[
6. Liability for Fraudulent Acts and
Representations.
1984, 1985. Liability for agent's
fraudulent act.
1986. Agent's fraud supple-
mented by some act or omis-
sion of the principal.
1987. Liability of principal for
agent's false or fraudulent
representations.
1988. No liability for repre-
sentations if any represen-
tation is outside authority.
1989. Representations within
apparent authority.
1990. Liability for representa-
tions not made for princi-
pal's benefit.
1991. 1992. Represent a t i o n s
concerning facts which con-
dition authority.
1993. Liability by ratification
or adoption of act.
1994. Effect of misrepresentations
Remedies.
1995. 1996. Action of deceit.
1997. Effect of fraud not avoided
by recitals in contract that
there was none.
7. Liability for Penal or Criminal
Acts of Agent.
1998. What here involved.
a. Civil Liability.
1999. Principal's civil liability for
agent's criminal or penal
act.
ito ni EJOB aooi'jil
,_,, , ' <~ ~C[__,"(>f
1706. Purpose of chapter. It is obvious that one of the most
important questions in the law of agency is that which deals with the
duties and liabilities of the principal to third persons, based upon and
growing out of the acts, declarations, contracts and misconduct of the
agent in his dealings and transactions with them. To some extent and
for some time, the agent has been invested with authority by his prin-
cipal and sent out into the world to obtain for the principal the profits,
benefits or other objects which he desired, and to bind the principal
1298
2000. Civil liability for statutory
torts committed in course
of employment.
2001. No civil liability for acts
not in course of employ-
ment.
2002. 2003. Usury.
2004, 2005. Liability by ratification.
6. Criminal or Penal Liability.
2006. Principal's criminal liability
for agent's criminal or penal
acts.
2007. Penal acts.
2008. Illustrations.
2009. Contrary holdings.
8. Matters Relating to Procedure.
2010. Joinder of principal and agent
in one action.
2011. Weight of authority per-
mits joinder.
2012. Master cannot be held
if servant not liable.
2013. The measure of damages
against the principal
Compensation.
2014. Exemplary damages.
2015. Exemplary damages not
allowed.
2016. Exemplary damages al-
lowed.
2017. Unsatisfied judgment against
agent no bar to action
against principal.
2018. Principal or master liable al-
though other's negligence
also contributed.
.nor
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES [ 1706
when necessary by such representations, contracts and other acts as
are suitable to the occasion, and within the terms and objects of the
authorization.
In pursuing these objects, the agent may have kept either the fact
of the agency, or the name of his principal, or both, concealed from
the persons with whom he dealt, and in this event the question arises
whether, in either case, the actual principal can be made liable when
discovered.
Or the agent may have disclosed both the fact of his agency and
the name of his principal, and in this event it is material to know
whether the act, contract or representation of the agent, assumed to
be done or made by virtue of his authority, was in fact within its na-
ture and its scope.
~J* V"Wt r TiR ^O >/fi r ti\ 'V
So the question may arise how far the principal can be held respon-
sible for the misrepresentations, deceits, trespasses and other wrongs
committed by the agent in pursuance of, or while engaged in, the un-
dertaking. For convenience of treatment there will be considered:
1. The liability of a disclosed principal.
2. The liability of an undisclosed principal.
I. The liability of the principal upon contracts made by his agent,
including:
IL The responsibility of the principal for the agent's statements,
representations and admissions.
III. The effect upon the principal of notice to or knowledge in his
agent.
IV. The liability of the principal for the torts and crimes of his
agent or servant.
Hereunder will be considered such questions as
1. Did relation of principal and agent or of master and servant ex-
ist?
2. Liability for acts expressly directed.
3. Liability for negligent acts of servant or agent.
4. Liability for trespass or conversion by servant or agent.
5. Liability for wilful or malicious acts of servant or agent.
6. Liability for fraudulent acts and representations of servant or
agent.
7. Liability for penal or criminal acts of agent
8. Matters relating to procedure.
1299
177- 1 79] THE LAW OF AGENC * [BOOK iv
I.
THE LIABILITY OF THE PRINCIPAL UPON CONTRACTS MADE BY AN AGENT.
G ftonss^wi* srfMfr ft ITIC ,i
1707. In general. In dealing with the liability of the principal
upon contracts made by his agent, there must be deemed to be in-
cluded not only the making of the contracts but the alteration, modifica-
tion or termination of them, the performing and receiving performance
of them, and the various other acts which are incidental to the contract
relation.
As has already been suggested, in view of one of the peculiar situa-
tions in the law of agency, the questions must be considered not only
in relation to a disclosed principal but also to an undisclosed principal.
For the purpose of disposing of the general before the particular, the
case of the disclosed principal will be considered first.
1. The Contractual Liability of the Disclosed Principal.
1708. In general. The case in which the principal is disclosed
at the time of making the contract or doing the act is the usual and
typical one. To this case the great majority of the rules and principles
of the subject are directed, although, as will be seen many of them
apply equally to the case of the undisclosed principal where he is liable
at all. It is fitting therefore to consider them at the outset.
1709. Principal liable on contracts made in his name by his
authority. Beginning with the simplest aspects, it may be noted
that the principal is liable on all lawful contracts made in his name by
his agent acting within the scope of his authority. This is the normal
and typical case, and to this case the general rules of agency have their
fullest application.
In this case the agent is not liable and cannot be held even though
the principal fails, or is unable, to perform. The contract is made in
the principal's name and not in the agent's, and no liability on the part
of the agent can arise upon the contract. The contract, by the hypo-
thesis, is made with the principal's authority, and there is therefore
no room for liability on the part of the agent based either upon deceit
or on any warranty of authority.
1300
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES [ I?!, 17 M
The principal is also liable to the same extent upon contracts made
by his authority in a name adopted as the principal's trade name. 1
1710. Principal liable on informal contracts not expressly charg-
ing agent's responsibility. The principal is also liable on all in-
formal contracts entered into on. his account and by his authority and
not expressly made on the agent's responsibility rather than the prin-
cipal's. 2 The contract is, by the hypothesis, made on the principal's
account and by his authority ; and it should naturally and normally be
the principal's contract. It is, however, true, as has been seen, 3 thai
an authorized agent may, intentionally or unintentionally, charge his
own personal responsibility rather than that of his principal ; but, as
has also been seen, 4 where a person is known to be acting as the agent
of a disclosed principal the presumption is that the principal and not
the agent is to be bound, and the burden of proof is upon him whc
alleges that the agent pledged his own responsibility.
The rule of liability in this case is simple and just. An agent is
sent, for example, to buy goods. He discloses his agency and the
name of his principal. After examination and negotiation, he says,
"I will take these goods at this price," etc. Whom does he bind?
Who is "I" in such a case? Obviously his principal, unless the con-
trary is clearly indicated- either by some express agreement or by a
course of dealing. Ordinary business is too informally done to re-
quire that the person known to be acting as agent of a known principal
shall constantly reiterate that he is speaking for his principal and not
for himself.
1711. - Informal entries or charges against agent not con-
clusive. The fact that, in such a case, goods are charged to the
agent or bills or other memoranda are made out in his name, is not
conclusive that the credit was not given to the principal. These charges
or entries may be merely informal and for the purpose of identification
or to serve until more formal and regular entries can be made. Unless
some one has been reasonably mislead by them to his prejudice, they
are inconclusive. 8
i Sec Conroe v. Case, 79 Wis. 338, Y.), 252; Owen v. Gooch, 2 Esp. 567;
Where the principal was doing busl- Ex parte Hartop, 12 Ves. 349; Rob-
ness in a name which was formerly Ins v. Bridge, 3 M. & W. 114.
the business name of the agents. 3 See ante, 1405.
3 Whitney v. Wyman, 101 U. S. 392, * See ante, 1422.
25 L,. Ed. 1050; Bonynge v. Field, 81 Guest v. Burlington Opera House
N. Y. 159; Covell v. Hart, 14 Hun (N. Co., 74 Iowa, 457.
1301
op, ot
1712,1713] THE LAW OF AGENCY [BOOK IV
1712. Principal may often be liable though agent also bound.
The principal, moreover, may often be liable though the agent is also
bound. The agent, by special agreement, may bind himself jointly
with the principal. 6 He may also, in the same manner, make himself
a surety for his principal. But entirely outside of these forms of bar-
gaining, it is also possible for both principal and agent to be liable.
This is true, as seen in the preceding subdivision, where the principal
was undisclosed at the time of the bargaining ; but it may also be true
where both were then known, though the theory of liability is differ-
ent. Where the principal is known and the agent is known to be act-
ing for him, it is, as has been seen, 7 the presumption that the principal,
and the principal alone, is to be bound. But the agent may pledge his
own responsibility ; and he may do so in two ways : either instead of
his principal's, or in addition to his principal's.
1713. Written contract in agent's name Principal not
liable. Where, when the principal is known at the time of the bar-
gaining, the written obligation of the agent is taken, it is often said that
this amounts to an election to give the credit to the agent and not to
the principal, and that the latter can therefore not be held.* This
case, it is said, is unlike the case of the undisclosed principal. There
the obligation of the agent is taken because no principal is known to
exist; but when, later, the existence of the principal is discovered, the
law gives the other party the right to choose between them. Here, it
is said, both parties are known at the time of making the contract, and
the other party by taking the agent's obligation elects in the first in-
stance to rely upon him rather than upon the principal. It also vio-
lates the rule of evidence, it is urged, to permit a party [the principal]
See ante, 1419. is implied in the terms of the propo
i See ante, 1422. sition that a party may pursue an
s Chandler v. Coe (1874), 54 N. H. undisclosed principal; and, indeed,
561, 22 Am. Rep. 437; Ferguson v. the rule is elementary, neither need-
McBean, 91 Cal. 63, 14 L. R. A. 65; ing nor permitting citation of au-
Gillig v. Lake Bigler Road Co., 2 Nev. thority in its support."
214. Where money was loaned upon the
In Matter of Bateman, 7 Misc. 633, note of the agent, endorsed by the
it is said: "Where a party contracts person now claimed to have been an
with an agent as such, in ignorance undisclosed principal, it was held
of the existence of a principal, he that there was no room for the doc-
may, on discovering the principal, trine of the undisclosed principal and
elect to hold him. But, if he know the liability of the parties as fixed by
the principal at the time of the co' the contract could pot be changed,
tract, and yet chooses to engage with Brown v. Tainter, 114 N. Y. App. Div.
the agent, he is estopped afterward 446.
to go against the principal. So much
1302
CHAP. V] LIAPILITY OF PRINCIPAL TO THIRD PARTIES [ 1714
to be charged upon a contract in writing made with knowledge of his
existence yet containing no word showing an intention to bind him.
Thus it was said by the court in New Hampshire. 9 "We are of opin-
ion that where a principal is sought to be charged upon a contract in
writing, made in the name of his agent, the rule of evidence, which
prohibits the parties to a written contract from contradicting or vary-
ing its terms by parol testimony, applies if the principal was known,
but not if he was unknown." A number of cases have adopted this
view.
1714. Same subject Principal liable. Notwithstanding
these cases, however, there is excellent authority for the position that
the principal also may be held in such a case. It does not violate the
parol evidence rule, it is replied, because the effect is not to release the
agent but simply to add the liability of the principal. Taking the ob-
ligation of the agent may be evidence of election it is conceded ; but it
is urged that it is not conclusive and should ordinarily be a question for
the jury. The leading case on this side is Calder v. Dobell, 10 decided
in 1871, by the English court of common pleas and the exchequer
chamber. It appeared that one Cherry, a broker, had proposed to the
defendant, a Liverpool merchant, to buy cotton "to arrive," and the
defendant had authorized Cherry to buy 100 bales for him but declined
to allow his name to appear in the transaction. Cherry offered to buy
the cotton of the plaintiffs but they refused to trust him, and he, being
pressed, disclosed the name of the defendant as his principal. A writ-
ten contract was then entered into between plaintiffs and Cherry, in
which Cherry alone was named as the buyer and which he signed in
his own name without any reference in the contract to the fact that he
was acting for another. An invoice was later made in Cherry's name,
he was charged with the cotton on plaintiffs' books and when the cot-
ton arrived he was repeatedly asked to accept and pay for it. He*
failed to do so, and, the price of cotton having fallen, an action for
damages was brought against the defendant. It was urged at the trial
that the taking of the contract in Cherry's name was a conclusive elec-
tion to hold him only, but the trial judge left the question of election
to the jury and the jury found for the plaintiffs. Against this action
appeal was taken. Four judges in the common pleas gave opinions,
all in favor of affirmance. A variety of views were expressed but all
agreed that the matter of election was for the jury. Montague-Smith,
Chandler v. Coe. supra. 486. See other quotations from this
10 Calder v. Dobell, L. R. 6 C. P. case ante, 1420, note 20.
lyoit
1715] THE LAW OF AGENCY [BOOK IV
J., said of the contention that the entering into the contract in Cherry's
own name was conclusive evidence of an election to hold him alone as
the principal : "I agree that it was strong evidence ; but, if the parol
evidence [that defendant had authorized the purchase] was admissible,
it shows what the real transaction between the parties was. Being
employed to buy cotton for the defendant, with, an injunction not to
allow the defendant's name to appear, Cherry buys in his own name;
but the sellers, for reasons of their own, insisting upon knowing who
the principal was. Cherry, disregarding his instructions in that respect,
disclosed the defendant's name. The plaintiffs required the principal's
name, with a view of fixing him ; but, because he desired that his name
should not appear, the contract was made out in the name of the agent.
The plaintiffs clearly never intended to make the bargain with Cherry
alone. At all events, it was a question for the jury." This judgment
was affirmed by the exchequer chamber, all the judges regarding it as
a question of election not conclusively determined by the form of the
contract. This case undoubtedly has some peculiar features, but the
same doctrine has been applied in cases which did not have them.
1715. Thus in Byington v. Simpson " decided in 1883
by the supreme court of Massachusetts the suit was to recover a bal-
ance due under a building contract. The contract was in writing and
purported on its face to be made by the plaintiffs with J. B. Simpson.
It provided that the work should be done under the direction of J. B,
Simpson, agent, and was signed "J. B. Simpson, agent." J. B. Simp-
son was in fact contracting as agent for the defendant, his wife, and
this was known to the plaintiffs at the time the contract was made. It
was contended that inasmuch as the plaintiffs knew the principal and
yet were contented to accept a written contract which on its face bound
the agent they must be taken to have dealt with, and to have given
credit to, the agent alone. But the court said: "We are of opinion
that the plaintiffs' knowledge does not make their case any weaker
than it would have been without it. Whatever the original merits of
the rule, that a party not mentioned in a simple contract in writing may
be charged as a principal upon oral evidence, even where the writing
gives no indication of an intent to bind any other person than the
signer, we cannot reopen it, for it is as well settled as any part of the
law of agency. And it is evident that words which are sufficient on
their face, by established law, to bind a principal, if one exists, cannot
11 Byington v. Simpson, 134 Mass. Merrell v. Witherby, 120 Ala. 418, 74
169, 45 Am. Rep. 314. See also, York Am. St. Rep. 39.
County Bank v. Stein, 24 Md. 447;
1304
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES [ 1716
be deprived of their force by the circumstance that the other party re-
lied upon their sufficiency for that purpose. Yet that is what the de-
fendant's argument comes to. For the same parol evidence that shows
the plaintiffs' knowledge of the agency may warrant the inference that
the plaintiffs meant to have the benefit of it, and to bind the principal."
1716. - Conceding that the other party's election is not
conclusively determined by taking the written contract of the agent,
his situation seems to be thenceforward like that of one who has dealt
with the agent of an undisclosed principal he would not lose his right
to proceed against the principal merely by conduct showing an inten-
tion to preserve his rights against the agent and not amounting to a
discharge or merger of the claim. 12 Thus in Calder v. Dobell it was
suggested that the other party might sue either principal or agent, and
that there would be no conclusive election unless he had sued to judg-
ment.
The doctrine of Calder v. Dobell would doubtless be also subject to
the qualification that the written contract made in the name of the
agent was not an instrument under seal or a negotiable instrument.
12 In Cross v. Matthews (K. B.
Div.), 91 Law Times Rep. 500, it
appeared that the plaintiffs sued M.
and W. jointly. M. did not appear,
and plaintiffs entered a judgment by
default against him. When the case
came on for . trial against W. it
appeared that M. was simply W.'s
agent, and that the credit was really
given W., although the invoices had
been made out in the name of M.
W. objected to judgment against him-
self upon the ground that the plain-
tiffs had already elected by taking
judgment against M. Against W.'s
objection the judgment against M.
was set aside, and upon the hearing,
judgment was rendered against W.
On appeal this was held to be er-
roneous, the court saying that the
taking of Judgment against M.
"showed an election on the part of
the plaintiffs to accept the liability
of the agent." Hammond v. Scho
field, [1891] 1 Q. B. 453, was cited to
the point that the effect of taking
judgment could not be obviated by
subsequently setting aside that judg-
ment upon the consent of the defend-
ant therein only.
In Wilson v. Blanck, [1909] Trans-
vaal L. R., the plaintiff, who had fur-
nished goods upon the order of de-
fendant's agent, sued the agent and
recovered in the lower court upon
the theory that the agent had pledged
his own credit. Upon appeal it was
held that he had not pledged his
own credit, and the judgment against
him was reversed. Plaintiff then
sued this defendant, and was held
entitled to recover. It was held that
the doctrine of election did not apply
because the result in the other case
showed that plaintiff never had any
claim against the agent, and the
mere prosecution of an unsuccessful
action in which no judgment could
legally be obtained, did not constitute
an election.
1305
(8 .Y . T / 8Si
I7I7~ I 7 I 9] THE LAW OF AGENCY [BOOK IV
1717. Principal not liable where credit given exclusively to
agent. As has already been pointed out, 13 it is entirely possible
that a known agent may pledge his own responsibility, and that the
contract, although made for the benefit of the principal, shall be made
solely and exclusively on the credit of the agent. Where this is the
situation, the principal cannot be held upon the contract. 14 Whether
the credit was thus given exclusively to the agent, is, as has been seen,
ordinarily a question of fact to be determined in the light of all the
circumstances of the case. 15 In two particular classes of cases, how-
ever, already frequently referred to, namely, the case of the negotiable
instrument and the instrument under seal, the question is determined
by the established rule that no one can be charged upon the contract
except the one who upon its face appears to be the party to it. 16
1718. For what contracts and contractual acts of agent is prin-
cipal liable. With this much of preliminary discussion, the ques-
tion next arises, for what particular contracts and contractual acts is
the principal responsible. A detailed answer to this question is here
impracticable. All that has gone before has been designed to aid in
its solution. How authority is conferred," how it is to be interpreted
and construed. 18 how it is to be executed, 19 and especially what acts
and contracts fall within or without the scope of particular authori-
ties, 20 have already been considered at much length. The only thing
which is practicable here is to refer back to those discussions, and to
recall to mind some of the more general principles which must always
be taken into account when endeavoring to solve a particular problem.
In the field of these general principles, those which follow are perhaps
the most important.
1719. Qui facit per alium, facit per se. It is the fundamental
principle of the law of agency, that what one person does for and by
the authority of another is to be considered as the act of that other.
The principle has taken the form of the familiar maxim Qui facit per
alium, facit per se. That this should be so, is an obvious natural and
moral necessity as well as a legal one, founded upon manifest doctrines
of good faith and moral and legal responsibility. The law of agency,
is See ante, 419. Lynch, 31 N. Y. Misc. 724; Lament
**See Paterson v. Gandasequi, 15 v. Hamilton, [1907] Scotch S. C. 628.
East, 62; Addison v. Gandasequi, 4 See ante, 1422 et seg.
Taunt. 574; Hazelhurst Lumber Co. i See ante, 1425; post, 1734.
v. Carlisle Mfg. Co., 130 Ky. 1; Silver 17 See ante, 209-253.
v. Jordan, 136 Mass. 319; Perkins v. See ante, 764-793.
Cady, 111 Mass. 318; Burns v. Royal 19 See ante, 1079-1183.
Bank, 128 N. Y. Supp. 723; Davis v. 20 See ante, 794-1078.
1306
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES [ I72O, 1721
however, is wider than this maxim. For the principal is liable in many
cases, especially of tort, in which he can not be deemed to have author-
ized or intended the act. On the other hand, that the maxim is not a
principle of unlimited application in the law of agency, has already
been shown. 21 It is not every act done by one person for another which
is binding upon the latter. The act done must have been a lawful one,
done in the name and behalf of that other, and by his express or im-
plied authority. What acts are lawful to be done by an agent have
been determined. 22
1720. Principal liable for acts and contracts within scope of
authority. Out of these principles, however, grows the general rule
that the lawful acts and contracts of the agent, done or made for the
principal and in his behalf, are binding upon the principal, if so done
or made by the agent while he was acting in the course of his under-
taking and within the real or apparent scope of his authority, 23 or if
they have subsequently, with full knowledge of the facts, been ratified
and confirmed by the principal. 24
The converse of this rule follows as a necessary consequence. If
the act done or contract made was not a lawful one, the law, as has
been seen, will not enforce it. 23 If the agent acted for himself and in
his own behalf instead of for his principal, and the other party with full
knowledge so dealt with him, the principal is not liable. 26 If the agent
were not acting in the course of his principal's business, but was acting
entirely outside of that, and for some purpose of his own, the act is not
the principal's, unless he has adopted it. If the act done or contract
made was not within the scope of his authority, but exceeded or dis-
regarded it, then no liability attaches to the principal, unless he volun-
tarily affirms and ratifies it.
1721. Third person must ascertain agent's authority. Every
person dealing with an assumed agent is bound, at his peril as pre-
viously explained, to ascertain the nature and extent of the agent's
authority. The very fact that the agent assumes to exercise a dele-
gated authority is sufficient to put the person dealing with him upon
his guard, to satisfy himself that the agent really possesses the pre-
tended authority. 27
21 See ante, 80, 81. 28 See ante, 1419 et seq.
22 See ante, 79-126. 27 See ante, 743. Jacobs v. MOT-
23 Ante, 275-291. ris, [1902] 1 Ch. 816; Forman v. The
24 See Book I, Chap. V, Of Ratifica- Liddesdale, [19001 App. Gas. 190;
tion. Wigaud v. De Wertheimer, 35 Can.
25 See ante, 275-291. Super. 436.
O7
1722,1723] THE LAW OF AGENCY [BOOK IV
If, having relied upon it, he seeks to hold the alleged principal re-
sponsible, he must be prepared to prove, if either be denied, not only
that the agency existed, but that the agent had the authority which he
exercised. 28
But as has been frequently pointed out, it is not essential that an
actual authority existing should have been known and specifically re-
lied upon at the time. If it existed, it may be proved, although the
other party did not then rely upon it. 29
1722. What constitutes authority. An attempt has been made
in an earlier portion of the work to show what constitutes authority.
It has been seen that it is a composite matter into which a number of
different elements may enter. 80 All authority emanates from the prin-
cipal, who may in general confer as little or as much as suits his pur-
poses, and unless an alleged authority can be traced home to him as its
author and its source, it can not operate against him. It rests upon
his will and intention. That will and intention may find expression in
words, but it may also be declared by conduct. The authority of the
agent, then, so far as third persons are concerned, is as broad not only
as the words of the principal, but as broad also as his acts and conduct.
In other phrase, it is, so far as third persons are concerned, as broad
as the principal has made it appear to be. 31 As respects the mutual
rights and dealings of the principal and agent, the actual authority
may govern ; but as respects the liability of the principal to third per-
sons for the acts and contracts of the agent, it is the apparent authority
in the sense previously explained, which controls. This apparent au-
thority may be the result of the principal's negligent act of his omis-
sion, silence, or acquiescence. 32 Every person is presumed by law to
contemplate and intend the natural and proximate results of his own
acts, and he cannot avoid them by asserting that he did not really in-
tend or contemplate them. If the principal leads third persons, acting
reasonably and in good faith, to believe that his agent possesses a cer-
tain authority, then, as to them, the principal will be estopped to deny
that the agent does possess it. 33
1723. Secret instructions and restrictions of principal,
or secret motives of agent Mistakes of agent. As has been seen,
- See ante, 745. Hambro v. Burn- ^> See ante, 728.
and, [1903] 2 K. B. 399, s. c., [1904] 2 ^ See ante, 710.
K. B. 10. 32 See ante, 720.
20 See ante, 744. See Hambro v. s 3 See ante, 245, 722.
Burnand, [1904] 2 K. B. 10, and par-
ticularly the opinion of Romer, L. J.
1308
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES [ 1723
however, the agent's authority is not unlimited. The principal may
impose upon it as many limitations and restrictions as he thinks best,
and these limitations and restrictions are binding upon third persons if
they have knowledge or are charged with notice of them. The prin-
cipal cannot, however, expect third persons to have notice of limita-
tions and restrictions which are in their nature secret and undisclosed.
And while, as has been stated, persons dealing with the agent are bound
to know the extent of his authority, they may reasonably take the vis-
ible and apparent interpretation of that authority by the principal him-
self as the true one, and as the one by which he chooses to be bound.
It is therefore the rule of the law that the rights of third parties, who
have reasonably and in good faith relied upon the apparent authority
of the agent, as previously explained, cannot be prejudiced by secret
limitations or restrictions upon it of which they had no notice. 3 *
So where the act of the agent is apparently within the terms of an
express authority, the principal may be bound, although the agent,
unknown to the party dealing with him, is secretly engaged in abusing
his authority, or has a secret motive to divert the authority to per-
sonal or other illegitimate ends. 35
3* See ante, 710. such act is binding on the constituent
35 Thus in Hambro v. Burnand, as to all persons dealing in good faith
[1904] 2 K. B. 10, it was held by the with the agent. Such persons are
English court of appeal, reversing not bound to inquire into facts
s. o., [1903] 2 K. B. 399, that where aliuntie. The apparent authority is
an agent had written authority to is- the real authority." (This had also
sue underwriting policies, his princi- been approved by the Privy Council,
pals were liable on policies of the in the case of a bill of exchange, in
sort authorized and apparently regu- Bryant v. Quebec Bank, [1893] App.
lar, although he was secretly abusing Gas. 170, 180.)
his power because the policies were The court thought the case distin-
issued for the benefit of an in- guishable from such cases as Grant
solvent concern in which the agent v. Norway, 10 C. B. 665; Whitechurch
was personally interested. The court v. Cavanagh, [1902] App. Gas. 117;
cited and relied upon the New York and British Mut. Bank Co. v. Charn-
cases of North River Bank v. Aymar, wood Forest Ry. Co., 18 Q. B. Div.
3 Hill, 262, and President, etc., v. 714. Romer, L. J., referred to them
Cornen, 37 N. Y. 320 cases of promis- as cases of master and servant, in-
sory notes and quoted with approv- volving implied rather than formal
al the rule approved by Cowen, J., that written authority. "They have noth-
"Whenever the very act of the agent ing to do with a case where there is
is authorized by the terms of the an express authority in writing."
power, that is, whenever by compar- Mathew, L. J., held that when plain-
ing the act done by the agent with tiffs saw that the written authority
the words of the power, the act la was sufficient, they were not bound to
in itself warranted by the terms used, inquire into his .motives, where there
1309
I724-I7 2 6] <i CJflTHE LAW OF AGENCY, /TIJIH [BOOK IV
So where the agent was authorized to act, the mere fact that he
acted mistakenly, that he erred in judgment, sold for too low a price,
paid too much, sold too soon or too late, granted too liberal terms,
selected the wrong article, did not sufficiently safe-guard the princi-
pal's interest, made or accepted offers contrary to his real intention,
and the like, where the other party was innocent and ignorant of the
mistake, will not ordinarily release the principal, 88
1724. General and special agents. These principles apply to
all agents whether they be general or special. It is true, of course,
that the scope of the general agent's authority is, from the very nature
of the case, wider and more flexible than that of the special agent.
The latter is essentially and necessarily limited and restricted. In the
former case, particular instructions are unusual ; in the latter, they are
expected. In each case the actual authority will be the determining
authority, unless the principal gives to it the appearance of a wider
scope. In neither case can the apparent authority be controlled by
secret limitations. The true distinction between general and special
agents lies, as has been stated, in this, that the apparent scope of the
special authority is naturally and necessarily a limited one. Of these
limitations, its very nature gives peculiar warning to which the persons
interested must give heed. 3T
1725. Special agent's authority must be strictly pursued.
When, therefore, it is said that the act of the agent must be within
the scope of his authority in order to be binding upon the principal, the
statement applies alike to general and special agents. None the less
true on this account, however, is the well settled and often asserted
rule that the authority of the special agent must be strictly pursued.
It is in its nature limited, and these limits may not be exceeded. 88
1726. Effect of ratification. Although the agent may have acted
beyond the scope of his authority, or may have acted without any au-
thority at all, the principal may yet subsequently see fit to recognize
was nothing to arouse suspicion. Col- (N. Y.), 194; Comer v. Granniss, 75
line, M. R., thought the case covered Ga. 277; Borden v. Richmond, etc., R.
by the case of Bryant v. Quebec Co., 113 N. Car. 570, 37 Am. St. Rep.
Bank, supra, and since the bill there 632; Natcher v. Natcher, 47 Pa. 496;
was signed per proc., he thought that Hasbrouck v. Western Un. Tel. Co.,
the fact that that was a negotiable in- 107 Iowa, 160, 70 Am. St. Rep. 181;
strument was immaterial. See also, Beaufort v. Neeld, 12 Cl. & F. 248.
Rainey v. Potter, 57 C. C. A. 113, 120 ST See ante, 739.
Fed. 651; Lysaght v. Falk, 2 Comw. ss See ante, 742. Russo-Chinese
L. R. (Australia) 421. Bank v. Sam, [1910] App. Cas. 174.
See Levy v. Terwilliger, 10 Daly
1310
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES [ 1/27, 1728
and adopt the act as his own. This recognition and adoption is termed
ratification, the doctrine of which has been hereinbefore discussed.
By such ratification, as has there been seen, the principal accepts the
act with its burdens and responsibilities precisely as though he had
previously authorized it. 39
1727. Performance of unlawful act not enforced. No contract
for the performance of an act which is either illegal in itself or which
ts opposed to public policy, will be enforced. No authority to make
any such contract or to perform any such act can, as has been seen, 40 '
be lawfully delegated. And even though the agent deeming himself
authorized should perform the act or execute the contract with all
formalities, yet such performance or such contract will furnish no
ground of action. The law, in general, leaves all such parties where
it finds them.* 1
1728. Principal not bound where agent had an adverse interest.
As has been seen, the principal is entitled to demand and receive from
the agent a loyal, zealous and disinterested service. He presump-
tively contracts for the exercise of all the agent's skill, knowledge and
ability in his own behalf and for his own advantage, and the policy of
the law will not tolerate the existence of a secret and undisclosed in-
terest in the agent antagonistic to that of his principal, on account of
the temptation offered to the agent to sacrifice the principal's interest
to his own. The principal may, if he sees fit, intrust his interests in
the hands of an agent whom he knows to also have an interest in the
same transaction which is or may be adverse to his own. But this is
not to be presumed, and it must appear that the interest of the agent
was fully and fairly disclosed to the principal. 42
Where, therefore, the agent while ostensibly acting only for his
principal, is secretly acting as the agent of the other party, or is him-
self the other party, the acts done or contracts made by him will not
be binding upon the principal if he sees fit to repudiate them.* 3
This rule is frequently applied to the case of the agent who, while
apparently acting only for his principal in the purchase or sale of prop-
39 See ante, Chapter on RATIFICA- neau, 1 Wis. 151, 60 Am. Dec. 368;
TION. Switzer v. Skiles, 3 Gilm. (111.) 529,
*o See ante, 82 et seg. 44 Am. Dec. 723; Harrison v. Mc-
41 See ante, 83. Henry, 9 Ga. 164, 52 Am. Dec. 435.
42 See ante, 1188 et seg. Bartram A fortiori where the other party ha&
v. Lloyd, 90 Li. T. Rep. 357. bribed the agent. Shipway v. Broad-
43Wassell v. Reardon, 11 Ark. 705, wood, [1899] 1 Q. B. 369. See also,.
54 Am. Dec. 245; Herman v. Marti- post. 3037 et seq.
1311
1729] THE LAW OF AGENCY [BOOK IV
erty, is, in reality, acting under the commission of the contemplated
purchaser or seller, and more often, to the case of the agent who, being
authorized to sell or buy property for the principal, secretly sells to or
buys of himself.
2. The Contractual Liability of an Undisclosed Principal.
1729. Preliminary considerations as to liability. It is ordi-
narily to the interest, as it is usually the duty, of an agent in making
contracts for his principal to full)- disclose the fact of the agency and
to make the contract in the name and on the account of the principal.
It often happens, however, that the agent will either intentionally or
unintentionally omit to do this. He may (i) disclose that he has a
principal but conceal his name and identity ; or he may (2) wholly con-
ceal the fact that he is an agent and contract as though he were him-
self the principal in the transaction. In either of these cases the agent
usually makes himself personally liable upon the contract. In the
second case the liability of the agent is ordinarily clear, because no
other person being known in the transaction, the agent is the one upon
whom the liability directly rests. In the first case also the agent may
be liable because, though disclosing the fact that he has a principal,
but concealing his name, he may be held to have pledged his own re-
sponsibility.**
Conceding that the agent thus is, or may be, liable upon the con-
tract, the- question arises whether the principal, if discovered, may be
held liable upon it also. In favor of such a liability it may be urged
that in as much as there is a principal in the transaction who has au-
thorized' the contract to be made and who is entitled to its benefit, the
principal should be held liable upon the contract when he is discovered.
Inasmuch as the principal must ordinarily settle with some one, being
liable to the agent, perhaps upon an express contract of indemnity or
reimbursement, or upon an implied one wherever the non-disclosure
of the principal and the pledging of the agent's own credit do not con-
stitute such a violation of duty as to disentitle the agent to such re-
lief, 45 it seems to be a convenient "short-cut," if nothing more, to
give the third party a direct claim upon the principal instead of re-
quiring him to pursue the agent who will then pursue the principal.
Where this is attempted before the principal has paid or settled with
One cannot be held as an undis- time. Brown v. Tainter, 114 N. Y.
closed principal whose relation to App. Div. 446.
the transaction was known at the gee ante, 1601 et seq.
1312
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES [ I73O, 173!
agent, and this seems to have been the 'typical case in the first in-
stances, nothing but more or less technical rules of procedure would
seem to stand in the way of it. Although in theory such an action
might be regarded as founded upon some right of the third party to be
subrogated to the agent's claim upon the principal, in practical effect
it would be likely to come to be looked upon as a direct right of the
third party against the principal upon the contract.
1730. Against such a liability it may be urged (i) that
it is contrary to the general principles of contract to permit a person
to be bound upon a contract who does not appear to be a party to it,
and (2) that, in the case where no principal was known to exist, the
effect of such a rule is to give to the other party the benefit of a liabil-
ity which he did not contemplate at the time of making the contract
and for which he did not stipulate. A right to hold the undisclosed
principal in such a case would, as was pointed out by a distinguished
English judge, come to the other party as a mere "God-send."
Whatever may be thought where the contract is informal and oral,
it is certain that where the contract is in writing and especially where
it contains no intimation of. the existence of a principal, a rational
theory for the principal's liability is not easy to discover. The con-
tract is in the name and over the signature of the agent. How can
that name and signature be treated as the name and signature of the
principal? If the agent also could not be held upon it, it might then
be said that the agent's name had, for the time being, been adopted as
the business name of the principal, and was therefore, in this case, the
name of the principal. 46 But if the agent is to be held liable also be-
cause it is his name, how can the principal be held upon the theory that
the name used is not the agent's name but the business name of the
principal ? May the same be, at the same time, the actual name of the
agent and the trade name of the principal?
A theory of the legal identification of the principal with the agent
leads to the same result. If the principal and the agent are legally one
and that one the principal, it may not be difficult to see that the con-
tract is the principal's contract, but it is not easy to see how the con-
tract is also the contract of the agent.
1731. General rule Undisclosed principal liable when discov-
ered. Notwithstanding these objections, the considerations mak-
ing for the principal's liability have generally prevailed under Eng-
lish law, though not under the Continental systems, and it is unques-
4 See Isham v. Burgett, 157 Mass. 546.
83
THE LAW OF AGENCY
[BOOK iv
.tionably the general rule of our law that an undisclosed principal, when
subsequently discovered, may, at the election of the other party, if
exercised within a reasonable time, be held liable upon all simple non-
negotiable contracts made in his behalf by his duly authorized agent,
although the contract was originally made with the agent in entire
ignorance of the principal.* 7
*f Mississippi Valley Co. v. Abeles,
87 Ark. 374; Bryant Lumber Co. v.
Crist, 87 Ark. 434; Merrill v. Ken-
yon, 48 Conn. 314; Appeal of National
Shoe & Leather Bank, 55 Conn. 469;
Dashaway Ass'n v. Rogers, 79 Cal.
211; Curran v. Holland, 141 Cal. 437;
Simpson v. Patapsco Guano Co., 99
Ga. 168; Baldwin v. Garrett, 111 Ga.
876 (but the matter is regulated by
the Code, 3024); Guest v. Burling-
ton Opera House Co., 74 Iowa, 457;
Steele-Smith Grocery Co. v. Potthast,
109 Iowa, 413; Edwards v. Gildemei-
ster, 61 Kan. 141; Jones v. Johnson,
86 Ky. 530; Ware v. Long, 24 Ky.
Law Rep. 696; Cecil v. Citizens' Nat.
Bank, 145 Ky. 842; Hyde v. Wolf, 4
La. 234, 23 Am. Dec. 484; Maxcy
Mfg. Co. v. Burnham, 89 Me. 538, 56
Am. St. Rep. 436; Henderson v. May-
hew, 2 Gill (Md.), 393, 41 Am. Dec.
434; Mayhew v. Graham, 4 Gill
(Md.), 339; Tobin v. Larkin, 183
Mass. 389; Schendel v. Stevenson, 153
Mass. 351; Hunter v. Giddings, 97
Mass. 41, 93 Am. Dec. 54; Exchange
Bank v. Rice, 107 Mass. 37, 9 Am. Rep.
1; Byington v. Simpson, 134 Mass.
169, 45 Am. Rep. 314; Huntington v.
Knox, 7 Cush. (Mass.) 371; Eastern
R. R. Co. v. Benedicts Gray (Mass.),
561, 66 Am. Dec. 384; Lerned v. Johns,
9 Allen (Mass.), 419; Nat'l Ins. Co. v.
Allen, 116 Mass. 398; Schweyer v.
Jones, 152 Mich. 241; Lindeke Land
Co. v. Levy, 76 Minn. 364 (Rowell v.
Oleson, 32 Minn. 288, overruled);
Simmons Hdw. Co. v. Todd, 79 Miss.
163; Weber v. Collins, 139 Mo. 501;
Lamb v. Thompson, 31 Neb. 448;
Grrenburg v. Palmleri, 71 N. J. L. 83;
Elliott v. Bodine, 59 N. J. L. 567;
Yates v. Repetto, 65 N. J. L. 294;
Borcherling v. Katz, 37 N. J. Eq. 150;
Jennings v. Davies, 29 App. Div. 227;
Taintor v. Prendersrast, 3 Hill (N.
Y.), 72, 38 Am. Deo. 618; Briggs v.
Partridge, 64 N. Y. 357, 21 Am. Rep.
617; Cobb v. Knapp, 71 N. Y. 348, 27
Am. Rep. 51; Inglehart v. Thousand
Islands Hotel Co., 7 Hun (N. Y.),
547; Coleman v. First Nat'l, 53 N. Y,
388; Dykers v. Townsend, 24 N. Y. 57;
Meeker v. Claghorn, 44 N. Y. 319;
Jessup v. Steurer, 75 N. Y. 613;
Adolff v. Schmitt, 13 Misc. 623; Davis
v. Lynch, 31 Misc. 724; City Trust
Co. v. Amer. Brew. Co., 174 N. Y.
486; Patrick v. Grand Forks Merc.
Co., 13 N. D. 12; Harper v. Tiffin Nat'l
Bank, 54 Ohio St. 425: Smith V.
Plummer, 5 Whart. (Penn.) 89, 34
Am. Dec. 530; Hubbert v. Borden, 6
Whart. (Penn.) 79; Rice v. Fidelity
& Casualty Co., 1 Lack. Leg. News
(Penn.) Ill; Episcopal Church v.
Wiley, 2 Hill (S. C.), Ch. 584, s. c.,
1 Riley (S. C.), Ch. 156, 30 Am. Dec.
386; Waddill v. Sebree, 88 Va. 1012,
29 Am. St. Rep. 766; Belt v. Wash-
ington Water Power Co., 24 Wash.
387; Pennsylvania Casualty Co. v.
Washington Portland Cement Co., 63
Wash. 689; Ford v. Williams, 21 How-
ard (U. S.), 287, 16 L. Ed. 36; Moore
v. Sun Ptg. & Pub. .Ass'n, 41 C. C. A.
506, 101 Fed. 591; Boland v. North-
western Fuel Co., 34 Fed. 523; Hig-
gins v. Senior, 8 M. & W. 834; Brown-
ing v. Provincial Ins. Co., L. R. 5
P. C. App. 263; Calder v. Do'^ell, L.
R. 6 C. P. 486; Trueman v. Loder, 11
A. & E. 589; Smethurst v. Mitchell,
1 E. & E. 622; Thomson v. Davenport,
9 B. & C. 78. (This list does not
purport to be complete.)
CHAP. V]
LIABILITY OF PRINCIPAL TO THIRD PARTIES
[ 1732
The rule applies not only where the principal has in fact received the
benefits of the contract, but also where the contract still remains ex-
ecutory. 48
The rule itself is doubtless an anomaly, but even so it is undoubtedly
as well settled as any other rule in the law of agency. 49
1732. Rule applies to all simple contracts. This general rule
imposing obligation upon the undisclosed principal when discovered,
extends to all contracts made by oral negotiation under his authority.
It also, by the weight of authority, applies to all simple non-negotiable
contracts in writing, entered into by an agent in his own name and
within the scope of his authority, although the name of the principal
does not appear in the instrument, and was not disclosed, and although
the party dealing with the agent supposed that the latter was acting
for himself ; so and this rule obtains as well in respect to contracts
The same principle was applied this liability of the principal to the
agent, thereby putting the liability
ultimately, where it justly belongs,
upon the principal on whose account
the contract was made. Many prac-
tical objections to a remedy purely
equitable will, however, at once sug-
gest themselves. The less familiar
and more complicated procedure, and
the fact that many small claims are
not within the statutory jurisdiction
of courts of equity, may be mentioned.
An interesting discussion of the ques-
tion by Professor William Draper
Lewis, of the University of Pennsyl-
vania, will be found in 9 Columbia
Law Review, 116. Professor Lewis,
after discussing the theory of subro-
gation as an explanation of the rule,
and suggesting but rejecting the argu-
ment that the principal's liability
may be founded upon the theory of
his deceit in holding out some one-
other than himself as the principal,
contends that historically it is per-
fectly consistent with the theory of
the obligations enforced in the ac-
tion of assumpsit that the undis-
closed principal should be held liable,
because he was really the one who
caused the plaintiff to act ta his det-
riment.
e Briggs v. Partridge, 64 N. Y. 357,
21 Am. Rep. 617; Dykers v. Town-
where a corporation doing business
under an assumed name was held for
contracts made in that name. "An
undisclosed principal is bound by the
contracts of his agent acting within
the scope of his authority, although
the party with whom the contract was
made may have known the principal
under some other name." Phillips v.
International Text Book Co., 26 Pa.
Super. 230.
48 See Tobin v. Larkin, 183 Mass.
389; Lerned v. Johns, 9 Allen (Mass.),
419; Dykers v. Townsend, 24 N. Y.
61; Hubbert v. Borden, 6 Whart.
(Pa.) 79; Waddill v. Sebree, 88 Va.
1012, 29 Am. St. Rep. 766.
Kayton v. Barnett, 116 N. Y. 625.
In an article upon the general sub-
ject by Professor James Barr Ames
of Harvard in 18 Yale Law Journal,
443, it is suggested that, instead of
attempting to work out a rule under
which the principal can be held di-
rectly liable in an action at law, the
legal liability should be held to be
where the contract itself puts it,
namely, upon the agent, but that then, '
in as much as it is the duty of the
principal to exonerate the agent from
the liabilities incurred on his ac-
count, the other party should be per-
mitted In equity to avail himself of
1315
1733. X 734j
THE LAW OF AGENCY
[BOOK iv
which are required to be in writing, as to those to whose validity a
writing is not essential. 61
1733. Parol evidence to identify the principal. For the pur-
pose of identifying the principal, parol evidence may be admitted. It
does not violate the principle which forbids the contradiction of a writ-
ten agreement by parol evidence, nor that which forbids the discharg-
ing of a party by parol from the obligations of his written contract.
The writing is not contradicted, nor is the agent discharged; the re-
sult is, merely, that an additional party is made liable. 52 As is said by
a learned judge in a Massachusetts case : "Whatever the original mer-
its of the rule that a party not mentioned in a simple contract in writ-
ing may be charged as a principal upon oral evidence, even where the
writing gives no indication of an intent to bind any other person than
the signer, we cannot reopen it, for it is as well settled as any part of
the law of agency." 53
1734. Does not apply to contracts under seal. It was a funda-
mental principle of the common law that, upon an instrument under
seal, those persons only can be charged who appear upon its face to
'
send, 24 N. Y. 61; Coleman v. First v. Coe, 54 N. H. 561, 22 Am. Rep. 437;
Nat. Bank, 53 N. Y. 393; Ford v.
Williams, 21 How. (U. S.) 289, 16 L.
Ed. 36; Weber v. Collins, 139 Mo. 501;
Waddill v. Sebree, 88 Va. 1012, 29 Am.
St. Rep. 766; Belt v. Washington Pow-
er Co., 24 Wash. 387.
siTobin v. Larkin, 183 Mass. 389;
Borcherling v. Katz, 37 N. J. Eq. 150;
Briggs v. Partridge, supra. Compare
Bourne v. Campbell, 21 R. I. 490, prob-
ably wrong.
62 Higgins v. Senior, 8 M. & W. 834;
Huntington v. Knox, 7 Cush. (Mass.)
371; Ford v. Williams, 21 How. (U.
S.) 287, 16 L. Ed. 3G; Curran v. Hol-
land, 141 Cal. 437; Pleins v. Wachen-
heimer, 108 Minn. 342; Lindeke Land
Co. v. Levy, 76 Minn. 364 (overrul-
ing Rowell v. Oleson, 32 Minn. 288);
Belt v. Washington Power Co., 24
Wash. 387. There is language con-
trary in a number of cases though
they are practically all distinguish-
able. Ferguson v. McBean, 91 Cal.
63, 14 L. R. A. 65 (a sealed instru-
ment) ; Gillig v. Road Co., 2 Nev. 214
(a negotiable instrument) ; Chandler
Heffron v. Pollard, 73 Tex. 96, 15 Am.
St. Rep. 764; Silver v. Jordan, 136
Mass. 319; Matter of Bateman, 7 N. Y.
Misc. 633; Brown v. Tainter, 114 N.
Y. App. Div. 446, sometimes referred
to, were cases of a disclosed principal
and involved a different question, else-
where considered. Murphy v. Clark-
son, 25 Wash. 585, is contra, but the
court apparently overlooked the dis-
tinction between ordinary simple con-
tracts in writing and negotiable in-
struments, which was involved in
Shuey v. Adair, 18 Wash. 188, 63 Am.
St. Rep. 879, 39 L. R. A. 473.
53 Holmes, J., in Byington v. Simp-
son, 134 Mass. 169, 45 Am. Rep. 314,
[citing Huntington v. Knox, 7 Cush.
(Mass.) 371; Eastern R. R. v. Bene-
dict, 5 Gray (Mass.), 561, 66 Am. Dec.
384; Lerned v. Johns, 9 Allen
(Mass.), 419; Hunter v. Giddings, 97
Mass. 41, 93 Am. Dec. 54; Exchange
Bank v. Rice, 107 Mass. 37, 9 Am.
Rep. 1; National Ins. Co. v. Allen,
116 Mass. 398; Higgina v. Senior, 8
M. & W. 834].
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES
[ 1734
be the parties to it. 54 Under this rule an undisclosed principal could
not be charged upon such an instrument. 55 The mere fact that the
54 "Where a contract is made by
deed, under seal, on technical grounds,,
no one but a party to the deed is
liable to be sued upon it, and, there-
fore, if made by an attorney or agent,
it must be made in the name of the
principal, in order that he may be
a party, because otherwise he is not
bound by it." Shaw, C. J., in Hunt-
ington v. Knox, 1 Gush. "(Mass.) 374.
ss Huntington v. Knox, supra;
Haley v. Belting Co., 140 Mass. 73;
Mahoney v. McLean, 26 Minn. 415;
Briggs v. Partridge, 64 N. Y. 357, 21
Am. Rep. 617; Kiersted v. Orange,
etc., R. Co., 69 N. Y. 343, 25 Am. Rep.
199; Schaefer v. Henkel, 75 N. Y. 378;
Henricus v. Englert, 137 N. Y. 488;
Farrar v. Lee, 10 N. Y. App. Div.
130; Whitehouse v. Drisler, 37 N. Y.
App. Div. 525; Williams v. Magee, 76
N. Y. App. Div. 512: Spencer v. Hunt-
ington, 100 N. Y. App. Div. 463 (aff'd
without opinion, 183 N. Y. 506) ; Fur-
culi v. Bittner, 69 N. Y. Misc. 112;
Denike v. DeGraaf, 87 Hun (N. Y.),
61 (aff'd no opinion), 152 N. Y.
650; Benham v. Emery, 46 Hun
(N. Y.), 156; Smith v. Pierce, 45 App.
Div. (N. Y.) 628; Stanton v. Grang-
er, 125 N. Y. App. Div. 174; Willard
v. Wood, 135 U. S. 309, 313, 34 L.
Ed. 210; Badger Silver Min. Co. v.
Drake, 31 C. C. A. 378, 88 Fed. 48;
City of Providence v. Miller, 11 R. I.
272; Lenney v. Finley, 118 Ga. 718;
Van Dyke v. Van Dyke, 123 Ga. 686,
3 Ann. Cas. 978.
Briggs v. Partridge, 64 N. Y. 357,
21 Am. Rep. 617, is a leading case.
In this case it appeared that an agent
appointed by parol. had, without dis-
closing his agency, made in his own
name a contract under seal for the
purchase of real estate, but it was
held that the contract was not en-
forceable against the principal either
as a contract under seal or as a sim-
ple contract. See also, Klein v. Me-
chanics Bank, 145 App. Div. 615; Tut-
hill v. Wilson, 90 N. Y. 423.
Neither does the rule apply to a
lease under seal. Nor can liability
be enforced in equity. The relation
between the owner of land and those
who occupy it is of a purely legal
character (Borcherling v. Katz, 37
N. J. Eq. 150); and this is true al-
though the fact of the agency is re-
cited and it extrinsically appears
that the lessee acted as agent and al-
though the principal occupies the
premises without assignment of the
lease and furnishes money to pay the
rent. Kiersted v. Orange, etc., R. R.
Co., 69 N. Y. 343, 25 Am. Rep. 199.
See also, Haley v. Belting Co., 140
Mass. 73; Schaefer v. Henkel, 75 N.
Y. 378; Rand v. Moulton, 72 App. Div,
236; Lenney v. Finley, 118 Ga. 718.
A contract for the sale of land
made by the agent under seal in his
own name and not disclosing any
principal cannot be specifically en-
forced against the principal, even
though it be alleged that he ratified
it. Stanton v. Granger, 125 N. Y.
App. Div. 174, aff'd, 193 N. Y. 656. No
action for damages against the prin-
cipal will lie in such a case. Ma-
honey v. McLean, 26 Minn. 415.
But in Schenkberg v. Treadwell, 94
N. Y. Supp. 418, it is held that where
persons, assuming to act as officers of
a non-existing corporation, sign a
lease in its assumed name but adding
their pretended official titles, they are
personally liable, although the lease
was under seal. One judge dissented.
There was no discussion by the ma-
jority, merely a citation of cases to
a per curiam affirmance.
.Y .W >'
1317
1735] rffE LAW OF AGENCY [BOOK iv
principal received the benefit of the contract does not, it is held, alter
this rule. 56
The common law incidents attached to the presence of a seal were
confessedly highly technical, and efforts have been made in many
places to abolish them. In several states statutes have been enacted,
though not always in the same form or having the same effect. In
Minnesota, for example, the statute has abolished seals and declared
that the addition of a seal to an instrument should "not affect its char-
acter in any respect." Under this statute it has been held that an un-
disclosed principal may be charged upon an instrument under seal. 57
On the other hand in Texas where the statute declares that a seal
shall not be necessary to the validity of any contract, etc., and that the
addition of a seal shall not "in any way affect the force and effect of
the same," it was held that the statute had not changed the common law
rule with respect of the undisclosed principal. 58
I 735- With reference to authority for the execution of
instruments, a distinction has been made, as has been seen, between
instruments to w r hose validity a seal is an essential and those to which
a seal may happen to be attached but which would be perfectly valid
and effective without it it being held in the latter case that the un-
necessary seal might be disregarded as so much surplusage and the in-
strument dealt with, so far as authority for its execution is concerned,
as though no seal were attached. 59
Extending that doctrine still further it has been suggested that it
may be availed of here, that is to say, that for the purpose of charg-
ing an undisclosed principal an unnecessary seal may be regarded as
non-existent; and a number of cases have adopted the suggestion, at
least so far as to permit the undisclosed principal to sue upon the con-
tracts. 60
So far as action upon the contract itself is concerned, however, many
other cases, chiefly in New York, have refused to apply this theory and
have held to the general rule.' 1
BO Klein v. Mechanics Bank, 145 Stowell v. Eldred, 39 Wis. 614;
N. Y. App. Div. 615. Kirschbon v. Bonzel, 67 Wis. 178;
BT Streeter v. Janu, 90 Minn. 393; Lancaster v. Knickerbocker Ice Co.,
Efta v. Swanson, 115 Minn. 373. To 153 Pa. 427; Love v. Sierra Nevada,
same effect: Gibbs v. Dickson, 33 Ark. etc., Co., 32 Cal. 639, 91 Am. Dec. 602.
107. 6i Briggs v. Partridge, 64 N. Y. 357,
ss Sanger v. Warren, 91 Tex. 472, 21 Am. Rep. 617; Kiersted v. Orange,
66 Am. St. Rep. 913. See also, Jones etc., R. Co., 69 N. Y. 343, 25 Am. Rep.
v. Morris, 61 Ala. 518, 524. 199; Schaefer v Henkel, 75 N. Y. 378:
5i See ante, 215. Henricus v. Englert, 137 N. Y. 488;
I 3 l8
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES
[ 1736
In a few cases contracts clearly intended to be the contract of the
principal, but sealed with the seal of the agent, have been held enforce-
able by and against the principal as simple contracts. 62
There may also be cases in which, though no action will lie against
the principal upon the contract itself, there may yet be such elements
of adoption or receipt of benefits of a contract actually authorized by
him as to justify a recovery against him upon an implied promise. 03
1736. Does not apply to negotiable instruments. In addition to
the limitation upon the principal's liability growing out of the nature
of the instrument under seal, "there is," as pointed out in a case al-
ready referred to, 6 * "a well recognized exception to the rule in the case
of notes and bills of exchange, resting upon the law merchant. Per-
sons dealing with negotiable instruments are presumed to take them
on the credit of the parties whose names appear upon them ; and a per-
son not a party cannot be charged upon proof that the ostensible party
signed or indorsed as his agent." This doctrine has been applied in
many cases. 65
It is entirely possible, however, notwithstanding this rule, that an
action may, in many instances, be maintained by the original creditor
Spencer v. Huntington, 100 N. Y.
App. Div. 463; Denike v. De Graaf,
87 Hun (N. Y.), 61; Smith v. Pierce,
45 N. Y. App. Div. 628; Stanton v.
Granger, 125 N. Y. App. Div. 174,
aff'd, 193 N. Y. 656, and other New
York cases cited, supra.
But in New York it is held that
the recital of a seal where none is
affixed does not make the instrument
a sealed instrument within the gen-
eral rule. Slade v. Squier, 133 N.
Y. App. Div. 666.
82 Randall v. Van Vechten, 19
Johns. (N. Y.) 60, 10 Am. Dec. 193;
Dubois v. Delaware & Hud. Canal
Co., 4 Wend. (N. Y.) 285.
3 Moore r. Granby Mining Co., 80
Mo. 86.
G* Briggs v. Partridge, 64 N. Y. 357,
21 Am. Rep. 617.
s Heaton v. Myers, 4 Colo. 59;
Sparks v. Dispatch Transfer Co., 104
Mo. 531, 24 Am. St. Rep. 351, 12 L.
R. A. 714; Webster v. Wray, 19 Neb.
3 "
558, 56 Am. Rep. 754; Cortland
Wagon Co. v. Lynch, 82 Hun (N. Y.),
173; Ranger v. Thalmann, 84 App.
Div. 341, affirmed on opinion below,
178 N. Y. 574; Anderton v. Shoup, 17
Ohio St. 126; Shuey v. Adair, 18
Wash. 188, 63 Am. St. R. 879, 39 L.
R. A. 473; Cragin v. Lovell, 109 U. S.
194, 27 L. Ed. 903; Ducarrey v. Gill,
Mood. & Mai. 450.
Action against the principal has,
however, been permitted in a number
of cases upon the ground that though
the agent's name was signed to the
note, usually with the word "agent,"
etc., added, that name had been
adopted as the principal's name and
therefore the note was originally the
note of the principal. See Burkhalter
v. Perry, 127 Ga. 438, 119 Am. St. Rep.
343; Moore v. McClure, 8 Hun (N.
Y.), 557; Pentz v. Stanton, 10 Wend.
(N. Y.) 271, 25 Am. Dec. R58; Kay-
ton v. Barnett, 116 N. Y. 625.
: -
I 737> I 73&] THE LAW OF AGENCY [BOOK iv
against the principal, not upon the note itself, but upon the considera-
tion for which it was given. 66
1737. Exceptions to the general rule. The general rule, how-
ever, is subject to certain exceptions. Of these the most direct and im-
mediate are two. One of them grows out of the question whether the
other party should be permitted to recover of the principal if the latter
has already paid, credited or settled with the agent. The other, whether
such a recovery should be allowed if the other party had already takeri
steps indicating that he intends to charge the agent, even though there
has been no such payment or settlement.
For the purpose of discussion, these two exceptions may be tenta-
tively stated as follows :
1. Where principal has settled with agent. That the principal is not
liable where, before the other party has intervened with his claim, the
principal has settled with, paid or credited the agent in good faith*
and in reliance upon such a state of conduct or representations on the
part of the other party, as to reasonably lead the principal to infer
that the agent had already settled with such other party, or that the
latter looks exclusively to the agent for payment.
2. Where other party has elected to hold agent only. That the prin-
cipal cannot be held liable where the other party, with full knowledge
as to who was the principal, and with the power of choosing between
him and the agent, has distinctly and unquestionably elected to treat
the agent alone as the party liable.
1738. Of the first exception Change in accounts Misleading
conduct. This subject has been much discussed in the English
courts and various and conflicting rules have been laid down in suc-
es Coaling Co. v. Howard, 130 Ga. The court said that if there had
807, 21 L. R. A. (N. S.) 1051. been an Instrument under seal given,
In the Georgia case, land had been instead of the notes, the action could
sold and conveyed to one W, who was not have been maintained, as in that
described as "trustee" and who was case the simple contract would have
really the undisclosed agent or trus- been merged in the higher. See Van
tee of the defendants in making the Dyke v. Van Dyke, 123 Ga. 686, 3
purchase. For a portion of the pur- Ann. Cas. 978. But that the note was
chase price, W gave notes signed by a simple contract and that one sim-
himself with the word "trustee" pie contract did not merge another,
added. Held, that an action could be Theoretically and historically there
maintained for the recovery of the seems to be as much reason to say
balance of the purchase price against this in the case of the negotiable in-
the defendants as undisclosed princi- strument.
pals, not upon the notes 'but upon
"the original consideration."
1320
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES [ 1739, I74-C
cessive cases. Some of these rules have been adopted by the courts
and textwriters in this country, but have been afterwards denied or
limited by later cases in the English courts, and the result has been an
exceedingly unsatisfactory condition of the law.
The question, as will be seen, is substantially whether the rule shall
go beyond the point marked by the * in its statement above.
I 739- Thomson v. Davenport. One of the earliest of
these cases is that of Thomson v. Davenport, 67 decided in the court of
King's Bench, in 1829. In that case the agent disclosed that he was
acting for a principal in Scotland but did not disclose his principal's
name. Lord Tenterden, in his opinion, said : "I take it to be a general
rule, that if a person sells goods (supposing at the time of the contract
he is dealing with a principal), but afterwards discovers that the per-
son with whom he has been dealing is not the principal in the transac-
tion, but agent for a third person, though he may in the 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 Bayley, J., in the same case, said:
"Where a purchase is made by an agent, the agent does not, of neces-
sity, so contract as to make himself personally liable ; but he may do so.
If he 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 personally liable if the
justice of the case is that he should not be personally liable. If the
principal has paid the agent, or if the state of accounts between the
agent and the principal would make it unjust that the seller should call
on the principal, the fact of payment or such a state of accounts would
be an answer to the action brought by the seller where he had looked
to the responsibility of the agent."
The rule as laid down by Lord Tenterden was approved by Mr. Par-
sons in his work on Contracts, 68 and by Judge Story in his work on
Agency. 69 It was also adopted in Indiana. 70
1740. Heald v. Kenworthy. Following this case came
Heald v. Kenworthy, 71 decided in the Exchequer in 1855. The case
arose upon the sufficiency of a plea to a declaration for goods sold and
delivered. The plea alleged that the goods were bought for defendant
T 9 Barn. & Cress. 78. TO Thomas v. Atkinson, 38 Ind. 248.
8 Parsons on Contracts, 63. " 10 Exch. 739.
9 Story on Agency, 449,.
1321
I74 1 ] THE LAW OF AGENCY [BOOK IV
by his agent; that the latter bought in his own name and not -in that
of defendant; that plaintiff gave credit to the agent not knowing of
defendant, and that while plaintiff still gave credit to the agent, de-
fendant, in good faith, "at reasonable and proper times and according
to the usual course of dealing" between himself and his agent, settled
with the agent, believing and having reason to believe that the latter
would settle with the plaintiff.
The plea was held not to be good : the expressions of Lord Tenter-
den and Bayley, J., were shown to be mere dicta, and were held to be
inaccurate statements of the law. Parke, B., who delivered the leading
opinion, limited the rule to those cases in which the principal has been
misled by the action of the seller, saying: "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 the money on the faith that the agent and seller have
come to a settlement on the matter, or if any representation to that ef-
fect is made by the seller, either by words or conduct, the seller cannot
afterwards throw off the mask and sue the principal."
1741. Armstrong v. Stokes. Afterwards arose the case
of Armstrong v. Stokes, 72 decided in the court of Queen's Bench in
1872. In this case J. & O. Ryder, who were commission merchants
at Manchester, acting sometimes for themselves and sometimes as
agents, having received an order for goods from defendants, bought
them of plaintiff, without disclosing that they were not acting for
themselves.
J. & O. Ryder delivered the goods to defendants who paid for them
in good faith. Afterward J. & O. Ryder failed, not having paid the
plaintiff. Later it was discovered by plaintiff that J. & O. Ryder had
bought the goods for the defendants and thereupon the plaintiff brought
the action to charge defendants as undisclosed principals, but it was
held that defendants' payment to J. & O. Ryder was a bar to recovery.
Blackburn, J., who delivered the opinion of the court (Blackburn, Mel-
lor and Lush), held that the rule laid down by Parke, B., was too nar-
row and cited and approved that advanced by Lord Tenterden and
Mr. Justice Bayley.
Referring to the rule of Parke, B., the court say : "We think that if
the rigid rule thus laid down were to be applied to those who were
only discovered to be principals after they had fairly paid the price
to those whom the vendor believed to be the principals, and to whom
w
2 L. R. 7 Q. B. 598.
1322
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES [ 1/42
alone the vendor gave credit, it would produce intolerable hardship.
It may be said, perhaps truly, this is the consequence of that which
might originally have been a mistake, in allowing the vendor to have
recourse at all against one to whom he never gave credit, and that w,e
ought not to establish an illogical exception in order to cure a fault in
a rule. But we find an exception (more or less extensively expressed)
always mentioned in the very cases that lay down the rule ; and with-
out deciding anything as to the case of a broker, who avowedly acts
for a principal (though not necessarily named), and confining our-
selves to the present case, which is one in which, to borrow Lord Ten-
terden's phrase in Thomson v. Davenport, 73 the plaintiff sold the goods
to J. & O. Ryder (the agents), 'supposing at the time of the contract
he was dealing with a principal,' we think such an exception is estab-
lished. We wish to be understood as expressing no opinion as to what
would have been the effect of the state of the accounts between the
parties if J. & O. Ryder had been indebted to the defendants on a
separate account, so as to give rise to a set-off or mutual credit between
them. We confine our decision to the case where the defendants, after
the contract was made, and in consequence of it, bona fide and with-
out moral blame, paid J. & O. Ryder at a time when the plaintiff still
gave credit to J. & O. Ryder and knew of no one else. We think that
after that it was too late for the plaintiff to come upon the defendant."
1742. Irvine v. Watson In the Queen's Bench. This
case, in its turn, was followed by Irvine v. Watson, 7 * decided in the
Queen's Bench in 1879 H1 which Bowen, J., laid down the following-
rules : "There are two classes of sales through an agent to an undis-
closed principal which it is necessary to distinguish. I. Where the
seller supposes himself to be dealing with a principal, but discovers
afterwards that he has been selling to an agent, and that there is an
undisclosed principal behind, the law allows the seller to have recourse
on such discovery to the undisclosed principal, provided always 75 that
the principal has not meanwhile paid the agent, or that the state of ac-
counts between the principal and agent does not render it unjust, i. e.,
inequitable that the seller should any longer look to the principal for
payment. This statement of the proviso which relieves the undisclosed
principal in certain cases from all necessity to pay the seller was thought
by Parke, B., and the other judges in Heald v. Kenworthy 7e to be too
73 Supra. and Bayley, J., In Thomson v. Daven-
7* 5 Q. B. Div. 102. port, 9 B. & C. 78. ^ BT
T5 See, per Lord Tenterden, C. J., 78 10 Exch. 745.
THE LAW OF AGENCY [BOOK IV
large without further explanation, and they expressed the view that the
only case in which the seller under such circumstances was precluded
from having recourse to the undisclosed principal when discovered,
was when the seller, by some conduct of his own, had misled the prin-
cipal into paying or settling with his agent in the interim. The prin-
cipal, such is the reasoning of the court of Exchequer, has originally
authorized his agent to create a debt, and the principal cannot be dis-
charged from the debt unless the seller has estopped himself, by his
conduct, from enforcing it against him. The court of Queen's Bench
in Armstrong v. Stokes, 77 do not adopt this narrower version of Lord
Tenterden's and Mr. Justice Bayley's proviso. They revert to the
wider language used by Lord Tenterden and Bayley, J., in Thomson
v. Davenport, 78 and it must now be taken to be the law that a seller
who has given credit to an agent, believing him to be a principal, can-
not have recourse against the undisclosed principal, if the principal
has bona fide paid the agent at a time when the seller still gave credit
to the agent, and knew of no one else except him as principal.
"2. The present case is one that belongs to a distinct but analogous
class. At the time of the dealing in the goods, the seller was informed
that the person who came to buy was buying for a principal, but was
not told, and did not ask, who that principal was, nor anything further
about him. Thomson v. Davenport 79 is the leading authority to show
that, in such a case, where no payment or settlement in account be-
tween the undisclosed principal and his agent has intervened, the seller
may afterwards have recourse to the undisclosed principal. But what
if the undisclosed prin:ipal has meanwhile innocently paid or settled
with his agent? If ineeed such payment or settlement is the result of
any misleading conduct on the part of the seller, then, no doubt, the
general principal alluded to in Heald v. Ken worthy, 80 would equally
apply, and the seller could no longer pursue his remedy against the
man whom he had misled. But is this the only proviso, or must a
wider proviso still in the present class of cases be engrafted on the
statement of the rule, similar to the proviso as finally sanctioned in
Armstrong v. Stokes. 81 This was a case in which, at the time of sale,
exclusive credit had been given by the seller to the agent, who bought
in his own name as principal. In the present instance the agent bought,
it is true, in his own name, but held out to the seller the additional
it Supra. so supra.
73 supra. si Supra.
19 Supra.
1324
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES [ 1742
advantage of the credit of an unnamed principal behind. What dif-
ference to the liability of the principal does this make? It is obvious
that when, as in Armstrong v. Stokes, 82 the seller deals exclusively
with the agent as principal, the seller sells knowing, if his buyer turns
out to have a principal behind him, the principal will have, at all events,
been justified in assuming, as the fact is, that the seller deals simply
with the agent. The principal may be expected to arrange with his
agent on this basis. If before recourse is had to him, the undisclosed
principal has put his agent in funds to pay, the seller cannot afterward
object that the undisclosed principal, who had a right to suppose his
credit was not looked to in the matter, should have held his hand. The
case is altered where the agent, when buying, states he has a principal
whose existence, though he does not name him, he is authorized in
mentioning. I think that the liability of the principal, who under such
circumstances pays his agent, to pay over again to the seller must de-
pend in each case on what passes between the seller and the agent,
acting within the scope of his authority, and on the precise nature of
the contract which the agent has lawfully made. * * * The es-
sence of such a transaction is that the seller, as an ultimate resource,
looks to the credit of some one to pay him if the agent does not. Till
the agent fails in payment, the seller does not want to have recourse to
this additional credit. It remains in the background : but if, before the
time comes for payment, or before, on non-payment by the agent, re-
course can be fairly had to the principal whose credit still remains
pledged, the principal can pay or settle his account with his own agent,
he will be depriving the seller behind the seller's back of his credit. It
surely must, at all events, be the law that in the case of sales 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 from 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, such a delay, for ex-
ample, 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 aban-
don his recourse to the principal and to look to the agent alone."
sz Supra.
1325
I743 J 744] THE LAW OF AGENCY [BOOK IV
1743. Irvine v. Watson in the court of appeal Irvine v.
Watson, however, went to the court of appeal 83 where, while the re-
sult reached below was affirmed, the court declare the rule as laid down
by Parke, B., in Heald v. Kenworthy, to be the true one.
The court did not expressly overrule Armstrong v. Stokes [Bram-
well, L. J., spoke of it as "a very remarkable case ;" and Brett, L. J.,
declared it depended upon "the peculiar customs obtaining in Man-
chester in relation to the business of commission merchants"] as the
difference in the facts enabled them to draw a distinction between the
cases, but Bramwell, L. J., said : "It is to my mind certainly difficult to
understand that distinction, or to see how the mere fact of the vendor's
knowing or not knowing that the agent has a principal behind him can
affect the liability of that principal. I should certainly have thought
that his liability would depend upon what he himself knew, that is to
say, whether he knew that the vendor had a claim against him and
would look to him for payment in the agent's default," and Brett, L. J.,
said : "If the case of Armstrong v. Stokes arises again, we reserve to
ourselves sitting here, the right of reconsidering it." The distinction
of Parke, B., was again approved in Davison v. Donaldson, 84 decided
in the court of appeal in 1882.
The result, therefore, of the English cases seems to be to limit the
exception to that first stated by Parke, B., 83 although that may perhaps
not be settled beyond controversy. 86
1744. What is misleading conduct. The question of
what acts or conduct of the other party may be sufficient to reasonably
lead the principal to believe that the agent only is relied upon, has not
83 5 Q. B. Div. 414; 49 L.. J. C, L. Browne had failed to distinguish be-
531, 42 L. T. 800. The opinions dif- tween the author's own statement and
fer more or less as reported in these his quotation from an English judge,
various reports. The quotations in Upon having his attention called to
the text are made from the official thfs fact, Mr. Browne promptly ac-
edition. knowledged his error, and promised
a* L. R. 9 Q. B. Div. 623. In Can- to correct it in future reprints, and
ada, see Arbuthnot v. Dupas, 15 Mani- this has now been done,
toba, 634. In Scotland, see Lament v. ssThus Mr. Bowsteart in his Di-
Hamilton, [1907] S. C. 628. gest of the Law of Agency (3d ed.
SB The learned American editor of 1907), p. 303, says that Armstrong v,
"English Ruling Cases, Vol. 2, p. 483, Rtokfs "must be treated as still be-
first impression, in referring to this insr law, because it has not been
statement erroneously suggested that dffinitely overruled. It is, however,
the present author had been incon- of very doubttvi authority, and cer-
sistent in stating the result of the tainly will not be in the least ex-
English cases. The fact was that Mr. tended."
1326
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES [ 1744
been much considered, and it is not one which readily lends itself to
definite rules. It must be largely a question of fact in each particular
case. In Irvine v. Watson 8T the defendants had given their broker
an order to buy goods, and the broker had bought them in his own name
of the plaintiffs, stating that he had a principal but not disclosing his
identity. The invoice given by plaintiffs to the broker stated that the
terms were, "cash (or before delivery if required) allowing two and
one-half per cent discount." The broker rendered to defendants a
statement of the purchase stating terms of payment, "cash, less two
and one-half per cent." The sellers, however, did not insist upon cash
on or before delivery. They made no demand on the broker for pay-
ment for five or six days. Then they demanded payment from him at
intervals for about ten days, after which, the broker having stopped
payment, they made demand for the first time upon defendants. In
the meantime defendants had paid the broker. Under these circum-
stances defendants urged that they had a right to believe from the fact
that the terms were "cash" that plaintiffs would not have delivered the
goods unless they had gotten their pay and that therefore defendants
were justified in paying the broker within the rule of Heald v. Ken-
worthy. It appeared, however, that even where the terms of sale were
"cash," there was no fixed custom of insisting upon payment at the
precise time of delivery and that it was not infrequent to allow a few
days of grace after delivery. It also appeared that defendants had paid
the broker (by accepting his draft which he immediately discounted)
before part of the goods had in fact been delivered. It was held that
these facts furnished no sufficient evidence that defendants had been
misled by the plaintiffs. Bramwell, L. J., said : "The terms of the con-
tract were 'cash on or before delivery' and it is said that the defendants
had a right to suppose that the sellers would not deliver unless they
87 Irvine v. Watson, 5 Q. B. Div. Argument in Heald v. Kenworthy, 10
414, 49 L. J. 531, 42 L. T. 800. In Exch. 739.
Kymer v. Suwercropp, 1 Camp. 109, In Horsfall v. Faimtleroy, 10 B. &
it was said that permitting the time C. 755 a statement in a sales cata-
of payment to pass without a demand logue that the terms of credit on
upon the principal, was a mislead- which the agent bought were billed at
ing circumstance; but no such point two months was held sufficient to
was actually involved in the case, lead the principal to believe that the
See Smyth v. Anderson, 7 C. B. 21. agent must hgve given his bill for
Compare Macfarlane v. Giannaeopulo, the goods and to protect him in therc-
8 H. & N. 860. See this point in upon accepting the agent's draft
Armstrong v. Stokes, supra; also the
1327
1745] THE LAW OF AGENCY [BOOK iv
received payment of the price at the time of delivery. I do not think,
however, that this is a correct view of the case. The plaintiffs had a
perfect right to part with the oil to the broker without insisting strictly
upon their right to prepayment and there is, in my opinion, nothing in
the facts to justify the defendants in believing that they would so in-
sist. No doubt if there was an invariable custom in {he trade to in-
sist on prepayment where the terms of the contract entitled the seller to
it, that might alter the matter; and (in such case non-insistence on pre-
payment might discharge the buyer if he paid the broker on the faith
of the seller already having been paid. But that is not the case here ;
the evidence shows that there is no invariable custom to that effect."
1745. Delay, etc. In Davison v. Donaldson 88 one of
several owners of a boat bought supplies for her of the plaintiff. The
latter knew that there were other owners though it does not appear that
he knew who they were. The goods were charged to the one who
bought them. He collected the amount from the other co-owners but
did not pay the plaintiff. The plaintiff finally sued the other owners.
Their defence was that they had settled with the managing owner be-
lieving that he had paid the plaintiff, and that they had been misled by
the fact that the plaintiff had not pressed his claim against the pur-
chaser who had now become insolvent. It did not appear, however, that
there had been any unreasonable delay at the time they settled with
the managing owner, and the real gist of the defendants' contention
was that if they had known of plaintiff's claim against them they could
have recovered the money from the managing owner before he became
insolvent. This was held not sufficient to release defendants. Jessel,
M. R., said : "The principal cannot be heard to say that the subsequent
conduct of the plaintiff induced him not to sue the agent for repayment
of the money. Independently of the settlement of accounts there is no
evidence that the mere abstaining from pressing the agent is an injury
to the principal. A debtor must find out his creditor and go and pay
ss Davison v. Donaldson, 9 Q. B. There are dicta In a number of
Dlv. 623, 47 L. T. 564. See also, The cases that the right to charge the un-
Huntsman, [1894] Pro. Div. 214. disclosed principal must be exercised
In Berry v. Chase, 102 C. C. A. 572, within a reasonable time. See Smeth-
179 Fed. 426, it was held that a de- hurst v. Mitchell, 1 El. & El. 622; Fell
lay of three or four months in mak- v. Parkin, 52 L. J. Q. B. 99, 47 L. T.
ing claim upon the principal after Rep. 350; Curtis v. Williamson, L. R.
discovery was- not so unreasonable 10 Q. B. 57; Irvine v. Watson, 5 Q.
as to discharge him In the absence B. Div. 102.
of anything to prejudice him there-
by.
1328
CHAP. Vj LIABILITY OF PRINCIPAL TO THIRD PARTIES [ 1746-1748
him." "No doubt in many cases principals may reasonably rely on
the honor of their agents, and may not require vouchers ; but when they
come into a court of law and seek to excuse themselves from liability,
and it turns out that they have not required the production of vouchers,
they must expect the court to deal strictly with them." Bowen, L. J.,
said : "I do not say that in very special circumstances mere delay may
not amount to misrepresentation: it may be conduct misleading the
defendant. But that can only be when there is something in the origi-
nal contract or in the conduct of the parties which renders the delay
misleading. The creditor is not obliged to apply to all his debtors if he
can get payment from one of them." This case, however, as was
pointed out by the judges, was not the mere case of principal and agent
because the defendants were co-owners or partners with the managing
owner and jointly liable with him.
1746. Giving the agent a receipt for the price, even
though mistakenly, upon the strength of which the principal in good
faith pays or credits the agent, will be such conduct as protects the
principal. 89
1747. It must be kept in mind that this exception dif-
fers from the following one. This is not a question of election but of
misleading. It is essential here that the principal shall have done
something shall have paid or credited or otherwise altered his situa-
tion which will prejudice him if he now be called upon to pay. No
such act is necessary where election alone is involved.
It is also possible that that which would not suffice to constitute an
election may be sufficient to relieve the principal under this rule if he
has reasonably acted upon it to his prejudice. For example, the com-
mencement of suit against the agent is, as will be seen, not usually re-
garded as sufficient to constitute an election. But would the principal
be liable again if, after the other party who knows there is a principal
and has had an opportunity to sue him has sued the agent, the princi-
pal in reliance thereon should pay the agent ? It would seem that there
might be cases in which the conduct of the plaintiff was so unambiguous
and decisive as to be reasonably relied upon by the principal.
1748. The rule in the United States. The subject has
not very frequently arisen in the United States and has not been thor-
oughly considered in any very recent case by a court of last resort.
so Cheever v. Smith, 15 Johns. (N. Co., 30 Md. 39; Hyde v. Wolf, 4 La.
Y.) 276; English p v. Rauchfuss, 21 234, 23 Am. Dec. 484.
N. Y. Misc. 494; Brown v. Telegraph
84 1329
1749]
THE LAW OF AGENCY
[BOOK iv
In the earlier cases, as was naturally to be expected, the tendency was
to follow the rule laid down by Judge Story and Professor Parsons,
based upon the dictum of Lord Tenterden, 90 (that is, as far as the *
in 1737 ante.) A general statement of the rule was made some years
ago by the New York court of appeals 91 with the exception "provided
he has not in the meantime in good faith paid the agent," but the state-
ment was a mere dictum. Most of the cases which have arisen since
Irvine v. Watson was decided by the court of appeal, have either ig-
nored that decision or apparently failed to note its full significance. 92
1749. General conclusions. Notwithstanding the re-
marks of Bramwell, L. J., the distinction between the case where the
other party knows that there is a principal in existence though he does
not know who he is and that where he is totally ignorant of the exist-
ence of such a person, seems not without significance. Certainly if the
other party is to be charged with the consequences of his misleading
o Thus for example in 1847 in Clea-
land v. Walker, 11 Ala. 1058, 46 Am.
Dec. 238; in 1855, in Fish v. Wood, 4
E. D. Smith (N. Y. Com. Pleas), 327;
in 1871, in Thomas v. Atkinson, 38
Ind. 248; in 1879, in McCullough v.
Thompson, 45 N. Y. Super. 449. See
also, Ketchum v. Verdell, 42 Ga. 534;
Emerson v. Patch, 123 Mass. 541.
The Georgia code enacts substantially
the rule of Thomson v. Davenport.
On the contrary, in 1866, in York
County Bank v. Stein, 24 Md. 447,
the rule of Baron Parke in Heald v.
Kenworthy, was approved in reliance
upon the staterrient of the Editor of
Story on Agency.
91 Knapp v. Simon (1884), 96 N.
Y. 284.
92 The question was quite fully con-
sidered in 1885 in Laing v. Butler, 37
Hun (N. Y.), 144. The court cites
Armstrong v. Stokes and Irvine v.
Watson as applying to different
classes of cases and apparently with-
out attaching much importance to
the comments made upon the former
case by the Court of Appeal when
Irvine v. Watson was before it.
There is also a very interesting
discussion in Fradley v. Hyland
(1888), 37 Fed. 49, 2 L. R. A. 749;
Irvine v. Watson, in the Queen's
Bench Division, is cited, but not the
case in the Court of Appeal. See al-
so, Harder v. Continental Printing
Co., 64 N. Y. Misc. 89.
A very general reference to the
matter is made in Berry v. Chase, 77
C. C. A. 161, 146 Fed. 625, 102 C. C.
A. 572, 179 Fed. 426.
The question was involved in Nich-
olson v. Pease, 61 Vt. 534, and the
syllabus indicates the case as holding
that "a traveling salesman who is
furnished with money by his employ-
er to pay his expenses while on the
road, cannot bind his principal for
the payment of such expenses if, be-
fore receiving notice from the party
extending such credit, the employer
has settled with his salesman and al-
lowed him the amount of such ex-
penses." There is, however, no dis-
cussion of the point in the opinion.
There is a statement of the English
rule as a dictum in Simmons Hard-
ware Co. v. Todd, 79 Miss. 163; and
Guest v. Burlington Opera House Co.,
74 Iowa, 457. See the cases reviewed
in 1889 by Mr. John W. Beaumont in
23 American Law Review, 565.
1330
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES [ I/5O
conduct, it seems much more reasonable and just to do so where he
knows that there is a principal whose actions may be affected by his
conduct than where he has no such knowledge. It may be suggested
that every person who dc?.k without expressly excluding that possibil-
ity may always be regarded as potentially an agent with an undisclosed
principal ; but the suggestion seems forced if not fanciful.
Nevertheless, the rule of Parke, B., seems on the whole to be rea-
sonable and just. If a principal sends an agent to buy goods for him
and on his account, it is not unreasonable that he should see that they
are paid for. Although the seller may consider the agent to be the
principal, the actual principal knows better. He can easily protect him-
self by insisting upon evidence that the goods have been paid for or
that the seller with full knowledge of the facts has elected to rely upon
the responsibility of the agent, and if he does not, but, except where
misled by some action of the seller, voluntarily pays the agent without
knowing that he has paid the seller, there is no hardship in requiring
him to pay again. If the other party has the right, within a reasonable
time, to charge the undisclosed principal upon his discovery, and this
right seems to be abundantly settled in the law of agency it is diffi-
cult to see how this right of the other party can be defeated, while he
is not himself in fault, by dealings between the principal and the agent,
of which he had no knowledge, and to which he was not a party.
1750. Of the second exception "Election." The second excep-
tion to the general rule is commonly said to rest upon the theory of
"election." A wholly anomalous situation is presented. A contract
has been made which in terms binds the agent only. Nevertheless the
principal may be made liable upon it. How is he liable ? Although the
other party may perhaps sue both severally but simultaneously, or pos-
sibly sue both jointly, 93 the obligation can hardly be deemed a joint
one in the sense that it can ultimately be enforced against both. 9 - 1
Neither can it be said that both are liable severally in the sense that
recovery can be had partly from each. The liability is commonly said
to be an alternative one. The agent can be held because he made the
contract in his own name, or the principal can be held because it is in
law deemed to be his contract. Which one shall be held ? The answer
ordinarily given is that the other party may "elect" between them. As
3 See cases post, 1758, note 14. 742; Belt v. Washington Power Co.,
4 See Tew v. Wolfsohn, 77 N. Y. 24 Wash. 387; Steele-Smith Grocery
App. Div. 454; McLean v. Sexton, 44 Co. v. Potthast, 109 Iowa, 413; Good-
N. Y. App. Div. 520; Gay v. Kelley, ale v. Page, 92 S. Car. 413.
109 Minn. 101, 26 L, R. A. (N. S.)
1331
I75 1 ] THE LAW OF AGENCY [BOOK IV
a corollary to this, it is said that the other party has but one choice ;
that when he has made his election his determination is final ; and he
cannot afterwards make a new choice even though his first efforts did
not result in a satisfaction of his claim. How far this is true, it is now
necessary to inquire. Before doing so, it may be well to notice one pre-
liminary matter.
Election properly is a matter of choice. It does not rest upon estop-
pel. It is not therefore essential in order to make it conclusive that it
shall appear to have misled the principal to his prejudice. If, however,
it has misled him if the principal, being apprised of the fact that the
other party has elected to look to the agent, settles with the agent upon
that basis and either pays him or allows him a corresponding credit,
nothing could be more unjust than to permit the other party after-
wards to repudiate his action with the agent and resort to the princi-
pal. 95
1751. Theories of election. With reference to this mat-
ter of election four views are possible: I. That the other party un-
expectedly finds himself in a situation where he can hold one of two
parties liable and he must simply choose between them. 2. That the
other party, inasmuch as he has a contract in terms with the agent, will
presumptively pursue this obligation, and that therefore some affirma-
tive action is necessary to show that he intends to abandon this for
his remedy against the principal. 3. That the other party, as soon as
he discovers the existence of the principal, will presumptively look to
him rather than to the agent, and that some affirmative act is therefore
necessary to show that he prefers to hold the agent. 4. That the other
party, having actually dealt with the agent as principal and obtained
an obligation against him, but finding unexpectedly that he also has a
claim against the principal, intends to make the most of the situation
Bpaterson v. Gandasequi, 15 East, Smith, 15 Johns. (N. Y.) 276; Bush
62; Addison v. Gandasequi, 4 Taunt, v. Devine, 5 Har. (Del.) 375; Brown
574; Thomson v. Davenport, 9 Barn. v. Bankers, etc., Tel. Co., 30 Md. 39;
& Cress. 78; Horsfall v. Fauntleroy, Schepflin v. Dessar, 20 Mo. App. 569;
10 Barn. & Cress. 755; Smyth v. An- Hyde v. Wolfe, 4 La. 234, 23 Am. Dec.
derson, 7 Com. Bench, 21; Irvine v. 484; Romans v. Lambard, 21 Me. 308.
Watson, 5 Q. B. Div. 102; Armstrong One who gives a receipt to a state
V. Stokes, L. R., 7 Q. B. 599; Heald agent, without actual payment cannot
v. Kenworthy, 10 Exch. 739; Kymer afterward hold the state although he
v. Suwercropp, 1 Camp. 109: Mac- has given notice to the accounting of-
farlane v. Giannacopulo, 3 Hurl. & fleers not to allow such receipt as a
Nor. 859; Clealand v. Walker, 11 Ala. credit to the agent. Pitler v. Com-
1058, 46 Am. Dec. 238; Cheever v. monwealth, 31 Pa. 406.
1332
CHAP. V 7 ] LIABILITY OF PRINCIPAL TO THIRD PARTIES [ 1752, 1753
to keep and enforce his claims against both until he has obtained sat-
isfaction from one of them or has done something which in fact or in
law shows that he has abandoned his claim against one or the other of
them.
Any one of these views might undoubtedly be taken, but no one of
them, in fact, has been consistently held. The field is therefore open
for the adoption of the one which seems most consistent with principle
and the peculiarities of the situation. That the last is the sound and
natural view would seem to require no argument to establish, although
it undoubtedly is not election in the ordinary sense. From the stand-
point of the liability of the principal it would lead to this conclusion :
that no act with reference to keeping alive or enforcing the liability of
the agent would discharge the principal unless it also showed that the
other party did not intend to charge the principal.
1752. Knowledge necessary. Election, as has been
pointed out involves choice, and choice presupposes knowledge of the
alternatives and freedom to choose between them. The other party
cannot elect between the principal and the agent so long as he does not
know that there was a principal in the transaction, or does not know
who he was ; and this knowledge must include not only the fact of the
agency but the name and identity of the principal. 96 What he may do
before that can not be charged to him as an election.
I 753- At this stage it seems desirable to notice more
fully a question already referred to, namely, whether the rules are the
same whether the other party knows there is a principal but does not
know who he is, or is totally ignorant of the existence of any principal,
and believes that the agent is the only person interested. In general, as
has been pointed out, that distinction is deemed immaterial. It was fully
discussed in Thomson v. Davenport, 97 where Bayley, J., said "There
is no authority to show that mere knowledge that there is a principal
destroys the right of the seller to look to that principal as soon as he
knows who that principal is, provided he did not know who he was at
the time when the purchase was originally made." It is true that Lord
Blackburn, in Armstrong v. Stokes, 98 refers to such a distinction, cit-
ing the case of the broker who is usually known to be acting for a prin-
cipal, though the latter's identity may not be disclosed. But in Irvine
as Greenburg v. Palmieri, 71 N. J. Kenyon, 48 Conn. 314, 40 Am. Rep.
L. 83; Steele-Smith Grocery Co. v. 174; Reid v. Miller, 205 Mass. 80.
Potthast, 109 Iowa, 413; Curtis v. Wil- ^ 9 B. & C. 78.
liamson, L. R., 10 Q. B. 57; Merrill v. L, R. 7 Q. B. 598.
1333
1754] THE LAW OF AGENCY [BOOK iv
v. Watson, 09 as has been seen, 1 Lord Bramwell, referring to that case,
said, "It is to my mind certainly difficult to understand that distinction,
or to see how the mere fact of the vendor knowing or not knowing that
the agent has a principal behind can affect the liability of that princi-
pal." Several American cases 2 have approved the views of Bayley, J.,
saying that even if the other party knew there was a principal, but did
not know who he was, he could not then choose between them or debit
the real principal.
It seems to be everywhere agreed that the fact that the other party
knows there is an undisclosed principal in existence does not charge
him with the duty of then finding out who he is and giving the credit to
him alone. 3
The utmost effect which the knowledge of an existing but unnamed
principal would seem to have would be to make it easier, as a mere mat^
ter of fact, for the other party to elect, at the time of the transaction,
by some unequivocal means, to deal with the agent only, to the exclu-
sion of any principal named or unnamed. 4
1754. What constitutes an election. It is impossible to lay
down any hard and fast rule by which it can/in all cases, be determined,
what constitutes an election until there is agreement as to what is
meant by election. The other party may, of course, by some express
and unequivocal act, done with that direct intent, declare his purpose to
treat the agent only as his debtor in such a manner as to leave no room
for doubt; but, in the majority of the cases, the intention of the other
party is to be gathered from his words and conduct, and the various
circumstances which surround the case. If the case were one of ordi-
nary election, any act which unequivocally indicated a purpose to pur-
sue either the principal or the agent would suffice ; 5 but it is quite clear
that we are not dealing with an ordinary case at all. This will be evi-
dent from a consideration of the cases which have actually been de-
cided, distinguishing between what is done before and what is done
after the discovery of the principal.
9 5 Q. B. Div. 414. 4 This seems to be the ground upon
1 See ante, 1743. which certain inconclusive cases, like
2 See, e. g. Merrill v. Kenyon, 48 Jablon v. Traynor, 135 N. Y. Supp.
Conn. 314, 40 Am. Rep. 174; Raymond 545, are to be based.
v. Crown, etc., Mills, 2 Mete. (Mass.) There is good discussion of "elec-
319. tion" by Lord Blackburn, in Scarf v.
A See Thomson v. Davenport; Ray- Jardine, 7 App. Gas. 345.
mond v. Crown, etc., Mills.
1334
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES [ 1/55
1755. I. Before discovery of principal. As has already been
pointed out, any act done before knowledge of the principal, unless it
amounts to an absolute discharge, extinction or merger of the debt,
cannot amount to such an election to charge the agent as will release
the principal when discovered.
Thus it has been held, the taking of an agent's promissory note or
acceptance for the price of goods sold to him by one who knew he was
acting as agent but who did not know for whom, will not conclude the
seller from holding the principal also when subsequently discovered,
nor will the fact that the vendor charged the goods to the agent, 7 or
sent him a statement of the account made out in his name, 8 supposing
him to be the principal, prevent the vendor from subsequently charging
the real principal when ascertained to be such.
The commencement of an action against the agent, before knowl-
edge, cannot be deemed an election ; 9 and even the recovery of a judg-
ment against the agent, before discovery of the principal, has been
held not to be a bar to an action against the principal when discovered
unless the principal discharges the judgment against the agent. 10 This
latter holding may, perhaps, be open to question, not because the re-
covery of judgment constitutes an election but upon the ground of mer-
ger. 11
e Merrill v. Kenyon, 48 Conn. 314, (N. Y.), 353; Steele-Smith Grocery
40 Am. Rep. 174. See also, Harper v. Co. v. Potthast, 109 Iowa, 413.
Tiffin Nat. Bank, 54 Ohio St. 425. "If Filing claim and having it allowed
the vendor on a sale made to an against estate of bankrupt agent be-
agent, take the promissory note of fore discovering principal, does not
the agent for the amount of the pur- preclude following the principal af-
chase, on failure of payment by the ter he is discovered. Sweeney v.
agent, the principal would be equally Douglas Copper Co., 149 N. Y. App.
liable to an action by the vendor, Div. 568.
founded upon the original considera- 10 Greenburg v. Palmieri, 71 N. J.
tion, as if the note had been given by 369, 8 Ann. Gas. 1024, 6 L. R. A. (N.
the principal himself." Keller v. L. 83; Lindquist v. Dickson, 98 Minn.
Singleton, 69 Ga. 703. S.) 729; Brown v. Reiman, supra.
7 Yates v. Repetto, 65 N. J. L. 294. " This question of merger is not
See also, Raymond v. Crown, etc., easy to dispose of. How many con-
Mills, 2 Mete. (Mass.) 319; French tracts are there? Is there the visible
v. Price, 24 Pick. (Mass.) 13; Guest contract of the agent and another,
v. Burlington Opera House Co., 74 invisible, contract of the principal?
Iowa, 457. Is there but one contract either of
s Henderson v. Mayhew, 2 Gill the principal or of the agent at the
(Md.), 393, 41 Am. Dec. 434. election of the other party? Is there
9 Brown v. Reiman, 48 App. Div. but one contract upon which prinei-
295; Ranger v. Thalmann, 39 Misc. pal and agent may be held jointly, as
420; Remmel v. Townsend, 83 Hun is said in several of the cases cited in
1335
I75^- I 758] THE LAW OF AGENCY [BOOK IV
1756. II. After discovery of principal. After knowledge of the
existence and identity of the principal comes to the other party, he is
in a position to choose between the principal and the agent. All of the
aspects of election are at once presented. If it be treated merely as a
matter of choice, the question is, when has a choice been indicated.
Treating the election in the manner suggested, however, the question
becomes : What acts of the other party, in view of the liability of both
principal and agent, manifest an intention not to hold the principal?
A number of situations have been considered in this connection.
I 757 Presenting claim. In one case, 12 after the discov-
ery of the principal, the creditor filed a claim against the estate of the
agent who had become insolvent. The proof was sent by mail. "Al-
most immediately" after this had been posted, the creditor's attorneys,
fearing that the presentation of this claim might prejudice the demand
against the principal, sent a telegram to stop its presentation, but the
telegram arrived too late as the proof had already been filed. Nothing
further, however, was done under it and no dividend was ever received.
As a mere matter of election, many cases could be imagined wherein
the filing of such a claim would be enough. Considered as evidence of
an intention not to hold the principal, it could be strongly urged that
merely keeping the claim alive against the agent was slight, if any, evi-
dence that the creditor did not intend to follow the principal also. It
was held not to be conclusive evidence, as a matter of law, of an inten-
tion to treat the agent as the only debtor. The argument was that, as
the mere commencement of an action against the agent was not conclu-
sive, the filing of the claim, which was less than the commencement of
an action, ought not to be.
1758. Commencement of action. As suggested in the
preceding case, the mere commencement of an action against the agent,
although this act is often regarded as an election in other fields, is not
a following note? Here are obvious- the estate of the Insolvent agent and
ly, but in a different form, the same received a small dividend upon it.
questions which arise under the doc- Held, that this did not defeat his ac-
trine of election. See the (dissent- tion against the principal,
ing) opinion of Lord Penzance, In In Hoffman v. Anderson (1902), 112
Kendall v. Hamilton, 4 App. Gas. 504. Ky. 893, the claim was presented
12 Curtis v. Williamson (1874), L. first against the estate of the princl-
R. 10 Q. B. 57. In Jones v. Johnson pal and a small dividend received.
(1888), 86 Ky. 530, while the creditor Held, that this did not prevent a sub-
had an action pending against the sequent proceeding against the agent
principal, he filed a claim against
CHAP. V]
LIABILITY OF PRINCIPAL TO THIRD PARTIES
[ 1758
here deemed to constitute a conclusive election as a matter of law, 13
whatever may be its force as evidence of an election as a matter of fact.
There is, moreover, as has been seen, authority for saying that principal
and agent may be simultaneously sued severally, and possibly even
jointly. 14
is Ferry v. Moore, 18 111. App. 135;
Curtis v. Williamson, supra; Ray-
mond v. Crown, etc., Mills, 2 Mete.
(Mass.) 319; Weil v. Raymond, 142
Mass. 206, 213; Cobb v. Knapp, 71 N.
Y. 348, 27 Am. Rep. 51.
In Raymond v. Crown, etc., Mills,
supra, the creditor took out a writ
against the agent before discovering
the principal; before the writ was
served he discovered the principal
and inserted his name also, and the
writ was thus served; later the cred
itor discontinued as to the agent.
Held, not as matter of law to defeat
the action against the principal. See
also, McLean v. Sexton, 44 App. Div.
520; Tew v. Wolfsohn, 77 App. Div.
454; Gay v. Kelley, 109 Minn. 101, 26
L. R. A. (N. S.) 101.
In Barrell v. Newby, 62 C. C. A.
382, 127 Fed. 658, the other party had
sued the agent and attached or gar-
nished funds of his, which suits were
still pending and plaintiff claimed
the right to proceed under them,
though no money had yet been re-
alized; they had also "elected to ap-
ply and did apply" certain funds in
their hands belonging to the agent
upon their claim. It was held that
this action was an election. The
court takes a more narrow view of
election than is taken in several other
cases.
i* In Pollock on Contracts (7th ed.
p. 105, Williston's Wald's Pollock p.
116) it is said: "When it is said that
he [the other party] has a right of
election this means that he may sue
either the principal or the agent or
may commence proceedings against
both but may only sue one of them
to judgment; and a judgment ob-
tained against one, though unsatis-
fied, is a bkr to an action against the
other."
In McLean v. Sexton, 44 App. Div.
520, [an action to foreclose a me-
chanic's lien] it is held that, under
the 'New York code at least, both
principal and agent may be sued in
the same action. This, however,
must be taken in connection with
what is there said to be the rule in
New York, that prosecuting the ac-
tion against either to judgment is not
an election.
In Tew v. Wolfsohn, 77 App. Div.
454, it is said: "Assuming that the
plaintiff is only entitled to judgment
against one of the defendants and
that he must elect which party he in-
tends to hold, he cannot be required
to make that election until the close
of the case." This case was affirmed
in the court of appeals, Tew v. Wolf-
sohn, 174 N. Y. 272, though that court
declined to treat it as a case of un-
disclosed principal. The dissenting
opinion of Cullen, J., discusses the
general question quite fully. But in
Cherrington v. Burchell, 147 App. Div.
16, the right to sue jointly is denied.
In Gay v. Kelley, 109 Minn. 101, 26
L. R. A. (N. S.) 742, it is held that
while prosecuting the action to judg-
ment against one of the parties
would be an election, where done with
full knowledge, still where -the al-
leged principal denies that he was
such, the other party may join both
in one action and cannot be compelled
to elect until the close of the testi-
mony. In Mussenden v. Raiffe, 131
111. App. 456, it is said that the
plaintiff may join both but must dis-
continue as to one before judgment.
1337
1759]
THE LAW OF AGENCY
[BOOK iv
I 759- Taking judgment against agent. Prosecuting the
action to judgment against the agent, after discovery of the principal,
has been held in several cases to constitute an election as a matter of
law. 15 As a mere matter of ordinary election, this is undoubtedly sound ;
as a matter of a possible merger it may also be sound ; but if election be
treated in the manner which has been suggested it cannot well be said
that changing the form qf the agent's obligation, or putting it into a con-
dition in which it can be more readily enforced, is inconsistent with an
intention to proceed against the principal also. Nothing' short of satis-
faction of the judgment against the agent would then release the prin-
cipal as a matter of law, and some cases have so held. 16
In Coaling Co. v. Howard, 130 Ga.
807. 21 L. R. A. (N. S.) 1051, a joint
action against several principals, only
one of whom was disclosed at the
time of contracting, was permitted.
There was no discussion of the ques-
tion.
In Weil v. Raymond, 142 Mass. 206,
it is said that while the third party
may proceed against each separately
(though not after judgment against
one) he cannot sue both jointly.
In Pittsburg Plate Glass Co. v.
Roquemore (Tex. Civ. App.), 88 S. W
449, it is said that if the other party
sues the agent who then discloses his
principal and the plaintiff brings him
into the action, the plaintiff must
then elect against which one he will
ask for judgment.
Priestly v. Fernie (1865), 3 H.
& C. 977; Kingsley v. Davis (1870),
104 Mass. 178; Weil v. Raymond, 142
Mass. 206 (dictum) ; Tuttill v. Wilson,
90 N. Y. 423; per Lord Ch. Cairns in
Kendall v. Hamilton, L. R. 4 App.
Cas. 504; Sessions v. Block, 40 Mo.
App. 569; Lindquist v. Dickson, 98
Minn. 369, 8 Ann. Cas. 1024, 6 L. R.
A. (N. S.) 729; Codd Co. v. Parker,
97 Md. 319; Murphy v. Hutchinson,
93 Miss. 643, 17 Ann. Cas. 611, 21 L.
R. A. (N. S.) 785; Semisch v. Guen-
ther, 10 Br. Col. L. R. 371; Hoffman v.
Anderson, 112 Ky. 873. See also
Coles v. McKenna, 80 N. J. L. 48.
is Beymer v. Bonsall, 79 Pa. 298.
This has been said to be the rule in
New York: McLean v. Sexton, 44 App.
Div. 520: Tew v. Wolfsohn, 77 App.
Div. 454, largely upon such approval
of Beymer v. Bonsall as is to be
found in Cobb v. Knapp, 71 N. Y. 348,
27 Am. Rep. 51; and First Nat. Bank
v. Wallis, 84 Hun, 376, neither one
precisely in point. But it seems to
be denied in Cherrington v. Burchell,
147 App. Div. 16. Maple v. Railroad
Co., 40 Ohio St. 313, 48 Am. Rep. 685,
so holds but it was an action of tort.
Beymer v. Bonsall is disapproved in
Barrell v. Newby, 62 C. C. A. 382, 127
Fed. 656.
As strong a statement, probably, as
has l:een made against this view is
that of Lord Chancellor Cairns, in
Kendall v. Hamilton, 4 App. Cas. 504
(a case of partnership). He said:
"Now, I take it to be clear that,
where an agent contracts in his own
name for an undisclosed principal,
the person with whom he contracts
may sue the agent, or he may sue the
principal, but if he sues the agent
and recovers judgment, he cannot af-
terwards sue the principal, even al-
though the judgment does not result
in satisfaction of the debt If any
authority for this proposition is need-
ed, the case of Priestly v. Fernie, 3
H. & C. 977, may be mentioned. But
the reasons why this must be the case
are, I think, obvious. It would be
clearly contrary to every principal of
1338
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES
1760. Taking agent's note. The effect of taking the
agent's promissory note or bill of exchange, after the discovery of the
principal, for a debt contracted before, is involved in some uncertainty.
If the paper be expressly taken as payment, no question could ordina-
rily arise. In a few States the paper is presumptively taken as payment,
justice that the creditor who had
seen and known and dealt with and
given credit to the agent, should be
driven to sue the principal if he does
not wish to sue him, and, on the other
hand, it would be equally contrary to
justice that the creditor on discover-
ing the principal, who really has had
the benefit of the loan, should be
prevented suing him if he wishes to
do so. But it would be no less con-
trary to justice that the creditor
should be able to sue first the agent
and then the principal, when there
was no contract, and when it was
never the intention of any of the par-
ties that he should do so. Again, if
an action were brought and judgment
recovered against the agent, he, the
agent, would have a right of action
for indemnity against his principal,
while, if the principal were liable
also to be sued, he would be vexed
with a double action. Farther than
this, if actions could be brought and
judgments recovered, first against the
agent and afterwards against the prin-
cipal, you would have two judgments
in existence for the same debt or
cause of action; they might not nec-
essarily be for the same amounts,
and there might be recoveries had, or
liens and charges created, by means
of both, and there would be no mode,
upon the face of the judgments, or
by any means short of a fresh pro-
c^eding, of shewing that the two
judgments were really for the same
debt or cause of action; and that sat-
isfaction of one was, or would be, sat-
isfaction of both." [But in Judd Lin-
seed Oil Co. v. Hubbell, 76 N. Y. 543,
it was held that it was merely an ir-
regularity if two separate judgments
for slightly different amounts were
taken against two partners respec-
tively.]
The opinion in Beymer v. Bonsall,
79 Penn. 298, which is the leading
case on the other side, is very brief
and was per curiam. The court said :
"Undoubtedly an agent who makes a
contract in his own name without dis-
closing his agency is liable to the
other party. The latter acts upon his
credit and is not bound to yield up
his right to hold the former personal-
ly, merely because he discloses a prin-
cipal who is also liable. The princi-
pal is liable because the contract was
for his benefit, and the agent is bene-
fitted by his being presumably the
creditor, for there can be but one
satisfaction. But it does not follow
that the agent can afterwards dis-
charge himself by putting the creditor
to his election. Being already liable
by his contract, he can be discharged
only by satisfaction of it, by himself
or another. So the principal has no
right to compel the creditor to elect
his action, or to discharge either him-
self or his agent, but can defend his
agent only by making satisfaction for
him."
In McLean v. Sexton, 44 App. Div.
520, after quoting with approval the
rule in Pollock's Contracts that the
other party may sue either principal
or agent or may commence proceed-
ings against both, but may sue only
one of them to judgment, it is said:
"If they may be sued in separate ac-
tions, there is no good reason why
both the principal and agent who are
liable for a debt should not be sued
in the same action. Both will be dis-
charged by the satisfaction of the
debt, and neither can be discharged
without it."
1339
I76l,I/62j THE LAW OF AGENCY [BOOK IV
and would ordinarily release the principal. 17 In the majority of the
States, however, the paper is not presumptively payment and such a
conclusion would not follow. 18 In a case 10 in Massachusetts, where a
note is presumptively payment, the court said : "If the plaintiff, knowing
O. to be the agent of the defendant, accepted his note in payment for
property sold to the defendant, intending to receive it as payment and
to give exclusive credit to O., it would operate as payment ; and he could
not thereafter fall back upon the defendant for the price of the prop-
erty, although the note of O. should be dishonored." This, however,
was not a case of undisclosed principal at all, but of election between a
known principal and a known agent tendering his individual responsi-
bility, a case which may be analogous but is not identical. In a simi-
lar case 20 in Missouri, where a note is held to be not presumptively pay-
ment, 21 it was said that "where the creditor with knowledge of the prin-
cipal's liability sees fit to take the individual note of the agent, without
taking, at the time of the transaction, any steps indicative of an intent to
hold the principal, this is equivalent to a discharge of the principal as
a matter of law." Considering that these two rules were inconsistent,
the court in a later case suggested that the conclusion in the agency case
might perhaps be regarded as an exception to the previous more general
rule. 22
On the principle of election suggested, while the taking of the agent's
note may have some effect as evidence, it is difficult to see why, unless
actually taken as payment, it should operate as matter of law to dis-
charge the principal.
1761. Charging goods to agent. A fortiori would there
be no release merely because the goods were charged, or a bill made
out, to the agent after the discovery of the principal. 23
1762. Mere delay Statute of limitations. The question
of the effect of delay is not easily dealt with. Delay reasonably leading
17 Paige v. Stone, 10 Mete. (Mass.) bone v. Tucker, 15 Wend. (N. Y.)
160, 43 Am. Dec. 420; Wilkins v. Reed, 498; Muldon v. Whitlock, 1 Cow. (N.
6 Greenl. (Me.) 220, 19 Am. Dec. 211; Y.) 290, 13 Am. Dec. 533.
French v. Price, 24 Pick. (Mass.) 13; " Perkins v. Cady, 111 Mass. 318.
Green v. Tanner, 8 Mete. (Mass.) 20 Ames Packing & Prov. Co. v.
411; Chapman v. Durant, 10 Mass. Tucker, 8 Mo. App. 95.
47; Tudor v. Whiting, 12 Mass. 212. 21 Commiskey v. McPike, 20 Mo.
is See Atlas S. S. Co., v. Columbian App. 82.
Land Co., 42 C. C. A. 398, 102 Fed. 22 Schepflin v. Dessar, 20 Mo. App.
358, where the question is fully dis- 569.
cussed though the case was not really 23 Dyer v. Swift, 154 Mass. 159;
one of undisclosed principal. Rath- Gardner v. Bean, 124 Mass. 374.
1340
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES [ 1763-1765
to and followed by a detrimental change of position would bar recovery ;
but unless it thus results in an alteration of the situation it seems quite
certain that no ordinary delay in seeking to charge the principal will, as
a matter of law, operate to release him. But a delay so long that all
right of action against the agent is barred by the statute of limitations,
will, it is held, ordinarily bar a recovery against the principal. 24
1763. Intermediate party must have been agent and not princi-
pal. Where it is sought to hold one as undisclosed principal, for
example for goods bought, it is essential that the intermediate party
through whom the goods were secured shall have been an agent of the
principal sought to be held and not his vendor. 25 Thus, for illustration,
if A orders goods of B as seller, but B, not happening to have them on
hand, buys them in his own name of C -and supplies them to A, A will
not be liable to C as undisclosed principal if B fails to pay C. A would
not be liable to C in such a case if he had been disclosed. There was no
agency and no principal disclosed or undisclosed.
The same doctrine would, of course, apply to other cases than the
sale of goods to leasing, borrowing, employing, and the like.
1764. Alleged agent must have been really such. It must be
kept in mind that the rules here considered contemplate the actual ex-
istence of authority from a principal, though he be not disclosed. There
is no more warrant for holding an undisclosed party liable for acts
which he did not authorize than there is for holding a disclosed party
in such a case. In fact there is often much less warrant. It is therefore
an indispensable part of the plaintiff's case to show that the alleged
principal was really such as to the act in question. 26
1765. It must also usually appear that the fact that the
undisclosed principal was undisclosed was not so far in violation of
his authority or consent as to practically destroy the agency. An au-
thority to contract for the purchase of goods, for example, in the prin-
cipal's name and upon his credit only, can ordinarily not be deemed
to warrant a contract in the agent's name and upon his credit. It is, of
2* In Gay v. Kelley, 109 Minn. 101, 383, 37 Am. Rep. 369; Consol. Safety
26 L. R. A. (N. S.) 742, a delay for Pin Co. v. Humbert, 128 N. Y. Supp.
a year was held not conclusive, and 710.
a verdict against the principal was 2 Young v. Inman, 146 Iowa, 492;
upheld. Delay until action against Moline v. Neville, 38 Neb. 433; Dick-
agent is barred by statute of limi- erson v. Rogers, 114 N. Y. 405; Mc-
tations bars action against principal. Kenna v. Stayman Mfg. Co., 112 N.
Ware v. Galveston City Co., Ill U. S. Y. Supp. 1099; Edwards v. Annan
170. (Tex. Civ. App.), 127 S. W. 299; Harp-
25 See Stoddard v. Ham, 129 Mass. er v. Sinclair, 7 Wash. 372. See also,
1341
i;66, 1767] THE LAW OF AGENCY [BOOK IV
course, true that custom, or the distinction between instructions and
authority, 27 or ratification with knowledge, may affect the matter, but
in the absence of some element of that nature the rule must be as stated.
1766. Where goods are bought upon credit it must also
be usually a part of the plaintiff's case that a purchase upon credit was
authorized, subject to the qualifications mentioned in the preceding par-
agraph. A principal who supplies an agent with funds with which to
buy and pay for goods can not, it is held, ordinarily be made liable where
the agent, concealing the principal, buys the goods upon his own credit
and makes some other disposition of the money. 28
Moreover there can ordinarily in such a case be no ratification of
which the other party may avail himself, in view of the rule denying
ratification by an undisclosed principal.
1767. "Apparent" authority. Granting that an agency
actually exists, it is held that the usual incidents attach to it, and,
among others, that the undisclosed principal is liable for acts which
fall within the usual scope of such an agency, even though the principal
may have given private instructions to the contrary. Thus where the
defendants put an agent in charge of their business to be carried on in
his own name and gave him authority to buy certain classes of goods
but instructed him not to buy other appropriate classes because they
would furnish these goods themselves, it was held that defendants were
nevertheless liable to the plaintiff for the price of goods of the forbid-
den class bought by the agent, although the plaintiff at the time of the
sale knew nothing of the agency and supposed the agent to be the prin-
cipal. 28 Wills J., said: "Once it is established that the defendant was-
Pitkin v. Benfer, 50 Kan. 108, 34 Am. of the disclosed principal see ante,
St. Rep. 110; Brown v. Tainter, 114 913, 914.
N. Y. App. Div. 446. 29 Watteau v. Fenwick, [1893] 1 Q.
27 Thus, in the converse case, it is B. 346. Followed in Kinahan v.
held that the principal may be liable, Parry, [1910] 2 K. B. 389, distinguish-
although he instructed the agent to ing Daun v. Simmins, 41 L. T. 782.
buy in his (the agent's) own name, But see, Kinahan v. Parry, [1911] 1
the seller being ignorant of the spe- K. B. 459; Edmunds v. Bushell, L. R.
cial instructions. Perth Amboy Mfg. 1 Q. B. 97, was relied upon, where
Co. v. Condit, 21 N. J. L. 659. See Cockburn, C. J., said: "If a person
also, Calder v. Dobell, L. R. 6 C. P. employs another as an agent in a
486. character which involves a particular
28 Laing v. Butler, 37 Hun (N. Y.), authority, he cannot by a secret res-
144; Fradley v. Hyland, 37 Fed. 49, ervation divest him of that author-
2 L. R. A. 749; Harder v. Continental ity." Watteau v. Fenwick is followed
Printing Co., 64 N. Y. Misc. 89 in Brooks v. Shaw, 197 Mass. 376.
For the ordinary rule in the case
CHAP. V]
LIABILITY OF PRINCIPAL TO THIRD PARTIES
[
the real principal. The ordinary doctrine as to principal and agent ap-
plies 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, not-
withstanding 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 per-
son supplying the goods knew nothing of the existence of a principal.
But I do not think so. Otherwise, in every case of undisclosed princi-
pal, or at least in every case where the fact of there being a principal
was undisclosed, the secret limitation of authority would prevail and
defeat the action of the person dealing with the agent, and then discov-
ering that he was an agent and had a principal." A number of other
cases have adopted similar views, as will be seen from the note.
1768. This doctrine, however, has been severely criti-
cised. 30 It has been thought by some to be merely one more extension
of a confessedly anomalous principle. It clearly can not be sustained
A similar conclusion had previously
been reached in Hubbard v. Tenbrook
(1889), 124 Pa. 291, 10 Am. St. Rep.
585, 2 L. R. A. 823. In this case an
agent had been put forward to man-
age a business apparently as owner
but with instructions not to buy
goods' on credit. He did so buy of
plaintiff and his principal was held
liable. Mitchell, J., said: "We have
thus the question presented whether
an agent can be put forward to con-
duct a separate business in his own
name, and the principal escapes lia-
bility by a secret limitation on the
agent's authority to purchase. The
answer is not at all doubtful. A man
conducting an apparently prosperous
and profitable business obtains credit
thereby, and his creditors have a
right to suppose that his profits go in-
to his assets for their protection in
case of a pinch or an unfavorable
turn in the business. To allow an
undisclosed principal to absorb the
profits, and then when the pinch
comes, to escape responsibility on the
ground of orders to his agent not to
buy on credit, would be a plain fraud
on the ruLlic. No exact precedent
has been cited. None is needed. The
rule so vigorously contended for by
the plaintiff in error that those deal-
ing with an agent are bound to look
to his authority is freely conceded,
but this case falls within the equally
established rule that those clothing an
agent with apparent authority, are,
as to parties dealing on the faith of
such authority, conclusively estopped
from denying it." Hubbard v. Ten-
brook was followed in Cracken v.
Hamburger, 139 Pa. 326; Ernst v.
Harrison, 86 N. Y. Supp. 247; Lamb
v. Thompson, 31 Neb. 448; Patrick v.
Great Falls Merc. Co., 13 N. D. 12;
Napa Valley Wine Co. v. Cassanova,
140 Wis. 289; Mississippi Valley
Const. Co. v. Abeles, 87 Ark. 374; and
Allison v. Sutlive, 99 Ga. 151, are to
the same effect.
30 For example, by Mr. Ewart in his
book on Estoppel pp. 246-248; by
the Solicitors' Journal, Vol. 37 p. 280;
in 10 Columbia Law Review, p. 763.
It is doubted in 9 Law Quarterly Re-
view, p. 111. The court in Watteau
v. Fenwick did not cite, or apparently
have their attention called to, Miles
v. Mcllwraith (1883), 8 App. Cas. 120,
rauH
1343
i?68]
THE LAW OF AGENCY
[BOOK iv
upon the ordinary principles of estoppel as applied to agency. The
person in charge did not appear to be an agent but an owner. If the
question had been what an ostensible owner may do, it would be easier
of solution. If he had attempted to deal with the goods, or even pos-
sibly to get credit in reliance upon their ownership, 31 there might be
and although the precise issue wag
not the same the general question
was similar and there is much in the
opinions in the cases not easy to
reconcile. Miles v. Mcllwraith was
an action for a penalty brought un-
der a statute imposing penalties up-
on any one who being in the public
service should be interested in a pub-
lic contract. Defendant was a mem-
ber of a Colonial legislature. The
colony was about to lease boats. De-
fendant was part owner of a number
of steamships for which a certain
firm (the agents herein) were agents.
This firm proposed to offer boats to
the government and, In order not
to involve defendant, he required the
agents not to offer any ships in which
he was interested as part owner.
With reference to one ship in particu-
lar it was agreed that the agents
should lease her at a rent independ-
ent of any they might obtain on a
lease to the government. In violation
of the directions the agents leased
this ship to the government on be-
half of the owners and in such form
as would bind defendant as one of
them. The colonial agent who acted
for the government did not know of
defendant's connection with the boat.
It was contended that defendant had
violated the statute and was subject
to the penalty. But it was held that
as defendant would not have been
liable to the government (since the
agents violated the instructions and
there was no apparent authority to
bind the defendant as he was un-
known) the defendant was not
amenable to the statute. A distinc-
tion may be made here upon the
ground that the business done was
not so done with the consent of the
alleged principal. Daun v. Simmins,
41 L. T. 783, was not cited in Watteau
v. Fenwick, but the court in Kinahan
v. Parry, supra, thought it distin-
guishable upon the ground that the
person in charge was known to be
only a manager.
In Becherer v. Asher (1896), 23
Ont. App. 202; Watteau v. Fenwick and
Miles v. Mcllwraith were considered,
and it was held that undisclosed prin-
cipals who had employed an agent to
carry on business (in a store rented
by him) for the sale of their goods
in his name (his authority being lim-
ited to the sale of goods supplied by
his principals and his compensation
being what he obtained for them
above invoice prices), were not liable
for goods purchased by him in his
own name and which he added to the
stock in the store. Watteau v." Fen-
wick was distinguished on the ground
that there the agent had authority to
purchase certain goods though he was
instructed not to buy any of the sort
which he did buy, but here he had no
authority to buy any goods at all.
One of the judges said he thought
that Watteau v. Fenwick was well
decided; another said: "It has been
sharply criticised, and, it would seem,
not without reason."
31 In several partnership cases it
has been held that firm creditors of
an ostensible partnership, composed
of apparent partners and the actual
owner, were to be preferred to indi-
vidual creditors of the actual owner
upon a theory that the holding out
the partnership as proprietor of the
business estopped the owner and
those claiming under him from set-
ting up the real situation. Kelly v.
Scott, 49 N. Y. 595; Thayer v. Hum-
1344
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES [1769-177!
found analogies which would throw light upon the situation. But the
question was not one of these but of a purely personal liability. The
most tenable explanation is probably this : The defendants when they
put a general agent in charge actually gave him by implication all the
incidental authorities which usually attend such a managerial position.
Among these would be authority to buy such goods as those in question,
which are usually dealt in at such a place. The defendants then sought
to narrow this actual authority by instructions which were either secret
or which were designed to limit usual authority and were not made pub-
lic. Within well settled rules, such limitations are ineffective.
1769. Right of assignee of other party against principal.
Where, even before the discovery of the principal, the other party as-
signs his rights under the contract to a stranger, it is held that the as-
signee will have the same right to follow the principal when discovered
which the assignor would have had. 32
1770. Apparent agent the real principal. As has already been
pointed out in an earlier section, 33 there may be cases in which the un-
disclosed principal proves to have been no other than the alleged agent
himself. In such a case, unless it can be said that the terms of the con-
tract are so explicit as to exclude his liability, there seems to be no rea-
son why he may not be held.
1771. Excluding principal's liability by terms of contract. In
Humble v. Hunter, 34 where by the terms of the contract, one who was
phrey, 91 Wis. 276, 51 Am. St. Rep. 82 Berry v. Chase, 102 C. C. A. 572,
887, 30 L. R. A. 549; Van Kleeck v. 179 Fed. 426.
McCabe, 87 Mich. 599, 24 Am. St. Rep. Ante, 1403. Compare Paine v.
182. See also, Adams v. Albert, 155 Loeb, 37 C. C. A. 434, 96 Fed. 164.
N. Y. 356, 63 Am. St. Rep. 675; Cod- 3*12 Q. B. 310. Followed in Form-
ville v. Smart, 15 Ont. L. Rep. 357. by Bros. v. Formby, 102 L. T. Rep.
Also, Ex parte Hayman, 8 Ch. Div. 11, 116. Compare Schmaltz v. Avery, 16
where, under the English Bankruptcy Q. B. 655; Sharman v. Brandt, L. R.
Act, it was held that property of 6 Q. B. 720; Harper & Co. v. Vigers,
which the firm had the "reputed own- [1909] 2 K. B. 549; Paine v. Loeb, 37
ership" will be administered as firm C. C. A. 434, 96 Fed. 164; Humble v.
assets. Hunter is followed in Moore v. Ce-
To the contrary, on the theory that ment Co., 121 N. Y. App. Div. 667.
estoppel in such cases is purely per- See also, Winchester v. Howard, 97
sonal, see Broadway Nat. Bank v. Mass. 303, 93 Am. Dec. 93.
Wood, 165 Mass. 312; Himmelreich v. In Brown v. Tainter, 114 N. Y.
Shaffer, 182 Pa. 201, 61 Am. St. Rep. App. Div. 446, where money was
698; Swanson v. Sanborn, 4 Woods, loaned upon the note of one person,
625, Fed. Cas. 13,675; Johnson v. Wil- endorsed by another, now sought to
liams, 111 Va. 95, 31 L. R. A. (N. be held as an undisclosed principal,
S.) 406. the majority of the court held that
85 1345
1772] THE LAW OF AGENCY [BOOK iv
actually an agent but ostensibly a principal described himself in a char-
ter-party as the owner, it was held that the undisclosed principal could
not show that he was the owner and sue upon the contract. Lord Den-
man said, "You have a right to the benefit you contemplate from the
character, credit, and substance of the party with whom you contract."
In Kayton v. Barnett 35 it was held that the undisclosed principal could
be held, even though, at the time of making the contract, the plaintiff
had inquired if the defendant was really the buyer and had declared
that he would not sell the goods if that was the fact. Notwithstanding
this declaration, said the court, the plaintiff did in fact sell the goods
to the defendant, although he did not know that he was doing so ; and
it did not now lie in defendant's mouth to assert that he was not liable
because he had succeeded in inducing the plaintiff to do that which he
did not intend to do. This case does not fall within Lord Denman's
reason, because the plaintiff here was not deprived of any benefit which
he may have contemplated from the personality of the party with whom
he ostensibly dealt, he still had that, and the only question was whether
he might also avail himself of the fact that defendant was the principal.
But other questions arise. May the terms of the negotiation be used
to show that the real agent was not dealt with as an agent at all, but
was the actual as well as the ostensible principal ? If so, there was no
agency and no undisclosed principal, and hence no room for the appli-
cation of the doctrine under consideration. 30 Suppose, also, that in a
formal contract it is made a term that no undisclosed person shall ac-
quire rights or be subject to liability thereon. May it afterward be as-
serted that there was, nevertheless, an undisclosed principal who may
be made liable ? 3T
1772. Cases in which the agent may not be liable. In practi-
cally all of the cases thus far considered, it has been assumed that the
agent was liable upon the contract, and he ordinarily is liable. It is en-
tirely possible, however, that a contract may be made in such terms as
the doctrine of the undisclosed prin- Helvetia Ins. Co., 163 Fed. 644, 'It
cipal could not apply to change "the was held that an undisclosed princi-
relations established between parties pal could not be held in contradiction
by their direct personal contracts, of of the terms of the written contract,
such a character as to exclude the and that therefor where it was pro-
idea of agency." vided in an insurance policy that cer-
35 Kayton v. Barnett, 116 N. Y. 625. tain funds only should be liable for
3 This is apparently the view of claims arising under it, another com-
the lower court in Kayton v. Bar- pany could not be held as an undis-
nett, 54 N. Y. Super. Ct. 78. closed principal of the one which is-
37 in Western Sugar Ref. Co. v. sued the policy.
1346
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES [ 1773
to exclude his liability, as, for example, where it is expressly made to
bind an announced but as yet unnamed principal, but is not under any
circumstances to charge the agent.
There would seem to be no doubt also that the undisclosed principal
of an infant agent would be liable like any other, or of a married woman
at common law or of a slave, as agent.
There may also doubtless be cases, wherein for some other purely
personal reason the agent can not be held, in which the principal may
nevertheless be charged.
The contract in any such case would not necessarily be void.
II
RESPONSIBILITY OF THE PRINCIPAL FOR THE AGENT'S STATEMENTS,
REPRESENTATIONS AND ADMISSIONS.
1773. In general. Important and difficult questions arise re-
specting the power of the agent to affect the principal by the agent's
statements, representations and admissions, either when made directly
and ultimately or incidentally and as a concomitant of some other act.
Such statements, representations and admissions, may be such as af-
fect the principal's liability in contract or contractual relations, or in
tort.
It is, of course, ordinarily true that one person's statements, repre-
sentations, or admissions can affect himself only ; and, if it be contended
that they affect some one else, some relation or causal connection be-
tween the latter and the former which alters this general rule must be
shown.
It is also ordinarily true that we do not, in our law, prove facts
merely by permitting one person to testify to what some other person,
who is not a party to the proceeding, may have said about them. The
rules against hearsay usually prevent that. If, then, such statements
are to be admitted, it is ordinarily essential to show some relation or
connection between the person speaking and the one against whom his
utterances are offered, which will take the case out of the ordinary rule.
The relation or connection which is offered here is that of agency,
and the question is how far that fact may serve to charge the principal
with responsibility for the statements of one who, if he were not the
former's agent, would affect himself alone by what he says.
1347
I774-I77 6 ] THE LAW OF AGENCY [BOOK IV
1774. Agent's authority must be first shown. It is necessary
to keep constantly in mind in dealing with the subject of the agent's
statements, representations and admissions that the fact of his agency
is a condition precedent. Before proof, therefore, can be made of his
statements, representations or admissions it is essential that the fact
that he was an agent at the time of making them shall either be admitted
or be shown by evidence making a prima facie case. 38
1775. Authority can not be shown by agent's admissions. It
must also be kept in mind, that, as has been already seen, 39 the fact of
the agent's authority can neither be established, nor can its scope or
effect be extended or enlarged, by his own statements, representations
or declarations, so as to charge the principal. There must be first a
prima facie showing of his authority by other evidence, before* the ad-
missions, declarations or representations, if otherwise competent, can
be admitted. 4 *
1776. Representations by agent. Representations made by an
agent may affect his principal in a variety of cases. They may be ex-
pressly and specifically authorized, and bind the principal because they
were so authorized. Authority to make them may properly be implied
from an express authority to do some act or to act in some capacity. An
agent authorized to lease his principal's house may, by implication, be
found to have authority to make certain representations respecting it ;
an agent authorized to sell goods may be found, by implication, to have
authority to make certain representations respecting their quality, fit-
ness, and the like. When made as a term of the contract these repre-
sentations may become warranties and bind the principal as such. This
subject has already been considered. 41
False and fraudulent representations by an agent may -affect the prin-
cipal because he has expressly or impliedly authorized representations
to be made by the agent and the latter made false and fraudulent ones.
Even though no representations were contemplated, the principal may
be affected by the false and fraudulent representations of his agent if
made in the course of his employment. When they were the induce-
ment to a contract, the principal, by taking the benefits of the contract,
:
*8 See Smith v. Kron, 96 N. C. 392; v. Cryder, 55 N. J. L. 329; Rumbough
Willcox v. Hines, 100 Tenn. 524, 66 v. Southern Impl. Co., 112 N. C. 751,
Am. St Rep. 761. vfcftl : 34 Am. St. Rep. 528: Gates v. Max,
: - See ante, 285. 125 N. C. 139; Summer-row v. Brauch,
4 See ante, 292; Taylor v. Com- 128 N. C. 202.
mercial Bank, 174 N. Y. 181, 95 Am. *i See Warranties by Agent
St. Rep. 564, 62 L. R. A. 783; Dowden
1348
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES [ 1777
may be often found to have assumed responsibility for the means by
which it was procured. They may in a proper case justify a rescission,
or they may be ground for charging the principal in damages. The sub-
ject will be more fully considered in a later subdivision. 42
Representations made by an agent, like those made by the principal
in person, would be subject to the rule excluding all other terms than
those finally included in a written contract. And the authority of the
agent to make representations which shall affect his principal may be
cut off by notice or by express stipulation.
1777. Principal liable for statements and representations ex-
pressly authorized. In the first place it may be noted that the prin-
cipal is of course responsible for the statements and representations
which he has expressly authorized. It must be kept in mind that the
speaking of words is as much an act as any other physical manifesta-
tion, and may be authorized as readily as any other act. In many cases
the speaking of words may be the very act authorized. In other cases
the use of words may be the only means by which the end authorized
can be accomplished. Thus if the principal authorizes an offer to be
made or accepted, or directs a notice to be given or a demand to be
made, the speaking of the words which constitute the offer or the ac-
ceptance or which make up the notice or the demand is the very act
which the principal has directly and expressly authorized. So if the
principal authorizes a contract to be made or modified or rescinded or
any other negotiation to be entered upon or conducted for which the
use of language is essential, the speaking of the words or the use of the
language necessary for the accomplishment of the purpose is an act
done by the direct authority of the principal. A moment's consideration
will suffice to show in how large a proportion of the cases the act to be
done by an agent consists of or involves the use of language by the
agent. If the distinction between an agent and a servant heretofore sug-
gested be considered, the distinguishing feature of the agent may appear
to be that he speaks as well as acts for his principal. And when spoken
language is referred to, it will be obvious that written language is also
to be included. Written words when appropriate may be just as much
the direct object of the authority as spoken words.
In view of these considerations it is evident that there may be oral
or verbal acts as well as any other, and that the principal will be as re-
sponsible for a verbal act which he has authorized as he will be for any
other.
42 See post, Liability for Fraudulent Acts and Representations.
1349
1778] THE LAW OF AGENCY [BOOK IV
1778. Statements of agent expressly authorized to give, or re-
ferred to for, information. It is not at all uncommon for the prin-
cipal to put an agent in a position in which the making of statements
or representations or the giving of information is the act expressly con-
templated and directed. Thus if the principal refers a person to his
agent for information, the agent is clearly authorized to give informa-
tion for the principal upon the subject indicated. If a principal carry-
ing on an extensive business establishes a bureau of information, or
designates an agent to whom inquiries may be referred or of whom in-
formation may be obtained, the giving of such information or the an-
swering of such inquiries is an act which the principal has directly au-
thorized.
The giving of information or the answering of inquiries in such a
case must, of course, be confined to the subjects which have actually or
apparently been confided to him to answer for ; but within that sphere
persons, expressly or impliedly referred to him, who act in good faith
and with reasonable prudence may rely upon the information as infor-
mation given by the principal.* 3
For similar reasons, if the principal refers a person for information
to another, though not then his agent, as a person who is authorized to
speak for the principal and on his account, what, such person says when
so referred to respecting the matter in question will be admissible, 44 but
not unless he was referred to as a person authorized to speak on the
principal's account.* 5
43 King v. Livingston Mfg. Co., plied to a telephone operator who
Ala. , 60 South. 143; Craig v. Craig, conducted a conversation between the
3 Rawle (Pa.), 472, 24 Am. Dec. 390; parties. Oskamp v. Gadsden, 35 Neb.
Chapman v. Twitchell, 37 Me. 59, 58. 7, 37 Am. St. Rep. 428.
Am. Dec. 773; Over v. Schiffling, 102 44 Chadsey v. Greene, 24 Conn. 560;
Ind. 191; Hahl v. Brooks, 213 111. 134; Over v. Schiffling, 102 Ind. 191;
Gott v. Dinsmore, 111 Mass. 45; Green Chapman v. Twitchell, 37 Me. 59,. 58
v. Boston, etc., R. Co., 128 Mass. 221, Am. Dec. 773; Armstrong v. Crump,
35 Am. Rep. 370. See also, cases 25 Okla. 452; Thayer v. Davis, 75 Wis.
cited in following section: 205.
Interpreters. When two persons This necessary qualification is
voluntarily agree upon a third to act made very clear in Rosenbury v.
as interpreter between them, each Angell, 6 Mich. 508. Here a person
makes the interpreter his agent to whose financial responsibility was in
communicate for him with the other, question referred the inquirer to
and each has the right to rely upon "the business men" of a certain vil-
what is so communicated as being an lage in another state where he had
authorized communication. Miller v. formerly lived. Held, that this did
Lathrop, 50 Minn. 91; Terrapin v. not make competent the statements
Barker, 26 Okla. 93; Sertant v. Crane of a business man living in that vil-
Co., 142 111. App. 49. Same rule ap- lage concerning certain specific acts
1350
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES
[ 1779
1779. Statements of agent impliedly referred to for information.
Instead of being expressly put foward to give information or answer
inquiries as contemplated in the preceding section, the express author-
ity of an agent may be directed to some other act, and yet the giving of
information, the answering of inquiries or the making of other state-
ments or representations, may be so incidental to the doing of the act
expressly authorized as fairly to be deemed to be included within the
scope of the agent's authority. Thus where a passenger by railroad in-
quired of the baggage-master and the station-master for his trunk,
which should have come as baggage, it was held that the statements of
these agents in response to the inquiry were admissible in evidence
against -the principal. "It was part of the duty of those agents," said
the court, "to deliver the baggage of passengers, and to account for the
same, if missing, provided inquiries for it were made within a reason-
able time. These declarations were therefore made by them as agents
of the defendants, within the scope of their agency, and while it con-
tinued." 4e So where a person who proposed to become a passenger on
defendant's railroad, desiring information respecting the sort of ticket to
of the person so referring while he to the plaintiffs' demand were made
lived in that village. Such a refer-
ence, said the court, could mean no
more than that the village in ques-
tion was a place where the inquirer
could properly make such investiga-
tions as he desired upon his own ac-
count; but the declarations of a par-
ticular resident could not be admis-
sible unless he had in some wise been
made agent to speak for the party
giving the reference, and that "where
the reference is made to all the busi-
ness men of a commercial town of
several thousand inhabitants, with-
out distinction of name or character,
the idea of agency becomes too ex-
travagant to be reconciled with the
theory of sanity in the party making
the reference." See also, Aldridge v.
Aetna L. Ins. Co., 204 N. Y. 83, 38 L.
R. A. (N. S.) 343.
46 Morse v. Conn. River Railroad
Co., 6 Gray (Mass.), 450. To same
effect see: Lane v. Boston & Al-
bany Railroad Co., 112 Mass. 455.
(The court here said: "The declara-
tions of their freight agent in answer
in the performance of his duty, and
therefore rightly admitted in evi-
dence against the defendants. The
form in which they were expressed
might affect the weight which the
jury would allow them, but did not
make them inadmissible.") Gott v.
Dinsmore, 111 Mass. 45; Green v.
Boston & Lowell Railroad Co., 128
Mass. 221, 35 Am. Rep. 370; Kivett v.
West. Un. Tel. -Co., 156 N. Car. 296;
Rutland v. Southern Ry. Co., 81 S.
Car. 448; Curtiss v. Avon, etc., Rail-
road Co., 49 Barb. 148; Baltimore &
Ohio R. R. v. Campbell, 36 Ohio St.
647, 38 Am. Rep. 617; Illinois Cent.
R. Co. v. Tronstine, 64 Miss. 834;
Lev! v. Missouri, etc., Ry. Co., 157 Mo.
App. 536; Burnside v. Grand Trunk
R. R. Co., 3 N. H. 554, 93 Am. Dec.
474; Lynchburg Tel. Co. v. Bokker,
103 Va. 594; Central Railroad &
Banking Co. v. Skellie, 86 Ga. 686;
McCotter v. Hooker, 8 N. Y. 497. Com-
pare Lafayette, etc., R. Co. v. Ehman,
30 Ind. 83.
1351
THE LAW OF AGENCY
[BOOK iv
purchase in view of certain facts, applied to the ticket agent for infor-
mation, it was held that he was justified in relying upon the informa-
tion which the agent gave him, there being nothing to indicate that it
was unauthorized, and that the company was bound by the information
so given. Said the court : "The plaintiff desires information. To whom
shall he go to obtain it ? To whom can he go but to the person appointed
by the company for the purpose of giving such information and selling
the proper tickets ?"* 7 So, in general terms, it was said by the supreme
court of the United States : "The declarations made by an officer or
agent of a corporation, in response to timely inquiries properly ad-
dressed to him and relating to matters under his charge, in respect to
which he is authorized in the usual course of business to give informa-
tion, may be given in evidence against the corporation." **
47 Burnham v. Grand Trunk Ry.
Co., 63 Me. 298, 18 Am. Rep. 220.
48 Xenia Bank v. Stewart, 114 U. S.
224, 29 L. Ed. 101.
Inquiries made of a station agent by
one about to load a car, whether there
were trains coming from which dan-
ger might be apprehended, are proper,
and his answers are in the line of his
duty and admissible. Chicago, etc.,
Ry. Co. v. Cox, 76 C. C. A. 127, 145
Fed. 157. To same effect, see Bachant
v. Boston & Maine R. R., 187 Mass.
392, 105 Am. St Rep. 408. So of
statements made by a conductor in
response to inquiries of a passenger
in regard to the dangerous appear-
ance of a fellow .passenger. St.
Louis T. M. &'S. Ry. Co. v. Green-
thai, 23 C. C. A. 100, 77 Fed. 150;
statements made by a general freight
agent, with whom the matter had
been taken up, that a car in question
had not been re-iced according to
contract. Pennsylvania R. Co. v.
Orem Fruit Co., Ill Md. 356. (To
same effect: Dean v. Toledo, etc., R.
Co., 148 Mo. App. 428.) And state-
ments by a telegraph agent as to
whether a message had been deliv-
ered. Garland v. Western Un. Tel.
Co., 118 Mich. 369, 43 L. R. A. 280.
Where a person having a claim
against an express company for lost
goods is referred from one agent to
another until he reaches a district
general manager who takes the mat-
ter up, the admissions and state-
ments of the latter are competent.
Hill v. Adams Express Co., 77 N. J.
L. 19. Same effect: Adams Express
Co. v. Berry, 35 App. D. C. 208, 31 L.
R. A. (N. S.) 309.
But where an express company was
sued for the loss of a physician's di-
ploma, a letter written by the attor-
ney of the company to the institution
issuing the diploma, stating that it
was claimed to be lost in transit and
making inquiries about obtaining a
duplicate, etc., is not admissible
against the company as an admission
that the company had received and
lost the diploma. Whiteside v.
Adams Express Co., 89 Neb. 430. The
court said that the letter was infor-
mal, casual, and not written for the
purpose of any step in the proceed-
ings.
So an agent sent by defendant to
get a statement from plaintiff as to
his claim is not thereby authorized
to bind defendant by admissions as
to the cause of plaintiff's injury.
Doyle v. St. Paul, etc., Ry. Co., 42
Minn. 79. But where the purpose of
what he said was to induce the
plaintiff's statement "to draw out a
1352
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES
[ 1780
1780. Statements of agent made as incidents of his position
General manager General agents, etc. Even though the making
of statements or declarations may not have been expressly authorized,
they may be authorized by implication because they are the natural and
ordinary incidents of the position which the agent occupies. Thus a
person may occupy such a managerial position, for example, that he will
be constantly called upon, in the performance of his duty, to give di-
rections, to adjust controversies, reject or accept performance of con-
tracts, give and receive notices, make and receive admissions, and the
like, because' all of these things must be done by somebody, and, in the
case in question the doing of them falls to the person who occupies his
position. In such a case, the agent's acts in these regards are binding
upon his principal because they are done by his authority. 49 This is
statement of any other injuries,"
etc., it may be admissible. McNich-
olas v. New England Tel. Co., 196
Mass. 138.
49 "The rule of law is entirely well
settled that when an agent is vested
with authority to perform any busi-
ness for his principal, his words, his
verbal acts, in conducting that busi-
ness and in relation thereto, are the
acts of the principal and may be
proved as against the latter." Hup-
fer v. National Distilling Co., 119
Wis. 417.
"A statement made by a general
agent of a corporation, in the course
of his employment, as to a fact
within his official knowledge touch-
ing the status of a matter entrusted
to him, is admissible in evidence ou
behalf of the party with whom the
corporation was dealing." Agricul-
tural Ins. Co. v. Potts, 55 N. J. L.
158, 39 Am. St. Rep. 637. To same
effect: Pierson v. Atlantic Nat. Bank,
77 N. Y. 304; Larson v. Metropolitan
St. Ry. Co., 110 Mo. 234, 33 Am. St.
Rep. 439.
"Where a corporation invests an
agent with general authority to ad-
just claims against it, the declara-
tions of that agent made while en-
deavoring to secure an adjustment
of the claim are competent evidence
against his principal." Adams Ex-
press Co. v. Harris, 120 Ind. 73, 16
Am. St. Rep. 315, 7 L. R. A. 214.
The statements of the general
manager of a railroad concerning the
condition of the track, which it was
his official business to know, upon
being informed of a wreck, are ad-
missible as the declarations of the
company whose alter ego he was as
to this matter. Krogg v. Atlanta,
etc., R. Co., 77 Ga. 202, 4 Am. St.
Rep. 79.
Statements of an agent in charge
of a business, e, g., an express car-
rier, as to the loss of goods delivered
to the carrier for transportation are
competent. Schmerler v. Barasch, 63
N. Y. Misc. 267. See also, McCotter
v. Hooker, 8 N. Y. 497; Fein v. Weir,
129 N. Y. App. Div. 299, aff'd, 199
N. Y. 540.
But they must be confined to losses,
etc., within the territory over which
the agent's authority extends. The
statements of an express agent in
Atlantic City as to what happened
in Chicago would not ordinarily be
competent. Yoshimi v. United States
Express Co., 78 N. J. L. 281.
A division superintendent of a
railroad company is held to have no
implied authority to answer ques-
tions or '. make exhibits as to the
1353
1781] THE LAW OF AGENCY [BOOK IV
strikingly true, of course, in the case of such a managing officer or
agent of a corporation which can speak only through an agent, and this
is the agent appointed for that purpose. 50
It is not indispensable in cases of this sort that the agent who thus
speaks shall have himself been an actor in the transaction of which he
speaks or that he shall speak of his own personal knowledge." He may
clearly be the mouthpiece of his principal to speak of that which was
done by other agents or servants of his principal, or to give informa-
tion, pass upon or make admissions concerning matters which have
been reported to him or which he has caused to be investigated.
Neither is it indispensable in these cases that what he says shall be
said at the time of or as a part of the act concerning which he speaks.
It is only essential that it shall be while his authority over the matter
still continues, and while he is acting in the course of his duty with ref-
erence to it.
In both of these respects, this case differs from the one to be consid-
ered in the next section, though the distinction is frequently not ob-
served.
Similar to the case of the general managing agent, is that of the agent
who has general authority over some matter or in some field. What he
says with reference to that matter while he is acting upon it and while
his authority over it still continues may be as binding upon his principal
as what he does.
It is indispensable, of course, in all these cases that the one who thus
speaks as manager or superintendent shall be the one authorized to deal
with the matter in question, and that what he says shall relate to matters
which are within his authority.
1781. Statements of agent made as incident to an authorized
act Res gestae. Somewhat similar to the cases referred to in the
preceding section though not resting upon precisely the same ground,
cause of an injury which has oc- ells Mining Co., 157 Ala 603; Moran
curred. Huebner v. Erie R. Co., 69 v. Power Co., 29 Wash. 292; Joslyn
N. J. L. 327. v. Cadillac Auto Co., 101 C. C. A. 77,
so See also Lynchburg Telephone 177 Fed. 863; Tenhet v. Atlantic
Co. v. Booker, 103 Va. 594; Virginia Coast Line R. Co., 82 S. Car. 465;
Chem. Co. v. Knight, 106 Va. 674; Western Un. Tel. Co. v. Yopst, 118
Myers v. San Pedro, etc., R. Co., 39 Ind. 248, 3 L. R. A. 224; Cleveland,
Utah, 198; Garfield Coal Co. v. Pa. etc., Ry. v. Closser, 126 Ind. 348, 9
Coal Co., 199 Mass. 22; Head v. L. R. A. 754.
Breeders' Club, 75 N. H. 449; Touch- ei Western Un. Tel. Co. v. Yopst,
berry v. Northwestern R. Co., 88 S. 118 Ind. 248, 3 L. R. A. 224.
Car. 47; Home Ice Factory v. How-
J354
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES [ 1782
are the statements, representations, declarations and admissions of an
agent which may be binding upon his principal because they are a part
of, or an incident to, some act or business which the agent was author-
ized to perform. Wherever the doing of a certain act or the transaction
of a given affair or the performance of certain business is confided to an
agent, the authority to so act will, in accordance with a general rule
often referred to, carry with it by implication the authority to do all of
the collateral acts which are the natural and ordinary incidents of the
main act or business authorized. 52 The speaking of words, the mak-
ing of statements, representations, declarations, admissions, and the
like, may as easily be such an incident as the doing of any other sort
of act. Their utterance is often described as a verbal act, and they do
not differ in substance from any other acts.
Since the authority for the doing of these incidental acts, however,
springs from the authority to do the main act, it must ordinarily end
with it. The incidental thing must be a part of the main thing. It must
occur before the main act is completely ended : it must take place while
that is still going on. To speak in the unnecessary and confusing Latin
often used to describe the situation, it must be a part of the res gestce,
although there is no more reason for using such a phrase to describe
these verbal acts than any of the other incidental ones which fall within
the same principle.
1782. Various statements of the doctrine. This gen-
eral doctrine has found expression in a great variety of forms. Thus
in a leading English case 53 it is said : "If P. was the agent of the de-
fendants, and it was within the scope of his duty and authority as agent
to do what the principal, if on the spot, would have done, what he says
while he is so acting is equally admissible as if said by the principal
himself." In an early case 54 in Maryland the rule is stated thus :
"Whatever is said by an agent, either in the making a contract for his
principal, or at the time, and accompanying the performance of any act,
within the scope of his authority, having relation to, and connected with,
and in the course of the particular contract or transaction in which he
is then engaged, is in legal effect, said by his principal, and admissible
in evidence ; not merely because it is the declaration or admission of an
agent; but on the ground, that being made at the time of, and accom-
52 See ante. 715. See also, ap- sa Kirkstall Brewery Co. v. Fur-
plying the principle to representa- ness Ry. Co., L. R. 9 Q. B. 468.
tions of agent Conkling v. Stand- 54 Franklin Bank v. Pennsylvania,
ard Oil Co., 138 Iowa, 596. etc., Co., 11 G. & J. (Md.) 28, 33 Am.
Dec. 687.
1355
THE LAW OF AGENCY 7TI [BOOK IV
panying the contract or transaction, it is treated as the declaration or
admission of the principal, constituting a part of the res gestcz, a part
of the contract or transaction, and as binding upon him as if in fact
made by himself." In an early case in Maine 5 it is said : "The declara-
56 Haven v. Brown, 7 Greenl. (Me.)
421, 22 Am. Dec. 208.
The following, selected from a
great number of cases, may serve as
illustrations of statements, represen-
tations or admissions held to be ad-
missible under this rule: Statements
by bridge tenders as to how they
preferred to have boats go through
the draw. Toll Bridge Co. v. Bets-
worth, 30 Conn. 380; statements
made by the president of a corpora-
tion, authorized to sell its land, as
to where the boundaries were.
Holmes v. Turner Falls Lumber Co.,
150 Mass. 535, 6 L. R. A. 283; state-
ments made and letters written by
the cashier of a national bank while
acting as such and respecting pay-
ment of claims left with the bank
for collection and with reference to
the ownership of collaterals pledged
to secure payment of these claims.
Xenia Bank v. Stewart, 114 U. S. 224,
29 L. Ed. 101. (But not if made
while not so acting. Gillespie v.
First Nat. Bank, 20 Okla. 768); ad-
missions of an insurance agent with
reference to the payment of pre-
miums which it was his duty to col-
lect and remit. Hall v. Un. Cent.
L. Ins. Co., 23 Wash. 610, 83 Am. St.
Rep. 844, 51 L. R. A. 288. To same
effect: Wright v. Stewart, 19 Wash.
179; declarations and admissions of
an agent authorized to receive deliv-
ery of goods under a contract that
the goods were in accordance with
the contract. Des Moines Land Co.
v. Polk County Homestead Co., 82
Iowa, 663. To same effect: Worth-
ington v. Given, 119 Ala. 44, 43 L. R.
A. 382; Rahm v. Deig, 121 Ind. 283.
See also, Pittsburg Plate Glass Co. v.
Kerlin, 58 C. C. A. 648, 122 Fed. 414;
statements and directions, concern-
ing materials and the manner of do-
ing the work, made by an architect,
put in charge of the construction of
a building, to the contractor. Wright
v. Reusens, 133 N. Y. 298; statements
of an agent who had acted in nego-
tiating a contract, made pending an
attempt at settlement between the
parties concerning it, as to what its
terms were. St. Louis Wire-Mill Co.
v. Consol. Barb Wire Co., 46 Kan.
773; statements made by conductor
of a car with reference to the pay-
ment of fare by a passenger, whom
he ejected and afterwards permitted
to return, made at the time. Robin-
son v. Superior Transit Co., 94 Wis.
345, 59 Am. St. Rep. 897, 34 L. R. A.
205; or of a ticket inspector as to
the reason why he rejected a ticket,
made at the time of the rejection.
Nichols v. Southern Pac. R. Co., 23
Ore. 123, 37 Am. St. Rep. 664, 18 L. R.
A. 55; statements made by an agent
whose duty it was to have repairs
made while calling attention to the
need of repairs and giving directions
to make them. Bundy v. Sierra
Lumber Co., 149 Cal. 772; oral and
written statements made by the
freight agent of defendant to whom
the property was delivered for car-
riage, relating to the investigation
of the loss and showing that the
property had been in the company's
possession. Green v. Boston, etc., R.
Co., 128 Mass. 221, 35 Am. Rep. 370;
see also, Illinois Cent. R. Co. v. Trons-
tine, 64 Miss. 834; statements of an
agent authorized to cut timber for
his principal, made while acting as
such, as to where he cut certain tim-
ber. Ayres v. Hubbard, 71 Mich.
594; statements of agents sent to
erect a range, made while erecting it,
as to why, owing to its peculiar con-
1356
CHAP. V]
[
tions of an agent, so far as they constitute a part of the res gesta, or in
other words, such as are made by him at the time he is engaged in mak-
struction, they erected it in a cer-
tain manner. Wrought Iron Range
Co. v. Graham, 25 C. C. A. 570, 80
Fed. 474; statements of the agent in
charge of a dock, with authority to
give directions to incoming vessels,
made to the master of a vessel pro-
posing to dock there, as to the depth
of the water. Garfleld Coal Co. v.
Rockland Line Co., 184 Mass. 60,
100 Am. St. Rep. 543, 61 L. R. A. 946,
a statement by an agent authorized
to employ a domestic servant as to
the nature of a disease known to
exist in the principal's family, made
to quiet the fears of the servant
about accepting the service. Kliegel
v. Aitken, 94 Wis. 432, 59 Am. St.
Rep. 900, 35 L. R. A. 249. The state-
ment of the agent in charge of a
station and yards used by two com-
panies as to which railroad's loco-
motive passed at a certain time.
Stroud v. Columbia, etc., Ry., 79 S.
Car. 447 (the court said it was simp-
ly a statement of fact, not an admis-
sion of liability). A statement rec-
ognizing the existence of a right of
way over the principal's land made
by an agent in charge of the land
and acting as superintendent of a
mill thereon situated. Bigelow
Carpet Co. v. Wiggin, 209 Mass. 542,
a statement made by a factory fore-
man that an employee was inexperi-
enced made on the occasion of the
foreman's transferring the employee
from one task to another less dan-
gerous. Comeau v. C. C. Manuel Co.,
84 Vt. 501, the statement of an at-
torney or other agent in presenting
a claim for personal injuries as to
the character of the claim or ex-
tent of the injury or how the client
claimed it occurred. Loomis v. New
York, etc., Ry., 159 Mass. 39; James
v. Boston Elev. Ry., 201 Mass. 263,
and, generally, that the statements,
representations and admissions of
facts of the agent made while act-
ing within the scope of his authority
and in reference to the business
which he is employed to transact,
may be received in evidence against
the principal, see Ball v. Bank of
Alabama, 8 Ala. 590, 42 Am. Dec.
649; First National Bank v. Alex-
ander, 161 Ala. 580; Montgomery-
Moore Mfg. Co. v. Leith, 162 Ala.
246; Perkins v. Bennett, 2 Root
(Conn.), 30; Mather v. Phelps, 2
Root (Conn.), 150, 1 Am. Dec. 65;
Willard v. Buckingham, 36 Conn.
395; Coweta Falls Mfg. Co. v. Rogers,
19 Ga. 416, 65 Am. Dec. 602; Galcer-
an v. Noble, 66 Ga. 367; Lindblom
v. Ramsey, 75 111. 246; Merchants,
etc., Trans. Co. v. Leysor, 89 111. 42;
Lafayette, etc., R. R. Co. v. Ehman,
30 Ind. 83; Mutual Ben. L. Ins. Co.
v. Cannon, 48 Ind. 264; Louisville,
etc., Ry. v. Henley, 88 Ind. 535;
Pennsylvania Co. v. Nations, 111 Ind.
203; United States Express Co. v.
Rawson, 106 Ind. 215; Wilson Sew.
Mach. Co. v. Sloan, 50 Iowa, 367; J.
I. Case Threshing Mach. Co. v. Fish-
er, 144 Iowa, 45; Central Branch U.
P. R. R. Co. v. Butman, 22 Kan. 639;
Haven v. Brown, 7 Greenl. (Me.)
421. 22 Am. Dec. 208; Hammatt v.
Emerson, 27 Me. 308, 46 Am. Dec.
598; Burnham v. Grand Trunk Ry.
Co., 63 Me. 298, 18 Am. Rep. 220;
Franklin Bank v. Pennsylvania, etc.,
Co., 11 Gill & John. (Md.) 28, 33 Am.
Dec. 687; City Bank v. Bateman, 7
Har. & J. (Md.) 104; Stiles v. West-
ern R. R. Co., 8 Mete. (Mass.) 44,
41 Am. Dec. 486; Tuttle v. Brown, 4
Gray (Mass.), 457, 64 Am. Dec. 80;
Zart v. Singer Sew. Mach. Co., 162
Mich. 387; O'Brien v. N. W. Imp.
Co., 82 Minn. 136; Dickman v. Wil-
liams, 50 Miss. 500; Robinson v.
Walton, 58 Mo. 380; McCormick v.
Demary, 10 Neb. 515; Union L. Ins.
Co. v. Haman, 54 Neb. 599; Burn-
1357
1783] THE LAW OF AGENCY [BOOK IV
ing a contract on the part of his principal, and having reference to the
subject matter of such contract, may be given in evidence to affect his
principal. They are admitted as the representations of the principal
himself, whom the agent represents while engaged in the particular
transaction to which the declaration refers. Representations made by
an agent, at the time he is contracting for his principal, constitute a
part of the contract, as much so as if they had been made by the prin-
cipal ; and a fact stated by an agent in relation to a transaction in which
he is then engaged, and while it is in progress, forms a part of that
transaction."
While these various statements differ more or less in form, they
agree in this, that the statements here referred to are admissible against
the principal because they are his acts done by his authorized agent.
Their admissibility depends upon the law of agency and not upon the
law of evidence. They are offered as the ultimate fact to be proved
and not merely as admissions to prove the truthfulness of the facts to
which they are supposed to refer.
1783. Limitations upon the rule. Tt will be evident
from the statement of the rule that it is subject to several limitations
which must be carefully observed. The statements are admissible be-
cause it is deemed that the principal, in authorizing the act, has author-
ized also the statements which are the usual and natural concomitants
and incidents of the doing of the act itself. In order, therefore, to bind
side v. Grand Trunk Ry. Co., 47 N. Chorpenning v. Royce, 58 Pa. 474;
H. 554, 93 Am. Dec. 474; Asl>more v. l.aurens Telephone Co. v. Bank, 90
Penn. Steam Towing Co., 38 N. J. S. Car. 50: Moore v. Bettis, 11
L. 13; Anderson v. Rome, etc., R. Humph. (Tenn.) 67, 53 Am. Dec.
R. Co., 54 N. Y. 334; White v. Mil- 771; St. Louis, etc., Ry. Co. v. Adams,
ler, 71 N. Y. 118, 27 Am. Rep. 13; 55 Tex. Civ. App. 245; Eddy v. Davis,
Fein v. Weir, 129 App. Div. 299, 199 34 Vt. 209; Dowdall v. Pennsylvania
N. Y. 540; Gazzam v. German Un. F. R. R. Co., 13 Blatch. (U. S. C. C.)
Ins. Co., 155 N. Car. 330; Albert v. 403.
Mut. L. Ins. Co., 122 N. Car. 92, 65 Where the business on which the
Am. St. Rep. 693; Needham v. Hal- agent Is engaged is a continuing one,
verson, 22 N. Dak. 594; Grover v. or is not fully ended by a single act,
Hawthorne, 62 Ore. 65, 121 Pac. "but requires a series of acts to oom-
808; Stockton v. Demuth, 7 Watts plete it according to the intention
(Pa.), 39, 32 Am. Dec. 735; Dick v. of the parties and commercial us-
Cooper, 24 Pa. 217, 64 Am. Dec. 652; ages," declarations made at any time
Sidney School Furn. Co. v. Waisau, during the transaction and relating
122 Pa. 494, 9 Am. St. Rep. 124; to it, are within the rule. Cleveland,
Baltimore, etc., Ass'n v. Post, 122 etc., Ry. Co. v. Closser, 126 Ind. 34S,
Pa. 579, 9 Am. St. Rep. 147; Stewart- 9 L. R. A. 754.
son v. Watts, 8 Watts (Pa.), 392;
1358
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES
[ 1783
the principal, by statements or admissions under the rule here in ques-
tion, it is essential (i) That the making of statements or admissions
of the class of those in question can fairly be regarded as incident to the
act authorized to be done. If there was no occasion to say anything,
or anything of the sort in question, there can be no foundation for their
admissibility. (2) They must be made by an agent authorized to act
with reference to the subject matter. The term authority as here used
has the same significance which it has in reference to the agent's act or
contract. If, therefore, the statements, representations or admissions
offered in evidence were made by one who either had no authority at
all, or had no authority to represent the principal at the time or the
place or respecting the matters concerning which they were made, they
are not admissible against the principal. 56 (3) The statements, represen-
ts Mobile, etc., R. R. v. Ashcroft,
48 Ala. 15; Memphis, etc., R. Co. v.
Maples, 63 Ala. 601; Green v. Ophir,
etc., Co., 45 Cal. 522; Central Georgia
Ry. v. Americus Cons. Co., 133 Ga.
392; Chicago R. R. Co. v. Riddle, 60
111. 534; Chicago R. R. Co. v. Lee,
60 111. 501; Rowell v. Klein, 44 Ind.
290, 15 Am. Rep. 235; Ft. Wayne,
etc., Traction Co. v. Crosbie, 169 Ind.
281, 14 Ann. Cas. 117, 13 L. R. A.
(N. S.) 1214; Mundhenk v. Central
Iowa Ry. Co., 57 Iowa, 718; Iowa R.
R. Land Co. v. Fehring, 126 Iowa, 1;
Lamm v. Port Deposit, etc., Ass'n, 49
Md. 233, 33 Am. Rep. 246; Fogg v.
Pew, 10 Gray (Mass.), 409, 71 Am.
Dec. 662; Stiles v. Western R. R. Co.,
8 Mete. (Mass.) 44, 41 Am. Dec. 486;
Corbin v. Adams, 6 Gush. (Mass.)
93; Wakefield v. South Boston R. R.,
117 Mass. 544; Robinson v. Fitch-
burg, etc., R. R. Co., 7 Gray (Mass.),
92; Crowley v. Boston Elevated Ry.,
204 Mass. 241; Riley v. Roach, 168
Mich. 294, 37 L. R. A. (N. S.) 834;
Gates v. Rifle Boom Co., 70 Mich.
309; Van Doren v. Bailey, 48 Minn.
305; Browning v. Henkle, 48 Minn.
544, 31 Am. St. Rep. 591; Rodes v.
St. Anthony Elev. Co., 49 Minn. 370,
Bernheim v. Hahn, 65 Miss. 459;
Williams v. Edwards, 94 Mo. 447;
Roberts v. Wabash Ry., 153 Mo. App.
638; Pannell v. Allen, 160 Mo. App.
714; Wood River Bank v. Kelley, 29
Neb. 590; Sheridan Coal Co. v. C.
W. Hull Co., 87 Neb. 117, 138 Am.
St. Rep. 435; Guerin v. New England
Tel. Co., 70 N. H. 133; Meyer v.
Virginia, etc., R. Co., 16 Nev. 341;
Yoshimi v. U. S. Express Co., 78 N.
J. L. 281; Anderson v. Rome, etc.,
R. R. Co., 54 N. Y. 334; New York
University v. Loomis Laboratory,
178 N. Y. 137; Corn v. Bergman, 145
N. Y. App. Div. 218; People v. Ter-
williger, 59 N. Y. Misc. 617; Cake's
Appeal, 110 Pa. 65; Plymouth County
Bank v. Gilman, 3 S. D. 170, 44 Am.
St. Rep. 782; Waldrop v. Green-
wood, etc., R. R. Co., 28 S. Car. 157;
Missouri Pac. Ry. Co. v. Sherwood,
84 Tex. 125, 17 L. R. A. 643; Belo v.
Fuller, 84 Tex. 450, 31 Am. St. Rep.
75; Gulf, etc., Ry. Co. v. York, 74
Tex. 364; Blain v. Pacific Express
Co., 69 Tex. 74; William Cameron
Co. v. Blackwell, 53 Tex. Civ. App.
414; Quanah, etc., Ry. v. Galloway
(Tex. Civ. App.), 140 S. W. 368;
Idaho Forwarding Co. v. Fireman's
Fund Ins. Co., 8 Utah, 41, 17 L. R.
A. 536; Jammison v. Chesapeake &
Ohio Ry. Co., 92 Va. 327, 53 Am. St.
Re]->. i3; Baltimore, etc., R. R. Co. v.
Chiistie, 5 W. Va. 325.
In Guerin v. New England TeL
1783]
THE LAW OF AGENCY
tations or admissions must have some inherent and rational relation to
the subject-matter of his agency. If admissible at all, it is because they
are incident to or a part of the act which he was authorized to do. The
mere idle, desultory or careless talk of the agent, having no legitimate
reference to or bearing upon the business of the principal confided to
the agent, obviously can not be binding upon the principal. (4) And the
statements, representations or admissions must have been made by the
agent at the time of the transaction, and either while he was actually
engaged in the performance, or so soon after as to be in reality a part
of the transaction.
This last qualification is the most difficult of all. The statements are
admissible because they are a part of the act. They must therefore be
made before the act is completed. To express this idea, it is often said
that they must be part of the res gestaz, which is only to repeat in Latin
what has already been said in English. This Latin phrase would be
well enough in itself and not objectionable if helpful, were it not for the
fact that it is constantly confused with another meaning of the same
expression, which has no connection with this use at all. This use de-
pends upon the law of agency : the other, which will be explained later,
Co., 70 N. H. 133, It Is said: "To
make the declarations of a servant
or agent binding upon his master
or principal, they must be made by
virtue of express authority, or be
required by the due and ordinary
prosecution of the business (Pemi-
gewasset Bank v. Rogers, 18 N. H.
255, 259); but 'the mere circumstance
of their having been made of and
concerning the business he was em-
ployed in, does not give them any
such effect, unless the servant had
been instructed to make them, or
unless they were so connected with
the service that they became neces-
sary in the due and effective dis-
charge of it.' Batchelder v. Emery,
20 N. H. 165, 167; Pemigewasset
Bank v. Rogers, supra; Woods v.
Banks, 14 N. H. 101, 113."
In Standard Oil Co. v. Linol Co.,
75 N. J. L. 294, it is said: "It can-
not be too often pointed out that
the mere fact that one employs
others to work for him does not
make him chargeable with what they
may say about him or his affairs
while in his employ; if he employs
them to talk for him a different case
may be presented. King v. Atlan-
tic City Gas Co., 70 N. J. L. 679."
An agent authorized merely to care
for or find a purchaser for property
real or personal has thereby no im-
plied authority to bind his princi-
pal by representations or state-
ments in disparagement or limita-
tion of his principal's title. Camer-
on v. Blackwell, 53 Tex. Civ. App.
414; Pier v. Duff, 63 Pa. 59; Sweeney
v. Sweeney, 119 Ga. 76, 100 Am. St.
Rep. 159.
The statements, etc., of the agent
which are held admissible under
the rule here being discussed must
usually be representations, etc., of
matters of fact, and not mere opin-
ions, conclusions or personal judg-
ments as to the principal's fault,
neglect, or liability. Plymouth
County Bank v. Gilman, 3 S. Dak.
170, 44 Am. St. Rep. 782.
1360
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES
depends wholly upon the law of evidence. This double use makes the
phrase a misleading and unfortunate one.
Whatever the phrase used, however, the idea is important. If there-
fore the statements offered in evidence were made before the perfor-
mance was undertaken, or after it was completed, or while the agent
was not engaged in the performance, or after his authority had expired,
they are not admissible. 57 In such a case they amount to no more than
- '
"Ricketts v. Birmingham St. Ry. Dec. 625; Gate v. Blodgett, 70 N. H.
Co., 85 Ala. 600; Tennessee River
Transportation Co. v. Kavanaugh,
101 Ala. 1; Western Union Teleg.
Co. v. West, 165 Ala. 399; Hender-
son-Mizell Co. v. C. D. Chapman Co.,
3 Ala. App. 296; Innis v. Steamer
Senator, 1 Cal. 459, 54 Am. Dec. 305;
Borland v. Nevada Bank, 99 Cal. 89,
37 Am. St. Rep. 32; Durkee v.
Central Pac. R. Co., 69 Cal. 533, 58
Am. Rep. 562; Anthony v. Easta-
brook, 1 Colo. 75, 91 Am. Dec. 702;
First Nat Bank of Canton v. North,
6 Dak. 136; Randel v. Chesapeake &
Del. Canal Co., 1 Harr. (Del.) 234;
Newton v. White, 53 Ga. 395; Adams
v. Humphreys, 54 Ga. 496; National
Bldg. Ass'n v. Quinn, 120 Ga. 358;
Lindblom v. Ramsey, 75 111. 246;
National Bank v. Farmers' Bank,
171 Ind. 323; Sweetland v. Illinois,
etc., Telegraph Co., 27 Iowa, 433, 1
Am. Rep. 285; May v. Sturdivant,
75 Iowa, 116, 9 Am. St. Rep. 463;
Phelps v. James, 86 Iowa, 398, 41
Am. St. Rep. 497; Swift v. Redhead,
147 Iowa, 94; Swenson v. Aultman,
14 Kan. 273; Roberts v. Burks, Lit-
toll's Sel. Gas. (Ky.) 411, 12 Am.
Dec. 325; Davis v. Whitesides, 1
Dana (Ky.), 177, 25 Am. Dec. 138;
Southern Express Co. v. Fox, 131
Ky. 257, 133 Am. St Rep. 241; Farm-
ers' Bank v. Wickliffe, 134 Ky. 627;
Louisville Times v. Lancaster, 142
Ky. 122; Zinsmeister v. Rock Island
Canning Co., 145 Ky. 25; Reynolds v.
Rowley, 3 Rob. (La.) 201, 38 Am.
Dec. 233; Haven v. Brown, 7 Greenl.
(Me.) 421, 22 Am. Dec. 208; Burn-
ham v. Ellis, 39 Me. 319, 63 Am.
316; Sandford v. Handy, 23 Wend.
(N. Y.) 260; First Nat Bank v.
Ocean Nat. Bank, 60 N. Y. 278, 19
Am. Rep. 181; White v. Miller, 71
N. Y. 118, 27 Am. Rep. 13; Wadele
v. New York Central, etc., R. Co., 95
N. Y. 274, 47 Am. Rep. 41; Cobb v.
United Engineering Co., 191 N. Y.
475; Statler v. Ray Mfg. Co., 195 N.
Y. 478; McComb v. Railroad Co., 70
N. C. 178; Southerland v. Wilming-
ton & W. R. Co., 106 N. C. 100;
Rounseville v. Paulson, 19 N. D.
466; Short v. Northern Pac. Elevator
Co., 1 N. D. 159; Sullivan v. Oregon,
etc., Co., 12 Ore. 392, 53 Am. Rep.
364; Stewartson v. Watts, 8 Watts
(Pa.), 392; American Steamship
Co. v. Landreth, 102 Pa. 131, 48 Am.
Rep. 196; State Bank v. Johnson, 1
Mill. (S. Car.) 404, 12 Am. Dec. 645;
Cobb v. Johnson, 2 Sneed (Tenn.),
73, 62 Am. Dec. 457; North Am. Ac-
cident Ins. Co. v. Frazer (Tex. Civ.
App.), 112 S. W. 812; Ward v. Powell
(Tex. Civ. App.), 127 S. W. 851; St.
Louis, etc., Ry. v. Gilbert (Tex. Civ.
App.), 136 S. W. 836; Fort Worth,
etc., Ry. v. Dysart (Tex. Civ. App.),
136 S. W. 1117; Caldwell Bros,
v. Coast Coal Co., 58 Wash. 461;
Hawker v. Baltimore, etc., R.
Co., 15 W. Va. 628, 36 Am. Rep.
825; Keeley v. Boston, etc., R. R.
Co., 67 Me. 163, 24 Am. Rep. 19;
Franklin Bank v. Pennsylvania, etc.,
Co., 11 Gill & John. (Md.) 28, 33 Am.
Dec. 687; Whiteford v. Burckmyer,
1 Gill (Md.), 127, 39 Am. Dec. 640;
'Marshall v. Haney, 4 Md. 498, 59
Am. Dec. 92; Lobdell v. Baker, 1
86
1361
1784]
THE LAW OF AGENCY
[BOOK IV
a mere narrative of a past transaction, and do not bind the principal.
The reason is that, while the agent may be authorized to speak as well
as act at the time and within the scope of his authority, he is not author-
ized, at a subsequent time, after the act or transaction itself is finished,
to narrate what he had done or how he did it. To hold otherwise
would be to make the incident more important than the main act it-
self.
1784. Further limitations. It is also to be borne in
mind that not everything which an agent knows or thinks is competent
Mete. (Mass.) 193, 35 Am. Dec. 358; law of Agency, it is said in Red-
Gott v. Dinsmore, 111 Mass. 45; Mc-
Kenna v. Gould Wire Co., 197 Mass.
406; Murphy v. Ley, 210 Mass. 371;
Converse v. Blumrich, 14 Mich. 109,
90 Am. Dec. 230; Baker v. Temple,
160 Mich. 318; McDermott v. Hanni-
bal, etc., R. Co., 73 Mo. 516, 39 Am.
Rep. 526; Brooks v. Jameson, 55 Mo.
505; Robinson v. Walton, 58 Mo.
380; Adams v. Hannibal, etc., R. Co.,
74 Mo. 553, 41 Am. Rep. 333; Ryan
v. Gilmer, 2 Mont. 517, 25 Am. Rep.
744; Cleveland Co-op. Co. v. Hovey,
26 Neb. 624; Union Life Ins. Co. v.
Haman, 54 Neb. 599; Gate v. Blod-
gett, 70 N. H. 316; Bank of U. S. v.
Davis, 2 Hill (N. Y.), 451; North
River Bank v. Aymar, 3 Hill (N. Y.),
262; Thallhimer v. Brinkerhoff, 4
Wend. (N. Y.) 394, 21 Am. Dec. 155;
Hubbard v. Elmer, 7 Wend. (N. Y.)
446, 22 Am. Dec. 590; Randal] v.
Northwestern Tel. Co., 54 Wis. 140,
41 Am. Rep. 17; Stone v. The North-
western Sleigh Co., 70 Wis. 58f>;
Lee v. Munroe, 7 Cranch (U. S.),
366, 3 L. Ed. 373; Carpenter v.
American Ins. Co., 1 Story (U. S. C.
C.), 57; Brown v. Cranberry Iron
Co., 18 C. C. A. 444, 72 Fed. 96; Fi-
delity & Casualty Co. v. Haines, 49
C. C. A. 379, 111 Fed. 337; Woolsey
v. Haynes, 91 C. C. A. 341, 165 Fed.
391; Bree v. Holbech, 2 Doug. 654;
Fitzherbert v. Mather, 1 T. R. 12;
Fairlie v. Hastings, 10 Ves. Jr. 125.
Speaking of declarations of this
sort, i. e., those depending on the
1362
mon v. Metropolitan St. Ry. Co., 185
Mo. 1, 105 Am. St. Rep. 558: "Was
it [the statement] admissible on the
ground that the conductor was the
agent and representative of the com-
pany and made the statement by au-
thority and to a passenger who had
the right to demand the cause of his
injury? This must be solved by the
application of the law of principal
and agent. The admission or decla-
ration of his agent binds the princi-
pal only when it is made during the
continuance of the agency in regard
to the transaction then depending.
* * * Applying the rule just stat-
ed, the question arises in each case,
were the statements of the agent
contemporary with the transaction
and illustrative of its character, or
merely a subsequent narrative of
how it occurred or an explanation of
how it might have been avoided? If
the latter, they are inadmissible."
[It may be suggested, however,
that if the agent could be deemed to
be impliedly authorized by the com-
pany to give an answer to a pas-
senger who had a right to demand
the cause of his injury, such reply
must, in the nature of the case, be
given after the injury, and it might
conceivably be made some time af-
ter. Suppose, for example, that the
injured passenger remains uncon-
sciaus for an hour or more and then
asks.]
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES
[ 1784
simply because he happens to declare it while engaged in the perform-
ance of his authority. His statement must be one concerning that which
is within his authority, it must relate to matters connected with his busi-
ness, and it must be confined to those things concerning which he can
be deemed authorized to speak or to act. 58 This salutary principle
seems often to be ignored.
The rule of admissibility should also be confined, in the case of the
ordinary agent or servant, to such statements and declarations as are
made as part of some authorized transaction with third persons. Mere
reports or statements made by the agent to his principal ought not to
be competent against the latter except to show notice to him. They
certainly are not admissions by the principal, and the fact that they are
made to the principal as part of the agent's duty does not show that the
principal has consented to be bound by them to third persons. They
are ordinarily mere hearsay. 59 This salutary principle also seems often
to be overlooked.
68 A statement made by a work-
man sent to examine and repair a
gas stove, made while at work, that
there was something wrong with the
stove, held not admissible against
the gas company in an action for
injuries from gas poisoning: "Where
one authorizes another to speak for
him, he may be confronted by testi-
mony as to what his representative
said within the scope of his au-
thority; but where the employment
is purely mechanical, the master is
not bound by what his servant may
choose to say while at work." King
v. Atlantic City Gas, 70 N. J. L. 679.
An agent's statements concerning
his principal's intentions, or pur-
poses or motives, are ordinarily not
admissible. Walkeen Lewis Millin-
ery Co. v. Johnston, 131 Mo. App.
693.
59 Reports made ~by agent to prin-
cipal. Statements or admissions
made in reports made by the agent
or servant to his principal, or ma-
terial gathered by the latter from
the former in investigating acci-
dents, etc., when offered not for the
purpose of proving notice to or
knowledge in the principal but as
admissions of the truth of the mat-
ters stated therein, are .generally
held not admissible. See Carrol v.
East Tenn., etc., Ry. Co., 82 Ga. 452,
6 L. R. A. 214; Atchison, etc., Ry.
Co. v. Burks, 78 Kan. 515, 18 L. R.
A. (N. S.) 231; Wabash R. Co. v.
Farrell, 79 111. App. 508; North Hud-
son, etc., Ry. Co. v. May, 48 N. J. L.
401; Powell v. Northern Pac. Ry. Co.,
46 Minn. 249.
Contra: See Keyser v. Chicago,
etc., R. Co., 66 Mich. 390: Virginia,
etc., Chemical Co. v. Knight, 106 Va.
674.
Admissible to show notice or knowl-
edge. Texas, etc., Ry. Co. v.' Lester,
75 Tex. 56; Vicksburg, etc., Ry. Co.
v. Putnam, 118 U. S. 545, 30 L. Ed.
257. ' }
Some courts exclude such reports
upon the ground that they are privi-
leged communications. Cully v.
Northern Pacific Ry., 35 Wash. 241;
Ex parte Schoepf, 74 Ohio St. 1, 6
L. R. A. (N. S.) 325. But, contra,
see Petition of Bradley, 71 N. H. 54;
Carlton v. Western, etc., Ry., 81 Ga.
531; Wooley v. North London Ry., L.
R. 4 C. P. 602; Parr v. London, etc.,
Ry., 24 L. T. N. S. 558.
1363
17^ > 5~ 1 7^>7] THE LAW OF AGENCY [BOOK IV
1785. - How question determined. The question whether
a given act or fact is part of or incident to another act or fact is obvi-
ously one which is often extremely difficult to determine. What was
the main act, when did it begin, when did it end, must first be decided ;
then : was this representation or statement or admission a natural and
ordinary part of it ? The incidental verbal part of it may come at any
stage in the whole transaction. If that transaction be the delivery of
goods, for example, it may begin upon the agent's demand for them
and end only with his acknowledgment of their receipt. The question,
like other questions of implied or incidental authority, is usually a ques-
tion of 'fact. If the whole transaction is in writing, or, if though not in
writing, the facts are undisputed and admit of but one inference, the
court will usually decide it: otherwise it will be for the jury.
1786. Effect of these statements not dependent upon their be-
ing true. It must be observed that, in all of these cases in which
the agent is deemed to be authorized, expressly or by implication, to
make statements, representations or admissions, the responsibility of
the principal for them does not necessarily depend upon their being true.
The principal may have intended that true statements only should be
made, but the mistake or misconduct of the agent in this respect must,
so far as innocent third persons are concerned, ordinarily affect the
principal like any other unauthorized acts committed within the scope of
the authority. Neither is the principal exonerated merely because he
instructed the agent not to make them. Secret instructions have no
greater efficacy in this field than in others.
1787. Statements showing notice to or knowledge by the agent.
Where the question is whether an agent had notice or knowledge of
particular facts or conditions, conversations with or statements made by
or to him while he was acting with reference to the subject matter of
the notice or | knowledge and tending to show that he had the notice or
knowledge in question, are incident to his employment and admissible. 60
But here as elsewhere if the statement indicating notice or knowledge
ooBundy v. Sierra Lumber Co., 88 S. Car. 47; Gulf, etc., Ry. Co. v.
149 Cal. 772; Elledge v. National City Compton, 75 Tex. 667; Texas, etc.,
Ry. Co., 100 Cal. 282, 38 Am. St. Rep. Ry. Co. v. Lester, 75 Tex. 56; Mis-
290; Louisville & N. R. Co. v. Bohan, souri, etc., Ry. Co. v. Russell, 40 Tex.
116 Tenn. 271; St. Louis, etc., Ry. Co. Civ. App. 114; Soronen v. Von Pus-
v. Weaver, 35 Kan. 412, 57 Am. Rep. tau, 112 App. Div. 437; Anderson v.
176; Trickey v. Clark, 50 Oreg. 516; New York, etc., Co., 47 Fed. 38.
Touchberry v. Northwestern R. Co.,
1364
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES [ 1788, 1789
is made after the transaction is over, and after the agent's authority
in the premises has ceased, it is inadmissible. 61
1788. Statements of agent made to qualify or explain the act.
Closely connected in form with the sort of statements referred to in
the preceding section and often confused with them, though really en-
tirely distinguishable and depending upon different considerations, are
statements of the agent which may be material because they tend to
qualify, modify, or explain his act. Thus it was said by a learned
judge 62 whose words have often been quoted: "Declarations of a party
to a transaction, though he was not under oath, if they were made at
the time any act was done which is material as evidence in the issue be-
fore the court, and if they were made to explain the act, or to unfold its
nature and quality, and were of a character to have that effect, are
treated, in the law of evidence, as verbal acts, and as such, are not hear-
say, but may be introduced with the principal act which they accom-
pany, and to which they relate, as original evidence, because they are
regarded as a part of the principal act, and their introduction in evidence
is deemed necessary to define that act and unfold its true nature and
quality. But such declarations cannot properly be received as evidence,
unless the principal act which they accompany and to which they relate,
is, itself, material to the issue to be submitted to the jury, nor unless the
declarations were made at the time the principal act was done, nor un-
less they were of a character to explain that act, or to unfold its true na-
ture and quality, as they are only admissible as incident to the principal
act, and because they are a part of it, and are necessary to explain and
define its true character."
Statements of this sort are only admissible where the act itself is
equivocal or ambiguous and therefore needs explanation or qualifica-
tion ; they are admissible only where the act itself, to which the words
are mere incidents, is material ; they must have some tendency to ex-
plain or qualify it; and they must be made at the time of the doing of
the act which they are thus to modify or explain.
1789. Illustrations. Illustrations of the application of
this rule are numerous. Thus if the question arises whether in a given
i First National Bank v. Farm- 381, it is said: "Where the act may
ers' Bank, 171 Ind. 323; J. I. Case have been prompted by one of two
Plow Works v. Pulsifer, 79 Kan. 176. or more motives or objects, the dec-
62 Mr. Justice Clifford, dissenting, larations of the actor made at the
in Insurance Co. v. Mosley, 8 Wall. time and illustrative of the motive
(U. S.) 397 at p. 411, 19 L. Ed. or object are admissible in evi-
437. In Lewis v. Burns, 106 Cal. dence."
1365
THE LAW OF AGENCY [BOOK IV
transaction a person acted on his own account or as agent for another ;
whether the credit was extended to the agent personally or to his princi-
pal, and the like, his statements made at the time showing for whom
he purported to act would be admissible. 63 If the question were whether
the agent had impliedly warranted his authority, or, on the other hand,
had disclosed its nature and source to the other party so that he might
determine for himself, statements made by the agent at the time as to
the authority by which he purported to act would be admissible. If the
question were as to the possibility of ratification because the agent did
or did not purport to act as the agent of the person subsequently rati-
fying, 64 his statements made at the time as to the person for whom he
purported to act would be admissible.
These holdings would not conflict with the rule that the agent's au-
thority cannot be shown by his own statements. These statements are
not offered for the purpose of proving authority, which must be shown
in some other way, but only for the purpose of showing the capacity in
which the person making them at the time purported to act. 86
ea Lewis v. Burns, 106 Cal. 381; Al-
len v. Duncan, 11 Pick. (Mass.) 308;
Thomas v. Leonard, 5 111. 556; Roeb-
ke v. Andrews, 26 Wis. 311; Jefferds
v. Alvard, 151 Mass. 94; Bank v.
Kennedy, 17 Wall. (84 U. S.) 19,
21 L. Ed. 554: Simonds v. Clapp, 16
N. H. 222; Chattanooga, etc., R. Co.
v. Davis, 89 Ga. 708; Kentucky Stove
Co. v. Page (Ky.), 125 S. W. 170;
Henderson v. Coleman, 19 Wyo. 183;
Miller-Brent Lumber Co. v. Stewart,
166 Ala. 657.
So statements by one in possession
of goods as to whether he claimed
to hold for himself or his princi-
pal are admissible. Drum v. Harri-
son, 83 Ala. 384.
e* See ante, 386.
65 Thus in Roebke v. Andrews,
supra, where the question was as to
the admissibility of evidence that
certain persons in negotiating a
purchase professed to act as agents
of the defendant the court said:
"Such statements by them were not
proof of the fact of agency. It
would be necessary to prove that
fact in some other way, or to con-
nect the defendant with the consum-
mation of the bargain. But it is still
true that whatever bargain was
made, if any, was negotiated by
those parties. What that bargain
was, with whom and by whom it
was made, could only be proved by
showing what was done and said In
its actual negotiation. If they pro-
fessed to act for the defendant, that
fact entered into and formed apart
of the negotiation itself, and gave it
character. It was a part of the res
gestae and was admissible as such,
though without something further
it would have no binding effect upon
the defendant." So in Thomas v.
Leonard, supra, where the question
was as to the admissibility of state-
ments of defendant's daughters as
to the person on whose account they
bought certain goods the court said:
"The question, 'what did the daugh-
ters say, when they purchased said
goods?' was clearly a part of the res-
gestae, and competent to show what
took place when the goods were
purchased. This evidence was not
offered to prove that the defendant
1366
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES [ 1790
Such declarations are, moreover, admissible not only against the prin-
cipal but for him, as where, for example, the principal desires to show
that, in the transaction in question, the alleged agent purported to act
on his own personal account, or that he purported to act as his agent ;
though ordinarily the mere self-serving declarations of the agent are
not admissible in his principal's behalf. 66
1790. Statements indicative of the agent's state of mind.
Wherever the agent's state of mind at a particular time is material
where the question of his good faith, his alertness, his sense of duty OP
responsibility, his attention to duty, his motive, his appreciation of dan-
ger, and the like, is involved his statements, admissions or declarations
made at the time and indicating what his state of mind then was in ref-
erence to such matters, would be admissible in evidence either for or
against his principal wherever the principal would be affected by the
agent's state of mind, and it would be a proper subject of inquiry. This
is not upon any ground of agency, of course, but upon the ordinary
rules of evidence.
Thus if the issue were an agent's negligence, evidence of his declara-
tions at the' time tending to show that his thoughts and attention were
upon something else than his duty would be admissible ; 67 if the charge
were his recklessness, declarations showing his indifference to conse-
quences would be admissible ; 68 if the question was as to his malice,
was liable to pay for the goods. Canning Co., 145 Ky. 25; Insurance
That depended nron the onr-sfion Co. v. Guardiola, 129 U. S. 642, 32 L.
whether the daughters of the de- Ed. 802; Chicago v. McKechney, 205
fendant were to be considered as 111. 372; Royle Mining Co. v. Fidelity
the agents of the defendant in mak- Co., 161 Mo. App. 185.
ing the purchase of the goods. If Where two persons jointly em-
the answer had been, that thsy di- ploy the same agent one of them can-
rected that the goods should be not charge the other upon admis-
charged to some third person, this sions made by the common agent.
would have afforded a strong pre- Austin v. Rupe, Tex. Civ. App.
sumption that they were not acting , 141 S. W. 547.
as the agents of their father. This <" See Knittel v. United Ry. Co.,
testimony was therefore admissible 147 Mo. App. 677; Reddick v. Young,
to go to the jury; but whether it was I n d. , 98 N. E. 813.
sufficient to authorize a recovery, 68 See, for example, Nashville, etc.,
without other proof, is entirely a R- Co. v. Messino, 1 Sneed (Tenn.),
diiferent question, and one which 220; Wabash W. Ry. Co. v. Brow, 13
this court is not called upon to de- C. C. A. 222, 65 Fed. 941.
termine." Statements showing haste, where
oe Self-serving statements of agents that may have affected the result,
not admissible in principal's be- would be admissible. Gulf, etc., Ry.
half. Zinsmeister v. Rock Island Co. v. Compton, 75 Tex. 667; but not
179^. 1 79 2 ] THE LAW OF AGENCY [BOOK IV
declarations showing his dislike or hatred would be admissible; 89 and
the like.
Such evidence might be admissible for the principal as well as against
him. Thus if a master were defending against liability for a servant's
act, evidence of the servant's declarations at the time showing that the
act was the result of the servant's own, private desire for revenge
against an enemy rather than an act done for the master, would be com-
petent.
1791. Words themselves constituting or aggravating the wrong.
The principal may be liable, in many cases, on the ordinary princi-
ples of agency for words which in themselves constitute a wrong or
which aggravate a wrong. Thus the principal may be liable for a libel
published, or a slander uttered, by his agent or servant. A carrier of
passengers, owing a duty to protect them, may be liable for the verbal
abuse or attack upon them by his servant to whom he has confided the
duty of protecting them. 70
In many cases, too, an independent wrong may be aggravated by the
contumelious, abusive or derisive language of the servant or agent who
perpetrates the wrong.
In these cases liability does not depend upon whether the principal
can be thought to have authorized the words : he may expressly have for-
bidden them and still be liable because they were uttered while the agent
or servant was acting within the scope of his authority and about his
master's business.
1792. Admissions of agent generally not competent to charge
principal. The admissions of an agent, except in the cases already
referred to, 71 in which it can be said that he has been expressly or im-
pliedly authorized to make them, are generally not competent to charge
his principal. 72 The agent may make admissions which will charge
otherwise: Gardner v. Detroit St. Ry. bins v. Little Rock, etc., R. Co., 19
Co., 99 Mich. 182; statements show- Ark. 85, 9 Ann. Gas. 84.
ing anger: Cincinnati, etc., Ry. Co. 09 i n an action for malicious prose-
v. Evans, 129 Ky. 152. cution, the statement of the agent
But if the motive Is one which who Instituted the prosecution, show-
would not affect the principal, either ing his motive, are admissible.
at all or under the pleadings or al- Southern Car Co. v. Adams, 131 Ala.
legations, statements of the agent 147.
showing his animus would not be 7 Malecek v. Tower Grove Ry. Co.,
admissible. Gulf, etc., Ry. Co. v. 57 Mo. 17.
York, 74 Tex. 364; Dilllngham v. TI See ante, 1777-1781, et seq.
Russell, 73 Tex. 47, 15 Am. St. Rep. Fairlie v. Hastings, 10 Ves. Jr.
753, 3 L. R. A. 634; Butler v. Man- 127; Roberts v. Burks, Littell's Sel.
hattan R. Co., 143 N. Y. 417. 42 Am. Cas. (Ky.) 411, 12 Am. Dec. 325,
St Rep. 738, 20 L. R. A. 40; Dob- Clancy v. Barker, 71 Neb. 83, 115
1368
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES [ 1/93
himself, and the principal may make admissions to bind himself, but
usually one man can not admit things to charge another. An agent may
confess his own negligence or default so far as his own liability is con-
cerned, but he can not ordinarily be deemed authorised to confess his
principal's negligence or defaults. So far as the principal' is concerned,
if he does not care to admit matters affecting his liability or interests,
he is entitled to have the question tried by the regular and established
methods of determining liability. Unless he has authorized him to do
so, the principal certainly cannot have his liability fixed by the admis-
sions of a person who happens, for other purposes, to be his agent. As
stated long ago in the leading case 78 upon the subject, "The admission
of an agent cannot be assimilated to the admission of the principal. A
party is bound by his own admission, and is not permitted to contradict
it. But it is impossible to say, a man is precluded from questioning or
contradicting anything any person has asserted as to him, as to his
conduct or his agreement, merely because that person has been an
agent of his. If any fact, material to the interest of either party, rests
in the knowledge of an agent, it is to be proved by his testimony, not
by his mere assertion."
The fact that it is the negligence of the agent which is sought to be
proved against the principal does not make the agent's admission of his
own negligence competent against his principal. It is bad enough, in
many cases, for the principal to be liable for the negligence of his agent,
without also fastening his liability by the agent's admission.
The fact that principal and agent are sued together does not affect
the rule as to the principal, though the agent's admission might be used
to charge the agent.
1793. Declarations and admissions of agent as part of res ges-
tae Spontaneous utterances. Although they thus can not be re-
garded as authorized, the declarations and admissions of an agent may
often be put in evidence upon an entirely different ground, namely,
that they constitute part of what is called the "res gesta." Some refer-
ence to one use of this term has already been made. 74 That use de-
Am. St. Rep. 559, 8 Ann. Gas. 682, 69 122 Pa. 449; Jungworth v. Chicago,
L. R. A. 642; Norfolk, etc., R. Co. v. etc., R. Co., 24 S. D. 342; People v.
Suffolk Lumber Co., 92 Va. 413; Jam- Terwilliger, 59 N. Y. Misc. 617;
mison v. Chesapeake, etc., R. Co., 92 Guerin v. New England Tel. Co., 70
Va. 327, 53 Am. St. Rep. 813; Willis N. H. 133; and many other cases
v. Atlantic, etc., R. Co., 120 N. Car. cited in the following sections.
508; McDermott v. Hannibal, etc., 73 Fairlie v. Hastings, supra.
R. Co., 73 Mo. 516, 39 Am. Rep. 526; 74 See ante, 1781.
Oil City Fuel Supply Co. v. Boundy,
1369
1794] THE LAW OF AGENCY [COOK iv
pends, as has been pointed out, upon the law of agency, upon the fact
that the person who made the declaration in question was in some way
expressly or impliedly authorised to speak for his principal because
what he said was part of what he was authorized to do. The use here
contemplated is a different one though the two are constantly confused.
It does not necessarily depend upon the law of agency at all. 78 It is a
rule of evidence, and is just as applicable in a proper case to one who
was not an agent at all as to one who was an agent. Ordinarily one
who is to be affected by the statements of a person, whom he has not
authorized to speak for him, has a right to be confronted by the witness,
to have him put under oath, and to subject him to cross-examination.
The purpose of this is, of course, to make sure that he is telling the
truth. Exceptions to this rule have been admitted in various cases upon
the ground that there were some other peculiar circumstances present,
conducive to truth telling, which might serve as a substitute for the or-
dinary tests. A familiar illustration is the case of the so called "dying
declaration." Another illustration is found in the case before us. It
is that where some unusual and striking event has occurred, for ex-
ample, a railway accident or similar casualty, and a person, who has
participated in it, makes a statement concerning it either during it or
soon after it, while yet under the excitement and influence of it and be-
fore he has had time to consider the effects and consequences of what
he says, there is such likelihood that what he thus says will be true as
to dispense with the ordinary tests for assuring truthful utterance.
The theory is that the spontaneous utterances of one who speaks under
the excitement of the moment and before he has had time to deliberate
to concoct a self favoring story are likely to be true. 76
1794. Meaning of res gestae as here used. By reason
of the fact that the declarations here in question must concern some
main act, for example the accident, and must be made by one who was
present and affected by its influence and must be made while under that
influence, it has been said that the declaration must be a part of the
act a part of the res gesta. This use of the Latin phrase is to be de-
" See Hupfer v. National Distilling made the declaration while he was
Co., 119 Wis. 417. surrounded by an angry mob which
fIn Feldman v. Detroit United threatened him with personal vio-
Ry., 162 Mich. 486, the declarations lence.
were thought not to be spontaneous For the similarity, in principle, to
and were excluded because the dec- dying declarations, see Riggs v.
larant, the motorman of a car which Northern Pac. R. Co., 60 Wash.\292.
had struck and killed a child, had
1370
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES [ 1795
plored because it means no more than the English equivalent, is likely
to be confused with the other use of the same phrase, and particularly
because it is likely to be made the cover for loose thinking or careless
discrimination. It seems, however, to be firmly fixed in our legal
phraseology. This use, as stated above, is not confined to agents, or
to cases involving civil liability. The statements of any person present
may sometimes be admissible and may be used in criminal and other
cases as well as those involving a principal's or master's liability. In
the latter cases, however, which are the ones here being considered, it
is almost invariably an agent's or a servant's statement which is in-
volved, and the real if not the avowed purpose is to get the statement
into the case as an admission of the agent or servant which will bind
the principal. 77 There are doubtless cases wherein the statement of-
fered might be sustained under either use of the phrase res gcstce; and
there are many cases wherein statements admissible for some other rea-
son are erroneously justified under the loose assertion that "they were
part of the res gcsta." The result is that the rule of res gesta in the
law of agency is in an unsatisfactory condition.
1795. What sort of statements admissible. This being
the theory upon which such evidence is admissible, a number of limita-
tions at once suggest themselves. The person whose words are offered
must have been a participant in the transaction and thus have come
within its influence. 78 The statements offered must be relevant to the
" See Louisville, etc., Ry. Co. v. knew its cause which is the natural
Johnson, 131 Ky. 277, 20 L. R. A. (N. inference from his statement, if tru-
S.) 133. ly reported yet it is clear that
78 in Metropolitan R. Co. v. Collins, what he said, though near in point
1 App. Cas. D. C. 383, where the sub- of time, was narrative only of a past
ject matter of the inquiry was the transaction. It was not a spontane-
alleged sudden starting of a street ous outburst, incident to the occur-
car, statements made two to five rence or illustrative of it." [This
minutes later by the transfer-agent statement, however, should have
of the company to the effect that been inadmissible on another
the conductor "would get into ground; it was merely the witness's
trouble" were excluded. Said the conclusion or deduction as to what
court: "If the declarations offered would happen and not in any way a
had been made by the conductor of statement of fact.]
the car whose negligence, according What is said by by-standers after
to the plaintiff, caused the injury, the event as to the cause of it is
the error would not be so clear; not admissible. Detroit, etc., R. Co.
but the transfer agent was not an v. Van Steinburg, 17 Mich. 99; Lea-
actor in the occurrence and had hey v. Cass Ave. Ry. Co., 97 Mo. 165,
nothing to do with it. If it be con- 10 Am. St. Rep. 300; Missouri Pac.
ceded that he saw the accident and Ry. Co. v. Ivy, 71 Tex. 409, 10 Am.
1371
I795J
THE LAW OF AGENCY
[BOOK iv
transaction and such as would be provable if the person making them
was put upon the stand as a witness. Mere conclusions, opinions and
speculations of the declarant should therefore be excluded. 70 The
statement offered must relate to the transaction in question and not be
merely narrations, though made at the time of that transaction or soon
afterward, of other and previous facts, conditions, or events. 80 It
St. Rep. 758, 1 L. R. A. 500: Louis-
ville Ry. Co. v. Johnson, 131 Ky. 277,
20 L. R. A. (N. S.) 133. Statements,
though by a participant, as to what
other persons thought of the trans-
action, are not admissible. Boone
v. Oakland Transit Co., 139 Cal. 490.
Where the question was as to the
negligence of certain servants of a
railroad company, to wit, the bag-
gagemen, in leaving a baggage
truck in a passage way, declarations
of the telegraph operator, though
proximate in point of time, are not
admissible. He was not "an actor
or participant in that transaction."
Tiborsky v. Chicago, etc., Ry. Co.,
124 Wis. 243. Statements made
among themselves by the trainmen
of one train as to the speed of another
train which caused the injury but with
which they were in no way connect-
ed are inadmissible. Norfolk, etc.,
Ry. Co. v. Gesswine, 75 C. C. A. 214,
144 Fed. 56. Statements made by a
foreman, who did not see the act,
as to how it happened, are not ad-
missible. St. Louis, etc., Ry. Co. v.
Brisco, 42 Tex. Civ. App. 321. "Not
res gestae but purely hearsay," said
the court.
Thus in a great variety of cases
expressions of opinion as to whose
fault it was, who was to blame,
how it must have happened, what
would have been the case if some-
thing else had happened or been
done, and the like, though made at
or near the time, have been held
inadmissible, as mere "conclusions,"
"judgments pronounced after the
event," "narratives of past events,"
and the like. See Scott v. St Louis,
etc., R. Co., 112 Iowa, 54; Giberson
v. Patterson Mills, 174 Pa. 369, 52
Am. St. Rep. 823; Silveira v. Iverson,
128 Cal. 187; Plymouth County Bank
v. Oilman, 3 S. D. 170, 44 Am. St.
Rep. 782; Metropolitan Nat Bank
v. Commercial State Bank, 104 Iowa,
682; St. Louis, etc., Ry. Co. v. Barg-
er, 52 Ark. 78; Balding v. Andrews,
12 N. Dak. 267; Electric Ry. Co. v.
Carson, 98 Ga. 652; Ohio, etc., Ry.
Co. v. Stein, 133 Ind. 243, 19 L. R.
A. 733 (such a statement might, how-
ever, be admissible for the purpose
of showing knowledge of the defect-
ive condition. Young v. Seaboard
Airline Ry. Co., 75 S. Car. 190);
Adams v. Hannibal, etc., R. Co., 74
Mo. 553, 41 Am. Rep. 333; Nelson v.
Georgia, etc., Ry. Co., 68 S. Car. 462;
Ruschenberg v. Southern, Elec. R.
Co., 161 Mo. 70; Redmon v. Metro-
politan St. Ry. Co., 185 Mo. 1, 105
Am. St. Rep. 558; Dodge v. Childs,
38 Kan. 526; Ft. Wayne, etc., Trac-
tion Co. v. Crosbie, 169 Ind. 281, 14
Ann. Gas. 117, 13 L. R. A. (N. S.)
1214; Louisville, etc., R. Co. v. Webb,
99 Ky. 332; Louisville, etc., R. Co. v.
Ellis, 97 Ky. 330.
so Thus on the ground that it was
merely a narration of a past trans-
action, the statement of a street car
driver made soon after an accident
that he had previously reported the
car as having a bad brake, was held
not admissible. Wormsdorf v. De-
troit City Ry. Co., 75 Mich. 472. 13
Am. St. Rep. 453. So in an action for
killing stock evidence of statements
made afterwards by the section fore-
man as to the previous condition of
the fence, were held inadmissible.
1372
CHAP. Vj LIABILITY OF PRINCIPAL TO THIRD PARTIES [ 1796
seems scarcely necessary to decide that the statements offered must be
serious and not jocular. 81
And, finally, and above all, as will be more fully seen in the following
sections, the statements must be made under the excitement of the
event, they must be "the language of exclamation or surprise" and
not "the language of narrative with a full appreciation of the conse-
quences growing out of a transaction which is passed and complete." 82
As stated in another case, the statements admissible must be the "events
speaking for themselves through the instinctive words and acts of par-
ticipants, not the words and acts of participants when narrating the
events." 83
1796. What embraced within res gestae. The question
of what declarations and admissions constitute a part of the res gesta,
within this rule is one exceedingly difficult of determination, and upon
which the authorities are conflicting. It was formerly held, and the
doctrine still prevails in some jurisdictions, that the declarations and ad-
missions must be strictly contemporaneous with the act ; that if they
were not made until the act in controversy was completed, although
made immediately afterwards, and on the spot, they were not admissi-
ble. 84 This would undoubtedly be sound wherever their admissibility
depends upon the rules of Agency, if they must be authorized, they
must then constitute a part of the authorized act in order to be them-
selves authorized.
Where, however, the true ground for the admission of the declara-
tions is that they are made spontaneously and under the influence of
the main event, it is then possible that the influence may continue al-
though the act is ended, and the proper view should be to treat the mere
point of time as less material, and to look rather to the nature of the
Norman v. Chicago, etc., Ry. Co., 110 drews, 12 N. D. 267; Fredenthal v.
Iowa, 283. "It was but a narrative Brown, 52 Ore. 33; Johnson v. Mc-
of a past transaction," said the court, Lain Investment Co., 79 Kan. 423.
citing Treadway v. Railroad Co., 40 131 Am. St. Rep. 302.
Iowa, 526. 83 St. Louis, etc., Ry. Co. v. Kelley,
si In Holmes v. Washington Real 61 Ark. 52, quoting Wharton's Crim.
Estate Co., 20 R. I. 289, it was ex- Ev. 262.
pressly decided that statements evi- ^ See, for example, Adams v. Han-
dently made jocularly and so under- nibal, etc., R. Co., 74 Mo. 553, 41 Am.
stood by the hearers were not com- Rep. 333; Barker v. St. Louis, etc.,
petent as part of the res gestae. Ry. 'Co., 126 Mo. 143, 47 Am. St. Rep.
82Weinkle v. Brunswick, etc., R. 646, 26 L. R. A. 843; Ruschenberg v.
Co., 107 Ga. 367. See also, Citizens' Southern Elec. R. Co., 161 Mo. 70;
St. R. Co. v. Howard, 102 Tenn. 474; Koenig v. Union Depot Ry. Co., 173
Ohio, etc., Ry. Co. v. Stein, 133 Ind. Mo. 698; Redmon v. Metropolitan St.
243, 19 L. R. A. 733; Balding v. An- Ry. Co., 185 Mo. 1, 105 Am. St. Rep.
1373
i?97]
THE LAW OF AGENCY
[BOOK iv
statements and the circumstances under which they were made. Ac-
cording to this view, each transaction should be judged by its own pe-
culiar facts, without conclusive regard to a fixed interval of time, and
with more regard to the question whether the declarations or admissions
seem to have been made, not with deliberate consideration, but voltyi-
tarily and spontaneously, under the immediate influence of the princi-
pal transaction, and are so connected with it as to characterize or ex-
plain it. 88
All the cases, however, agree that if the admissions were made so
long after the event that they cannot be deemed to come within its in-
fluence, they are mere narrations of a past event, and are not competent
as evidence.
Most of the cases present the question of statements made after the
act ; but there is no reason why statements made before, if made under
its impending influence, should not be admissible. 88
1797. How admissibility determined. The subject here
considered being a matter of evidence, the question of the admissibility
of the declarations must, like the question of the admissibility of evi-
dence generally, be determined by the court. It has sometimes been
said that the admissibility of these declarations rests in the discretion
of the court ; but that can not be deemed to be true without qualifica-
tion. The trial court must of course determine whether the circum-
stances are such as to make the declarations admissible, as it must in
558; Cleveland, etc., R. Co. v. Mara,
26 Ohio St. 185; Tennis v. Consol.
Rap. Transit Co., 45 Kan. 503; Dodge
v. Childs, 38 Kan. 526; Balding v.
Andrews, 12 N. D. 267.
ss See People v. Vernon, 35 Cal. 49,
95 Am. Dec. 50; Keyser v. Chicago
& G. T. Ry. Co., 66 Mich. 390, [citing
Scaggs v. State, 8 Sm. & Mar. (Miss.)
722; Insurance Co. v. Mosley, 8 Wall.
(U. S.) 397, 19 L. Ed. 437; Common-
wealth v. McPike, 3 Gush. (Mass.)
181, 50 Am. Dec. 727; Harriman v.
Stowe, 57 Mo. 93; Crookham v. State,
5 W. Va. 51"0; Boothe v. State, 4 Tex.
App. 202; Regina v. Abraham, 2
Car. & K. 550; Hanover R. Co. v.
Coyle, 55 Penn. St. 402; Brownell v.
Pacific R. Co., 47 Mo. 239; People v.
Vernon, 35 Cal. 49, 95 Am. Dec. 50;
Handy v. Johnson, 5 Md. 450; Carter
v. Buchannon, 3 Ga. 513; Mitchum
v. State, 11 Ga. 615; Courtney v.
Baker, 2 Jones & Sp. (N. Y.) 529;
O'Connor v. Chicago, etc., .Ry. Co.,
27 Minn. 166, 38 Am. Rep. 288; Ar-
mil v. Chicago, etc., R. R. Co., 70
Iowa, 130; State v. Koran, 32 Minn.
394, 50 Am. Rep. 583; Lund v.
Tyngsborough, 9 Cush. (Mass.) 36,
59 Am. Dec. 159].
See also, Walters v. Spokane
Intern. Ry. Co., 58 Wash. 293;
State v. McDaniel, 68 S. Car. 304,
102 Am. St. Rep. 661 (a criminal
case) ; McMahon v. Chicago City Ry.
Co., 239 111. 334; Denver City Ry.
Co. v. Brumley, 51 Colo. 251; An-
derson v. Great Northern Ry. Co.,
15 Idaho, 513; American Mfg. Co. v.
Bigelow, 110 C. C. A. 77, 188 Fed. 34;
Champlin v. Pawcatuck Val. St. Ry.
Co., 33 R. I. 572.
se See Northern Tex. Trac. Co. v.
Caldwell, 44 Tex. Civ. App. 374.
1374
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES [ 1 79$
the case of dying declarations, confessions, and the like ; and courts of
review are quite reluctant to overthrow the conclusion of the trial
judge; but the matter is, nevertheless, controlled by legal rules and is
not a matter of mere discretion. 87
The admissibility of these declarations does not depend, as seems
sometimes to be thought, upon the question whether the declarant is
dead or otherwise unable to testify.
1798. Illustrations of what has been called part of the res ges-
tae Inadmissible declarations. Attempts to give illustrations of
the actual rulings under a so-called res gestcs theory are unsatisfactory,
because the cases have sometimes gone upon one theory and sometimes
upon another. The following have been selected chiefly with reference
to the element of time involved, though it is obvious that there must be
much in each case besides the mere question of the time which has
elapsed.
In an action to recover damages caused by the derailment of a train,
statements of the engineer who was in charge of the engine at the time
of the accident, made six months or more afterwards, were held to be
too remote to constitute a part of the res gesta; 88 so an admission by
the general agent of a telegraph company of its liability for an accident,
alleged to have been caused by its negligence, two months after the ac-
cident, has been held to be not admissible ; 89 so in an action against a
railway company to recover damages for the misconduct of a conduc-
tor, statements made by the conductor about three weeks later to the
affect that he had been drinking on the day in question, were held in-
admissible ; 90 so evidence of the statement of a railroad roadmaster that
a certain employee, through whose incompetence an accident had hap-
pened, was incompetent, made several days after the accident, has been
held to be inadmissible ; 81 so the admissions made by the engineer of an
engine which had killed some cattle, made while he was still on the en-
ST See Pledger v. Chicago, etc., R. made more than a year afterward
Co., 69 Neb. 456; Walters v. Spokane were held inadmissible.
Intern. Ry. Co., 58 Wash. 293; Shel- 9 Randall v. Northwestern Tel. Co.,
ton v. Southern Ry., 86 S. Car. 98. 54 Wis. 140, 41 Am. Rep. 17.
ss Colorado Midland Ry. Co. v. o Louisville, etc., Ry. Co. v. Wil-
McGarry, 41 Colo. 398. In Gardner liamson (Ky.), 96 S. W. 1130; Radel
v. Schenectady Ry. Co., 113 N. Y. Co. v. Borches, 147 Ky. 506, 39 L. R.
App. Div. 133, the statement held A. (N. S.) 227.
inadmissible was made four years i McDermott v. Hannibal, etc., R.
before. Co., 73 Mo. 516, 39 Am. Rep. 526.
In Simms v. Forbes, 86 Miss. Statements were held inadmissible
412, statements of an agent that when made: "a few days" after-
he blamed himself for the accident wards (Robinson v. Fitchburg, etc.,
1375
1798]
THE LAW OF AGENCY
[BOOK iv
gine where it had been thrown from the track by the accident, but made
an hour after the accident, were held to be incompetent. 92 Upon such
cases as those just mentioned there would probably not be much dispute
under any theory. As the time grows shorter, the conflict becomes
greater. In an action against a railroad company for personal injuries
sustained by a passenger, evidence of the declarations of the conductor
and engineer "a few minutes" after the accident, was held incompe-
tent ; 03 so in two like cases evidence of similar declarations made, in one
.-)?/,- .anoii-
R. R. Co., 7 Gray (Mass.), 92); two Co. (Ky.), 92 S. W. 571; three quar-
and a half days afterward (Packet
Co. v. Clough, 20 Wall. (U. S.) 528,
22 L. Ed. 406); four or five days af-
ter (Paraffine Oil Co. v. Berry (Tex.
Civ. App.), 93 S. W. 1089); several
days after (Western Union Teleg.
Co. v. Jackson, 95 Miss. 471); the
day after (Harris v. Carstens Pack-
ing Co., 43 Wash. 647, 39 L. R. A.
491; Clancy v. Barker, 71 Neb. 83,
115 Am. St. Rep. 559, 69 L. R. A.
642, 8 Ann. Cas. 682; Maltby v. R.
R. Kirkland, 48 Fed. 760; Cook v.
Stimson Mill Co., 36 Wash. 36; Rapp
v. Easton Transit Co. (N. J.), 72
Atl. 38; Jefferson Fertilizer Co. v.
Houston, 3 Ala. App. 348); the next
morning (Wynnewood v. Cox, 31
Okla. 563; Havens v. Suburban Ry.
Co., 26 R. I. 48, 3 Ann. Gas. 617;
Caldwell v. Nichol, 97 Ark. 420);
the next night (Layzell v. Coal Co.,
156 Mich. 268).
82 Hawker v. Baltimore, etc., R.
Co., 15 W. Va. 628, 36 Am. Rep. 825.
So statements were held inadmis-
sible when made: ten hours after the
accident, Kyner v. Portland Mining
Co., 106 C. C. A. 245, 184 Fed. 43;
two hours after, Dodge v. Childs, 38
Kan. 526; an hour or two after,
Missouri Pac. Ry. Co. v. Ivy, 71 Tex.
409, 10 Am. St. Rep. 758, 1 L. R. A.
500; an hour after, Norfolk & C. R.
Co. v. Suffolk Lumber Co., 92 Va.
413: H. & St. L. R. Co. v. Davis
(Ky.), 106 S. W. 304; Cincinnati,
etc., Ry. v. Martin, 146 Ky. 260;
Balding v. Andrews, 12 N. D. 267;
half an hour to an hour after, Mar-
tin v. South Covington & C. St. Ry.
ters of an hour after, Henry v.
Seattle Elec. Co., 55 Wash. 444; half
an hour after, International, etc., R,
Co. v. Munn, 46 Tex. Civ. App. 276.
So in a number of cases in which
the time is not precisely stated but
was evidently a considerable time.
Louisville & N. R. Co. v. Ellis' Adm.,
97 Ky. 330; The Maurice, 135 Fed.
516; Moseley's Adm'r v. Black Dia-
mond Coal Co. (Ky.), 109 S. W. 306;
Gould v. Aurora, etc., Ry., 141 111.
App. 344.
3 Alabama, etc., R. R. Co. v. Hawk,
72 Ala. 112, 47 Am. Rep. 403. In this
case the court lay down the rule that
"Perfect coincidence of time between
the declaration and the main fact is
not of course required. It is enough
that the two are substantially con-
temporaneous;" but reach the con-
clusion "that the declarations of the
conductor and engineer cannot, un-
der a proper application of this prin-
ciple, be regarded as a part of the
res gcstae of the accident resulting
in 'injury to the plaintiff. The time
'a few minutes' does not appear
to be so proximate to the main trans-
action, nor are the declarations made
otherwise so closely connected with
it, as an elucidating circumstance, as
justly to authorize the conclusion
that they are not merely narrative
of a past occurrence, which at the
moment was finished and complete."
Eight minutes later, too late. Baker
v. St Louis, etc., R. Co., 126 Mo. 143,
29 L. R. A. 843. So of a statement by
an engineer "some minutes" after an
accident. Davis v. Louisville H. &
CHAP. Vj
LIABILITY OF PRINCIPAL TO THIRD PARTIES
case, 94 ten to thirty minutes, and in the other, 88 five minutes, after the
accident, was held inadmissible; so in an action for injuries sustained
by a passenger from the overturning of a stage sleigh, the declarations
St. L. Ry. Co. (Ky.), 97 S. W. 1122.
So a statement made two or three
minutes after. Morse v. Consolidated
Ry. Co., 81 Conn. 395; or one made
"a few seconds" after, Brauer v. New
York, etc., Ry. Co., 131 App. Div. 682.
See also, St Louis, etc., Ry. Co. v.
Pope, 100 Ark. 269; Blue Ridge Light
Co. v. Price, 108 Va. 652.
*Vicksburg, etc., R. R. v. O'Brien,
119 U. S. 99, 30 L. Ed. 290. "It was,"
said the court, "in its essence, the
mere narration of a past occurrence,
not a part of the res gestae simply
an assertion or representation, in the
course of conversation, as to a matter
not then pending, and in respect to
which his authority as engineer had
been fully exerted. It is not to be
deemed part of the res gestae simply
because of the brief period interven-
ing between the accident and the
making of the declaration. The fact
remains that the occurrence had
ended when the declaration in ques-
tion was made, and the engineer was
not in the act of doing anything that
could possibly affect it. If his decla-
ration had been made the next day
after the accident, it would scarcely
be claimed that it was admissible
evidence against the company. And
yet the circumstance that it was
made between ten and thirty min-
utes, an appreciable period of time
after the accident, cannot, upon
principle, make this case an excep-
tion to the general rule. If the con-
trary view should be maintained, it
would follow that the declarations of
the engineer if favorable to the com-
pany, would have been admissible in
its behalf as part of the res gestae
without calling him as a witness,
a proposition that will find no sup-
port in the law of evidence. The
cases have gone far enough in the
admission of the subsequent decla-
rations of agents as evidence against
87 1377
their principals. These views are
fully sustained by adjudications in
the highest courts of the States,"
[citing Luby v. Hudson River R. R.,
17 N. Y. 131; Pennsylvania R. R. Co.
v. Books, 57 Penn. 339, 98 Am. Dec.
229; Dietrich v. Baltimore, etc., R.
R., 58 Md. 347; Lane v. Bryant, 9
Gray (Mass.), 245, 69 Am. Dec. 282;
Chicago, etc., R. R. Co. v. Riddle, 60
111. 534; Virginia, etc., R. R. Co. v.
Sayers, 26 Gratt. (Va.) 328; Chicago,
etc., Ry. Co. v. Fillmore, 57 111. 265;
Michigan Cent. R. R. Co. v. Cole-
man, 28 Mich. 440; Mobile, etc., R. R.
Co. v. Ashcraft, 48 Ala. 15; Belief on-
taine Ry. Co. v. Hunter, 33 Ind. 335,
5 Am. Rep. 201; Adams v. Hannibal,
etc., R. R. Co., 74 Mo. 553, 41 Am.
Rep. 333; Kansas, etc., R. R. Co. v.
Pointer, 9 Kan. 620; Roberts v.
Burks, Litt. (Ky.) Sel. Cas. 411, 12
Am. Dec. 325; Hawker Y. Baltimore
6 Ohio R. R. Co., 15 W. Va. 628, 36
Am. Rep. 825]; Waite, C. J., and
Field, Miller and Blatchford, J. J.,
dissented. So a conductor's state-
ment that the accident was caused
by his negligence, made over ten
minutes after an accident, was held
inadmissible. Chesapeake & Ohio Ry.
Co. v. Reeves (Ky.), 11 S. W. 464;
so a statement fifteen minutes after,
Citizens' St. Ry. Co. v. Howard, 102
Tenn. 474; so a conductor's statement
eight to ten minutes after, Barker v.
St. Louis, etc., Ry. Co., 126 Mo. 143,
47 Am. St. Rep. 646, 26 L. R. A. 843.
SB Durkee v. Central Pacific R. R.
Co., 69 Cal. 533, 58 Am. Rep. 562. So
a statement by a motorman "seven
or eight minutes" after the collision
was held incompetent. Kimic v. San
Jose-Los Gatos Ry., 156 Cal. 379. Also,
Chicago Union Traction. Co. v. Daly,
129 111. App. 519; and Tennis v. Con-
solidated Rapid Transit Ry. Co., 45
Kan. 503.
THE LAW OF AGENCY
[BOOK IV
of the driver, made on the spot and immediately after the accident oc-
curred, that it happened through his carelessness, were held inadmissi-
ble; 98 so in an action against a railroad company for running over a
man, evidence of admissions by one trainman to another immediately
after the accident, was declared incompetent. 97
1799. Illustrations Admissible declarations. But on
the other hand in an action brought against a railroad company for
negligently injuring the plaintiff, declarations made by the engineer
immediately after stopping his train and backing up to the place of the
accident, as to the reason why he did not stop his train before the acci-
So where the statement was
"soon after." Willis v. Atlantic
& D. R. Co., 120 N. C. 508; Little
Rock Traction & Electric Co. v. Nel-
son, 66 Ark. 494; Weinkle v. Bruns-
wick & W. R. Co., 107 Ga. 367; Boone
v. Oakland Transit Co., 139 Cal. 490;
Lissak v. Crocker Estate Co., 119 Cal.
442. So a statement "just after,"
St. Louis S. Ry. Co. v. Brisco, 42 Tex.
Civ. App. 321. So a statement "short-
ly after," Harkins v. Queen Ins. Co.
of America, 106 N. Y. App. Div. 170;
and Dobbins v. Little Rock & E. Co.,
79 Ark. 85, 9 Ann. Cas. 84. So a
statement by a trainman immediately
after stopping the train, Memphis &
C. R. Co. v. Womack, 84 Ala. 149.
So engineer's statement at the next
town, Frye v. St. Louis, I. M. & S.
Ry. Co., 200 Mo. 377, 8 L. R. A. (N.
S.) 1069.
6 Ryan v. Gilmer, 2 Mont. 517, 25
Am. Rep. 744. The declaration of a
driver of a street car made as he was
getting off the car immediately after
running into the plaintiff, as to the
cause of the accident, held inadmiss-
ible in Luby v. Hudson River R. R.
Co., 17 N. Y. 131. So the declaration
of a street car driver immediately af-
ter an accident that it was his fault,
held inadmissible. Williamson v.
Cambridge R. R. Co., 144 Mass. 148;
and to same effect in Lane v. Bryant,
9 Gray (Mass.), 245, 69 Am. Dec. 282,
where Bigelow, J., says: "It is no
more competent because made im-
mediately after the accident than if
made a week or a month afterwards."
Statement a minute after accident
held inadmissible. Lecklieder v. Chi-
cago City Ry., 142 111. App. 139.
7 Adams v. Hannibal & St. Joseph
R. R. Co., 74 Mo. 553, 41 Am. Rep.
333; also Koenig v. Union Depot Ry.
Co., 173 Mo. 698; Butler v. Manhattan
Ry. Co., 143 N. Y. 417. 42 Am. St.
Rep. 738, 26 L. R. A. 46; St. Louis S.
M. & S. Ry. Co. v. Kelley, 61 Ark. 52;
Blackman v. West Jersey & S. R. Co.,
68 N. J. L. 1.
Impeachment of witness. State-
ments not admissible as part of the
res gestae may sometimes be admit-
ted for the purpose of impeaching a
witness who has given contradictory
or inconsistent testimony'; but in
such cases the effect of the statement
is to be confined to the impeachment
merely and is not to be regarded aa
evidence of the facts stated. Straight-
Creek Coal Co. v. Haney (Ky.), 87
S. W. 1114; International, etc., R. Co.
v. Munn, 46 Tex. Civ. App. 276; Louis-
ville, etc., R. Co. v. Davis (Ky.), 106
S. W. 304; Colorado Midland Ry. Co.
v. McGarry, 41 Colo. 398; Tennessee
River Transportation Co. v. Kava-
naugh, 101 Ala. 1; Radel v. Borches,
147 Ky. 506, 39 L. R. A. (N. S.) 227;
Kimic v. San Jose-Los Gatos Ry., 156
Cal. 379; Aldridge v. Aetna L. Ins.
Co., 204 N. Y. 83, 38 L. R. A. (N. S.)
343; Walsh v. Carter-Grume Co., 126
N. Y. App. Div. 229.
Contra: Simms v. Forbes, 86 Miss.
412, on the ground that the impeach-
ing statement was hearsay and in-
competent.
378
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES
[ 1799
dent, were not only held to be competent, but similar declarations made
by the engineer when he arrived at his destination about fifty minutes
later, in making a report to his superior officer, were also admitted ; 98
so in a case involving the liability of a railroad company for baggage
lost by fire, the declarations of the baggage master as to the origin of
the fire, made in view of the ruins but about fourteen hours after the
fire, were admitted ; 09 so in a case where the accident was brought about
by defective flanges on the wheels of the cars, the declarations of a
general superintendent of the railway made on the scene of the wreck
within three hours after it occurred were admitted ;* in the case of a
mine accident, statements as to the previous unsafe condition of the
appliances, made by a foreman on the ground while directing repairs
and at a time variously estimated as from "immediately" to "half an
hour" afterwards were admitted ; 2 in an action for injury caused by fire
the statements of the servant who started the fire, made on the morning
of the second day after, but while the fire was still burning, the injury
complained of being still incomplete and while the servant was on the
ground attempting to extinguish it were admitted ; 3 so statements made
under varying circumstances, fifteen minutes, 4 five to ten minutes, 5
six minutes, 6 five minutes, 7 three minutes, 8 two minutes 9 afterwards
ssKeyser v. Chicago & G. T. Ry.
Co., 66 Mich. 390. Both theories were
confused here.
9 Illinois Cent. R. R. Co. v. Tron-
stine, 64 Miss. 834. (Although the
court speaks of res gestae, this case
could properly be put upon the other
ground mentioned that the declara-
tions were made by one whose duty
it was to give such information.)
Contra: Michigan Cent. R. R. Co. v.
Carrow, 73 111. 348, 24 Am. Rep. 248.
i Roberts v. Port Blakely Mill Co.,
30 Wash. 25 (this case is certainly
doubtful on this point). See also,
Filkington v. Gulf C. & S. F. Ry. Co.,
70 Tex. 226.
a New York & Colo. Min. Syndi-
cate & Co. v. Rogers, 11 Colo. 6, 7
Am. St. Rep. 198. But the court
mentioned several other grounds up-
on which the statement might be ad-
mitted and seemed not to be entirely
clear as to the true one.
8 Yazoo & Miss. Valley Ry. Co. v.
Jones, 73 Miss. 229. It is to be noted
that the statement was made while
the fire was still raging and the in-
jury complained of still incomplete.
The point was not much elaborated.
To the same effect: see Mobile &
Ohio Ry. Co. v. Stinson, 74 Miss.
453; and Paraffine Oil Co. v. Berry
(Tex. Civ. App.), 93 S. W. 1089.
4 Missouri K. & T. Ry. Co. v. Vance
(Tex. Civ. App.), 41 S. W. 167. See
also, City of Austin v. Nuchols, 42
Tex. Civ. App. 5.
5 Hupfer v. National Distilling Co.,
119 Wis. 417. This case goes wholly
upon the theory of spontaneous
declarations, and not upon that of
agency, but the purpose of the decla-
rations was to show negligence of
the declarant as defendant's servant.
San Antonio, etc., Ry. Co. v. Gray,
95 Tex. 424.
T Dewalt v. Houston, E. & W. T. Ry.
Co., 22 Tex. Civ. App. 403.
s Wilson v. Southern Pacific Co., IS
Utah, 352, 57 Am. St. Rep. 766, 35
L. R. A. 611.
Gulf C. & S. F. Ry. Co. v. Tullis,
4 Tex. Civ. 'App. 219; Coll v.
1379
i8oo]
THE LAW OF AGENCY
[BOOK iv
have been held admissible ; so, in a number of cases, declarations made
within so short a time after the occurrence as properly to be designated
as immediately made have been held admissible. 10
1800. When principal bound by agent's representation of ex-
trinsic facts upon which authority depends. Where an agent's au-
thority to act in a given case depends upon the existence of certain
facts, it is ordinarily said to be incumbent upon a person proposing to
deal with the agent to ascertain whether those facts exist. 11 But where
the existence of those facts is a matter necessarily and peculiarly within
Easton Transit Co., 180 Pa. 618; Ohio,
etc., Ry. Co. v. Stein, 133 Ind. 243, 19
L. R. A. 733.
i O'Connor v. Chicago, etc., Ry.
Co., 27 Minn. 166, 38 Am. Rep. 288;
Hanover R. Co. v. Coyle, 55 Pa. 396;
McLeod v. Ginther, 80 Ky. 399; Lit-
tle Rock, etc., Co. v. Newman, 77
Ark. 599; Bass v. Chicago, etc.. Ry.
Co., 42 Wis. 654, 24 Am. Rep. i37;
Brownell v. Pacific R. R. Co., 47 Mo.
239; Toledo, etc., Ry. Co. v. Goddard,
25 Ind. 185. Where a boy who had
driven against a foot passenger on
the street immediately stopped his
horse and came back and said he
did not mean to, Judge Cooley said:
"It was as much a part of the res
gestae as would have been an ex-
clamation at the very instant the
plaintiff was struck." Cleveland V.
Newsome, 45 Mich. 62.
To same effect are: Little Rock,
etc., Ry. Co. v. Leverett, 48 Ark. 333,
8 Am. St. Rep. 230; Pierce v. Van
Dusen, 24 C. C. A. 280, 78 Fed. 693,
69 L. R. A. 705; Sample v. Consoli-
dated Light & Ry. Co., 50 W.
Va. 472, 57 L. R. A. 186; Kansas
City Southern Ry. Co. v. Moles,
58 C. C. A. 29, 121 Fed. 351;
Quincy Horse Ry. & Carrying Co.
v. Gnuse, 137 111. 264; South Coving-
ton C. St. Ry. Co. v. Riegler'-s Adm'r,
26 Ky. Law Rep. 666, 82 S. W. 382;
Cincinnati, etc., Ry. Co. v. Evans, 129
Ky. 152; Louisville Ry. Co. V. John-
Bon, 131 Ky. 277, 20 L. R. A. (N. S.)
133; Springfield Consolidated Ry. Co.
v. Welsch, 155 111. 511; Illinois Cent.
R. Co. v. Cotter (Ky.), 103 S. W. 279;
Zipperlan v. Southern Pac. Co., 7 Cal.
App. 206; Alsever v. Minneapolis,
etc., R. Co., 115 Iowa, 338, 56 L. R. A.
748; Ohio, etc., Ry. Co. v. Stein, 133
Ind. 243, 19 L. R. A. 733; United Ry.
Co. v. Cloman, 107 Md. 681.
In all the cases cited above the in-
jury was caused by the alleged negli-
gent management of cars or trains
and the statements admitted were
made while the person injured was
present and still upon the ground or.
under the car or wheels where he
was injured.
So statements have been admitted
where made "within a very few
minutes," Hermes v. Chicago & N.
W. Ry. Co., 80 Wis. 590; engineer's
statement about as soon as he stopped
his train, Hooker v. Chicago, Milwau-
kee & St. Paul Ry. Co., 76 Wis. 542;
"at a very brief interval thereafter,"
Gulf C. & S. F. Ry. Co. v. Pierce, 7 Tex.
Civ. App. 597; as soon after the ac-
cident as the injured man got quiet,
Young v. Seaboard Air Line Ry., 75
S. C. 190; twenty-five minutes after
but while trying to get help, Walters
v. Spokane International Ry. Co., 58
Wash. 293.
In Omaha, etc., Ry. Co. v. Chollette,
41 Neb. 578, the statements were
practically contemporaneous with the
event
11 See ante, 756. The Freeman v.
Buckingham, 18 How. (U. S.) 182, 15
L. Ed. 341.
1380
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES [ l8oi
the agent's knowledge, the question has arisen whether the party deal-
ing with him in good faith might not assume that giving information
upon that point was within the scope of his authority, and rely upon the
agent's representation ; and, particularly, whether, if the agent does the
act which could only be properly done in case the facts do exist, the
mere doing of the act, under such circumstances, may not properly be
regarded as such a representation on his part that the facts, which are
thus a condition precedent, do exist, as to bind his principal. This
question has already been so fully considered in an earlier chapter 12
that only a brief resume of it need be given here.
The question has been considered with great fulness in New York,
and in a leading case in that State 13 it is said : "It is a settled doctrine
of the law of agency in this State, that where the principal has clothed
his agent with power to do an act upon the existence of some extrinsic
fact necessarily and peculiarly within the knowledge of the agent, and
of the existence of which the act of executing the power is itself a rep-
resentation, a third person dealing with such agent in entire good faith,
pursuant to the apparent power, may rely upon the representation, and
the principal is estopped from denying its truth to his prejudice.
* * * If there be any exception to the rule within our jurisdiction,
it arises in the case of municipal corporations, whose structure and
functions are sometimes claimed to justify a more restricted liability." 14
It is to be observed in these cases that the question here is not as to
the existence, extent or nature of the agent's general authority : every
one knows what his authority is, the question is as to the existence
of certain extrinsic conditions or events upon which the right to exer-
cise that authority depends, and the fact of their existence is peculiarly
and necessarily within the agent's own knowledge.
1801. Illustrations Bills of lading Warehouse re-
ceipts Certified checks. In accordance with this rule, it was there
held that a carrier which had authorized an agent to issue bills of lad-
ing in its name, upon receipt of property for transportation, is liable
upon a bill of lading issued by such agent and transferred by the ship-
12 See ante, 759 et seq. R. R. Co., 65 N. Y. Ill, 22 Am. Rep.
is Bank of Batavia v. New York, 603.] See also, Van Dolsen v. Board
etc., R. R. Co., 106 N. Y. 195, 60 Am. of Education, 162 N. Y. 446; Bank of
Rep. 440, 35 Am. L. Reg. 573. [Cit- Monongahela Valley v. Weston, 172
ing North River Bank v. Aymar, 3 N. Y. 259.
Hill (N. Y.), 262; Griswold v. Haven, As to this, see Town of Solon v.
25 N. Y. 595, 82 Am. Dec. 380; New Williamsburgh Bank, 114 N. Y. 122;
York, etc., R. R. Co. v. Schuyler, 34 Hoag v. Town of Greenwich, 133 N.
N. Y. 30; Armour v. Michigan Cent. Y. 152.
I 3 8l
i8oi]
THE LAW OF AGENCY
[BOOK iv
per to one who, on the faith of it, had discounted a draft on the con-
signee, although in fact no property had been received by the carrier. 18
Upon this particular application of the rule, the weight of authority
is, doubtless, opposed, 16 but the doctrine of the New York court seems
most consonant with reason and justice, and is sustained by a consider-
able body of authority. 17 It is also adopted in the Uniform Bills of
Lading Act. 1 *
The New York court and others have applied the same doctrine to
warehouse receipts, 19 and to certificates of stock issued apparently
Bank of Batavia v. New York,
etc., R. Co., 106 N. Y. 195, supra, 60
Am. Rep. 440.
is Grant v. Norway, 10 C. B. 665.
(See also, Cox v. Bruce, 18 Q. B. Div.
147. Compare Montaignac v. Shitta,
15 App. Cas. 357); Friedlander v.
Texas & Pac. Ry. Co., 130 U. S. 416,
32 L. Ed. 991; Iron Mt. Ry. Co. v.
Knight, 122 U. S. 79, 30 L. Ed. 1077;
Pollard v. Vinton, 105 U. S. 7, 26 L.
Ed. 998; The Freeman v. Bucking-
ham, 18 How. (U. S.) 182, 15 L. Ed.
341; The Lady Franklin, 8 Wall. (U.
S.) 325, 19 L. Ed. 455. (See also,
Missouri Pac. Ry. Co. v. McFadden,
154 U. S. 155, 38 L. Ed. 944; The
Guiding Star, 10 C. C. A. 454, 62 Fed.
407; Planters' Fertilizer Co. v. Elder,
42 C. C. A. 130, 101 Fed. 1001; Eccles
v. Louisville, etc., R. Co., 198 Fed.
898); National Bank of Commerce v.
Chicago, etc., R. Co., 44 Minn. 224,
20 Am. St. Rep. 566; Williams v.
Wilmington, etc., R. Co., 93 N. Car.
42, 53 Am. Rep. 450; Louisiana Nat'l
Bank v. Laveille, 52 Mo. 380; Balti-
more, etc., R. Co. v. Wilkens, 44 Md.
11, 22 Am. Reo. 26 (immediately
changed by statute; Lazard v. Mer-
chants' Transportation Co., 78 Md.
1). See also, Fellows v. Steamer
Powell, 16 La. Ann. 316, 79 Am. Dec.
581; Hunt v. Miss. Cent. R. Co., 29 La.
Ann. 446; Sears v. Wingate, 3 Allen
(Mass.), 103; Dean v. King, 22 Ohio
St. 118; Lake Shore, etc., Ry. Co. v.
Nat. Live Stock Bank, 178 111. 506.
i 7 The New York rule is approved
1382
b^yrt li lo swuRVt land ^Ino
in Brooke v. New York, etc., R. R.
Co., 108 Penn. St. 529, reported also
In note 53 Am. Rep. 453; Sioux City
R. R. Co. v. First Nat. Bank, 10 Neb.
556, 35 Am. Rep. 488; Wichita Sav-
ings Bank v. Atchison, etc., Railroad
Co., 20 Kan. 519 (Semble).
The same doctrine was applied in
Wisconsin in a case in which a bank
had lands acquired in the payment
of debts and wished to sell them:
it was held that the question of
which lands the bank had so acquired
and had for sale was a fact peculiarly
within the knowledge of the cashier,
and his designation of the lands in
engaging a broker to sell them bound
the bank. Arnold v. National Bank,
126 Wis. 362, 3 L. R. A. (N. S.) 580.
is Paragraph 23.
is See Bank of New York v. Ameri-
can Dock & Trust Co., 143 N. Y. 559;
Hanover Nat. Bank v. Am. Dock &
Tr. Co., 148 N. Y. 612, 51 Am. St.
Rep. 721; Corn Exchange Bank v.
Am. Dock & Tr. Co., 163 N. Y. 332.
But not when issued by the agent to
himself, Bank of N. Y. v. Am. Dock
& Tr. Co., supra; Hanover Nat. Bank
v. Am. Dock & Tr. Co., supra. (Com-
pare Ruben v. Great Fingall Consoli-
dated, [1906] App. Cas. 439) unless
his principal had assented to or ac-
quiesced in such conduct. Corn Ex-
change Bank v. Am. Dock & Tr. Co.,
supra. The New York rule is adopted
in South Dakota. Fletcher v. Great
Western Elevator Co., 12 S. D. 643.
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES
upon the surrender of previous certificates, 20 but upon this point the
English cases are opposed as in the case of the bill of lading. 21
It is in accordance with the same principle that a bank is held liable
upon a check, which its cashier has certified as good, although in fact
the drawer had no funds, where third persons have in good faith ac-
quired rights in such check relying upon the certificate. 22
On the other hand, in Massachusetts, where an agent had authority
to pledge his principal's credit so that at any time not more than a
prescribed amount was involved, it was held that a third person in deal-
ing with the agent was bound to find out how much the indebtedness
incurred at any time actually was, and could not rely, as against the
principal, upon what the agent said. 23
20 New York, etc., R. Co. v. Schuy-
ler, 34 N. Y. 30; Fifth Ave. Bank v.
Forty-second St. R. Co., 137 N. Y.
231, 33 Am. St. Rep. 712, 19 L. R. A.
331; American Exch. Nat. Bank v.
Woodlawn Cemetery, 120 N. Y. App.
Div. 119; Jarvis v. Manhattan Beach
Co., 148 N. Y. 652, 51 Am. St. Rep.
727. See also, Tome v. Parkersburg,
etc., R. Co., 39 Md. 36, 17 Am. Rep.
540; Kisterbock's Appeal, 127 Pa. 601,
14 Am. St. Rep. 868; Allen v. South
Boston R. Co., 150 Mass. 200, 15 Am.
St. Rep. 185, 5 L. R. A. 716. But not
where the agent is acting for him-
self. Moores v. Citizens' Nat. Bank,
111 U. S. 156, 28 L. Ed. 385; Farring-
ton v. South Boston R. Co., 150 Mass.
406, 15 Am. St. Rep. 222, 5 L. R. A.
849. See also, Ruben v. Great Fingall
Consolidated, [1906] App. Cas. 439.
21 Whitechurch v. Cavanagh, [1902]
App. Cas. 117; British Mutual Bank-
ing Co. v. Charnwood Forest Ry. Co.,
18 Q. B. Div. 714. See also, Ruben v.
Great Fingall Consolidated, [1906]
App. Cas. 439. But in Hambro v.
Burnand, [1904] 2 K. B. 10, the court
of appeal, distinguishing the above
cases, held that where an agent had
written authority to issue policies of
insurance, a policy issued by him,
conforming to the terms of the pow-
er, was binding even though he is-
sued it with a wrong motive and in
abuse of his authority.
Negotiable instruments. With ref-
erence to strictly negotiable instru-
ments, the New York rule as laid
down in North River Bank v. Aymer,
3 Hill, 262, is, as has been seen (ante,
759, 760), generally followed. In
Louisville Trust Co. v. Louisville, etc.,
R. Co., 22 C. C. A. 378, 75 Fed. 433,
the New York rule was adopted to
uphold the guaranty of corporate
bonds in favor of bona fide purchas-
ers as against the objection that cor-
porate regulations had not been com-
plied with in its execution. See as
to this ante, 762.
22 Hill v. Nation Trust Co., 108
Penn. St. 1, 56 Am. Rep. 189; Mer-
chants' Bank v. State Bank, 10 Wall.
(U. S.) 604, 19 L. Ed. 1008; Espy v.
Bank of Cincinnati, 18 Wall. (U. S.)
604; Farmers', etc., Bank v. Butch-
ers', etc., Bank, 16 N. Y. 125, 69 Am.
Dec. 678; Irving- Bank v. Wetherald,
36 N. Y. 335; Pope v. Bank of Al-
bion, 59 Barb. (N. Y.) 226; Union
Trust Co. v. Preston Nat. Bank, 136
Mich. 460. See also, Second Nat.
Bank v. Averell, 2 App. Cas. D. C.
470, 25 L. R. A. 761. But not where
he certifies his own check. Lee v.
Smith, 84 Mb. 304, 54 Am. Rep. 101;
Claflin v. Farmers' Bank, 25 N. Y.
293; State v. Miller, 47 Oreg. 562, 6
L. R. A. (N. S.) 365.
23 Mussey v. Beecher, 3 Cush.
(Mass.) 511. See also, Baines v.
1383
1802, 1803] THE LAW OF AGENCY [BOOK IV
III
THE EFFECT UPON THE PRINCIPAL'S RIGHTS AND OBLIGATIONS OF
NOTICE TO OR KNOWLEDGE IN HIS AGENT
1802. In general. The question frequently arises whether the
principal may be affected not only by the agent's acts and contracts,
but also by the knowledge which he may possess, or the notice which
may come to him, respecting the subject matter of the agency, and
which would have affected the principal had it come to or been in him
while he was acting in person. The question has arisen in a great
variety of forms, but the answer has been substantially uniform, and
is commonly found stated in the language of the following section.
Many reasons have been assigned, but they are all predicated upon the
injustice which would result if the principal should be permitted to put
forward an agent to transact business for him and at the same time
escape the consequences which would have ensued from knowledge of
conditions or notice of the rights and interests of others had the princi-
pal transacted the business in person. "Policy and the safety of the
public," it was said in a leading case, 24 "forbids a person to deny knowl-
edge while he is so dealing as to keep himself ignorant, or so that he
may keep himself ignorant, and yet all the while let his agent know,
and himself perhaps profit by that knowledge. In such a case it would
be most iniquitous and most dangerous, and give shelter and encourage-
ment to all kinds of fraud, were the law not to consider the knowledge
of one as common to both, whether it be so in fact or not."
Stating this conclusion, first, in its most general and simple form
1803. General rule Notice to the agent is notice to the princi-
pal. It is the general rule, settled by an unbroken current of au-
thority, that notice to, or knowledge of, an agent while acting within
the scope of his authority and in reference to a matter over which his
authority extends, .is notice to, or knowledge of, the principal. 26 This
Ewing, 4 H. & C. 511, L. R. 1 Exch. Nixon v. Hamilton, 2 Dr. & W. 364, 1
320; Lowell Savings Bank v. Win- Ir. Eq. R. 46; Toulmin v. Steere, 3
Chester, 8 Allen (Mass.), 109. Mer. 210, 17 R. R. 67; In re Hennessy,
24 Lord Chancellor Brougham, in 2 Dr. & War. 555, 5 Ir. Eq. R. 259;
Kennedy v. Green, 3 Myl. & K. 699. Jennings v. Moore, 2 Vern. 609 (rati-
25 In re Payne & Co., 73 L. J. Ch. fication); Preston v. Tubbin, 1 Vern.
849, [1904] 2 Ch. 608, 91 .L. T. 777, 11 286; Espin v. Pemberton, 3 DeG. & J.
Manson, 437; Kennedy v. Green, 3 547, 28 L. J. Ch. 311; Brotherton v.
Mylne & Keen, 699; Dresser v. Nor- Hatt, 2 Vern. 574; Boursot v. Savage,
wood, 17 C. B. (N. S.) 466; Le Neve 35 L. J. Ch. 627, L. R. 2 Eq. 134;
v. Le Neve, Ambl. 436; Sheldon v. Frail v. Ellis, 16 Beav. 350, 22 L. J.
Cox, -2 Eden, 224; Ashley v. Baillie, 2 Ch. 467; Tweedale v. Tweedale, 23
Ves. 368; Maddox v. Maddox, 1 Ves. Beav. 341; Fuller v. Benett, 2 Hare,
61; Downesv. Power, 2 Ball & B. 491; 394, 12 L. J. Ch. 355; Atterbury v.
1384
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES
[ 1803
statement of it, however, is wholly tentative, and takes no account of
the various exceptions to it. The fuller and more accurate statement
Wallis, 8 DeG. M. & G. 454, 25 L. J.
Ch. 792; Kettlewell v. Watson, 51 L.
J. Ch. 281, 21 Ch. Div. 685, 46 L. T.
83; Majoribanks v. Hovenden, Dru.
11, 6 Ir. Eq. R. 238; Spaight v. Cowne,
1 Hem. & M. 359; Holland v. Hart, 40
L. J. Ch. 701, L. R. 6 Ch. 678, 25 L.
T. 191; Dickerson v. Matheson, 50
Fed. 73; Chicago St. P. M. & O. Co.
v. Belliwith, 28 C. C. A. 358, 83 Fed.
437; Hoffmann v. Mayaud, 35 C. C. A.
256, S3 Fed. 171; United States v.
Smith, 181 Fed. 545; Carter v. Gray,
79 Ark. 273; Union, etc., Ins. Co. v.
Robinson, 78 C. C. A. 268, 148 Fed.
358, 8 L. R. A. (N. S.) 883; Reed v.
Munn, 148 Fed. 737; McCalmont v.
Lanning, 154 Fed. 353; Brown v.
Cranberry Iron Co., 72 Fed. 96, 18 C.
C. A. 444; Alger v. Keith, 44 C. C. A.
371, 105 Fed. 105; Stanley v.
Schwalby, 162 U. S. 255, 40 L. Ed.
960; Armstrong v. Ashley, 204 U. S.
272, 51 L. Ed. 482; Russell v. Peavy,
131 Ala. 563; Kelly v. Burke, 132 Ala.
235; Lea v. Iron Belt. Merc. Co., 147
Ala. 421, 119 Am. St. Rep. 93; Trad-
ers Ins. Co. v. Letcher, 143 Ala. 400;
Wheeler v. McGuire, 86 Ala. 398, 2 L.
R. A. 808; Bessemer Land Co. v. Jen-
kins, 111 Ala. 135, 56 Am. St. Rep. 26;
Edson & Foulhe Co. v. Winsell, 160
Cal. 783; Carter v. Grey, 79 Ark. 273;
Allison v. Falconer, 75 Ark. 343;
Skillern v. Baker, 82 Ark. 86, 118
Am. St. Rep. 52, 12 Ann. Gas. 243;
Hunter v. Watson, 12 Cal. 363, 73 Am.
Dec. 543; Chapman v. Hughes, 134
Cal. 641; Pac. Lumber Co. v. Wilson,
6 Cal. App. 561; Farmers, etc.,
Bank v. Payne, 25 Conn. 444, 68
Am. Dec. 362; Johnson v. Tribbey, 27
App. D. C. 281; Decree 22 App. D. C.
368, affirmed Armstrong v. Ashley,
204 U. S. 272, 51 L. Ed. 482; New
York, etc., Ry. v. Russell, 83 Conn.
581; Saulsbury v. Wimberly, 60 Ga.
78; Thompson v. Overstreet, 80 Ga.
767; Githens v. Murray, 92 Ga. 748;
Am. St. Rep. 241; People's Savings
Bank v. Smith, 114 Ga. 185; Collins
v. C^ews, 3 Ga. App. 238; Pursley v.
Stahley, 122 Ga. 362; Burton v.
Perry, 146 111. 71; Fischer v. Tuohy,
186 111. 143; Booker v. Booker, 208
111. 529, 100 Am. St. Rep. 250; Cowan
v. Curran, 216 111. 598; Lowden v.
Wilson, 233 I1L 340; Merchants Nat
Bank v. Nichols, 223 111. 41; Sterling
Bridge Co. v. Baker, 75 111. 139; Shep-
pard v. Wood, 78 111. App. 428;
Mackay-Nisbit Co. v. Kuhlman, 119
111. App. 144; Shumacher v. Wolf, 125
111. App. 81; Merchants Nat. Bank v.
Nichols & Shepherd, 123 111. App. 430,
affirmed 223 111. 41; Marion Mfg. Co.
v. Harding, 155 Ind. 648; Field v.
Campbell, 164 Ind. 389, 108 Am. St.
Rep. 301; Miller v. Pfeiffer, 168 Ind.
219; Baldwin v. St. Louis K. & N. W.
Ry. Co., 75 Iowa, 297, 9 Am. St. Rep.
479; McMaken v. Niles, 91 Iowa, 628;
Mason v. Simplot, 119 Iowa, 94;
Campbell v. Park, 128 Iowa, 181;
Ware v. Heiss, 133 Iowa, 285; First
Nat. Bank v. Gunhus, 133 Iowa, 409.
9 L. R. A. (N. S.) 471; Sowler v. Day,
58 Iowa, 252; Condon v. Barnum
(Iowa), 106 N. W. 514; Merritt v.
Huber, 137 Iowa, 135; Van Buren
County v. Am. Surety Co., 137 Iowa,
490, 126 Am. St. Rep. 290; Roach v.
Karr, 18 Kan. 529, 26 Am. Rep. 788;
Hardten v. State, 32 Kan. 637; Bram-
blett v. Henderson (Ky.), 41 S. W.
575; Day v. Exchange Bank of Ken-
tucky, 25 Ky. Law Rep. 1449, 78 S.
W. 132; Sebald v. Citizens Bank
(Ky.), 105 S. W. 130; Connolley v.
Beckett (Ky.), 105 S. W. 446; Miller
v. Jones (Ky.), 107 S. W. 783; Ger-
man Ins. Co. v. Goodfriend, 30 Ky.
Law Rep. 218, 97 S. W. 1098; Schwind
v. Boyce, 94 Md. 510; Maryland Trust
Co. v. Nat. Mec. Bank, 102 Md. 608;
Jaquith v. Davenport, 191 Mass. 415;
Clark v. Roberts, 206 Mass. 235; Rus-
sell v. Sweezey, 22 Mich. 235; Sand-
Strickland v. Vance, 99 Ga. 531, 59 ford v. Nyman, 23 Mich. 326; Peoria
1385
i8o 3 ]
THE LAW OF AGENCY
[BOOK iv
of the rule is reserved for a later section, 28 after the subject has been
more completely developed.
Ins. Co. v. Hall, 12 Mich. 202; Taylor
v. Young, 56 Mich. 285; Campau v.
Konan, 39 Mich. 362; Thompson v.
Village of Mecosta, 141 Mich. 175;
Brown v. Harris, 139 Mich. 372; Geel
v. Goulden, 168 Mich. 413; Union
Central Life Insurance Co. v. Smith,
105 Mich. 353; Tilleny v. Wolverton,
50 Minn. 419; St. Paul & M. Trust
Co. v. Howell, 59 Minn. 295; Jeffer-
son v. Leithauser, 60 Minn. 251; Kel-
ley v. Citizens Mut Ass'n, 96 Minn.
477; Robertson Lumber Co. v. Ander-
son, 96 Minn.. 527; Lindgren v. Will-
iam Bros., 112 Minn. 186; Reynolds
v. Ingersoll, 11 Smedes & M. (Miss.)
249, 49 Am. Dec. 57; Ross v. Houston,
25 Miss. 591, 59 Am. Dec. 231; 111.
Cent. R. Co. v. Bryant, 70 Miss. 665;
Equitable Sureties Co. v. Sheppard,
78 Miss. 217; Hedrick v. Beeler, 110
Mo. 91; Hickman v. Green, 123 Mo.
165, 29 L. R. A. 39, 22 S. W. 455,
affirmed 27 S. W. 440; Priddy v.
MacKenzie, 205 Mo. 181; King v.
Rowlett, 120 Mo. App. 120; Coombs
v. Barker, 31 Mont. 526: Farmers
& Merchants Ins. Co. v. Wiard, 59
Neb. 451; Modern Woodmen of
America v. Colman, 68 Neb. 660;
Pringle v. Mod. Woodmen of Ameri-
ca, 76 Neb. 384; Henry v. Omaha
Packing Co., 81 Neb. 237; Brook-
house v. Union Pub. Co., 73 N. H. 368,
111 Am. St. Rep. 623, 6 Ann. Gas. 675,
2 L. R. A. (N. S.) 993; Warren v.
Hayes, 74 N. H. 355; Decree (Ch.
1905), 69 N. J. Eq. 580, affirmed,
Boice v. Conover, 71 N. J. Eq. 269;
Vulcan Detinning Co. v. American
Can Co., 70 N. J. Eq. 588; Clement
v. Young-McShea Amusement Co., 70
N. J. Eq. 677, 118 Am. St. Rep. 747;
Lockhart v. Washington Gold Min-
ing Co., 16 New Mex. 223; Weis-
ser v. Denison, 10 N. Y. 68, 61 Am.
Dec. 731; Consolidated Fruit Jar Co.
v. Wisner, 103 N. Y. App. Div. 453;
Badger v. Cook, 117 N. Y. App. Div.
328; Brooklyn Distil. Co. v. Standard
Distil. Co., 120 N. Y. App. Div. 237;
Gregg V. Baldwin, 9 N. D. 515; Aet-
na Indemnity Co. v. Schroeder, 12 N.
D. 110; Barnes v. McClinton, 3 Pen.
& Watts (Penn.), 67, 23 Am. Dec. 62;
Small v. Housman, 142 N. Y. App.
Div. 760; Jefferson County Bank v.
Dewey, 197 N. Y. 14; John Monks &
Sons v. West Street Improvement
Co., 149 N. Y. App. Div. 504; Lam-
bert v. Jenkins, 112 Va. 376; Cook
v. American Tubing Co., 28 R. I. 41,
9 L. R. A. (N. S.) 193; Salinas v.
Turner, 33 S. C. 231; American Free-
hold Land Mortgage Co. of London v.
Felder, 44 S. C. 478; Wardlaw v.
Troy Oil Mill, 74 S. C. 368, 114 Am.
St. Rep. 1004; Blowers v. Southern
Ry., 74 S. C. 221; Sparkman v. Sup.
Council American Leg. of Honor, 57
S. C. 16; Gibbes Machinery Co. v.
Roper, 77 S. C. 39; Lindquistv. North-
western, etc., Co., 22 S. Dak. 298;
Woodfolk v. Blount, 3 Hay. (Tenn.)
147, 9 Am. Dec. 736; Nashville, etc.,
R. R. Co. v. Elliott, 1 Coldw. (Tenn.)
611, 78 Am. Dec. 506; U. S. v. Schwal-
by, 87 Tex. 604; Grayson County Nat.
Bank v. Hall (Tex. Civ. App.), 91
S. W. 807; Flynt v. Taylor (Tex. Civ.
App.), 91 S. W. 864; Morrill v. Bos-
ley, 40 Tex. Civ. App. 7; Security
Mut. Life Ins. Co. v. Calvert (Tex.
Civ. App.), 100 S. W. 1033; Lips-
comb v. Houston & Texas, etc., Ry.,
95 Tex. 5, 93 Am. St. Rep. 804, 55
L. R. A. 869; Foote v. Utah Com-
mercial & Savings Bank, 17 Utah,
283; Black & Sons v. Johnson, 65 W.
Va. 518; Backman v. Wright, 27 Vt.
187, 65 Am. Dec. 187; Corliss v.
Smith, 53 Vt. 532; Mack Mfg.
Co. v. Smoot, 102 Va. 724; Fore-
man v. German Alliance Ins. Co.,
104 Va. 694, 113 Am. St. Rep.
1071, 3 L. R. A. (N. S.) 444;
26 See post, 1813.
I 3 86
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES
[ 1804
1804.
Illustrations. The cases in which this rule has
been applied are too numerous for specific statement, but the following
cases will serve as illustrations of the application of the rule. Thus,
where an agent acts for his principal in the purchase or other acqui-
sition of property or securities, notice to the agent of unrecorded
deeds 27 or mortgages, or of liens upon 28 or equities 29 against the prop-
erty, or of defects or infirmities in the title, 30 will be imputed to the
principal. So where an agent acts for his principal in the loaning of
money, the principal will be affected by the knowledge of the agent as
to who the real borrower is. 31 The same rule applies where an agent
authorized to purchase notes had notice that they were "tainted with
usury ;" 32 where an agent authorized to receive money had notice that
it was being taken from a trust fund; 33 where an agent buying stock
in a bank had notice that its capital was impaired ; 3 * where an agent
doing business with a firm had notice of the withdrawal of a partner ; 35
Traders & Trucksters Bank v. Black,
108 Va. 59; Lynch v. Kineth,
36 Wash. 368, 104 Am. St. Rep. 958;
Haynes v. Gay, 37 Wash. 230; Allen
v. Treat, 48 Wash. 552; Elliott v.
Knights of Modern Mac., 46 Wash.
320, 13 L. R. A. (N. S.) 856; Knott v.
Tidyman, 86 Wis. 164; Peterson v. El-
holm, 130 Wis. 1. [This list does
not purport to be complete.]
Under statutes. Whether notice
to an agent is notice to his princi-
pal under statutes providing for no-
tice, must depend upon the circum-
stances and the statute. In many
cases, it will be clear that a personal
notice was contemplated. See Street
Lumber Co. v. Sullivan, 201 Mass.
484, 16 Ann. Gas. 354.
2?McMaken v. Niles, 91 Iowa, 628;
Harrell v. Broocks, 52 Tex. Civ. App.
334; so a recorded mortgage. Field
v. Campbell, 164 Ind. 389, 108 Am. St.
Rep. 301.
28Schwind v. Boyce, 94 Md. 510;
Fischer v. Tuohy, 186 111. 143.
29 Knott v. Tidyman, 86 Wis. 164;
Morris v. Georgia Loan Co., 109 Ga.
12, 46 L. R. A. 506; Henry v. Sneed,
97 Mo. 407, 17 Am. St. Rep. 580; Mul-
lanphy Sav. Bank v. Schott, 135
111. 655, 25 Am. St. Rep. 401;
Johnston Harvester Co. v. Miller, 72
Mich. 265, 16 Am. St. Rep. 536; Hed-
1387
rick v. Beeler, 110 Mo. 91; Coombs v.
Barker, 31 Mont. 526; Huff v. Farwell,
67 Iowa, 298; Cassiday, etc., Co. v.
Terry, 69 W. Va. 572.
so Stanley v. Schwalby, 162 U. S.
255, 40 L. Ed. 960; Brown v. Cran-
berry Iron & Coal Co., 18 C. C. A.
444, 72 Fed. 96; Bramblett v. Hen-
derson (Ky.), 41 S. W. 575; Hick-
man v. Green, 123 Mo. 165, 29 L. R.
A. 39; so insurance agents' notice of
incumbrances on the property. Farm-
ers & Mer. Ins. Co. v. Wiard, 59 Neb.
451.
31 American Land Mortgage Co. of
London v. Felder, 44 S. C. 478;
Salinas v. Turner, 33 S. C. 231;
Strickland v. Vance, 99 Ga. 531, 59
Am. St. Rep. 241; Russell v. Peavy,
131 Ala. 563; so knowledge of the
cashier of a bank in regard to bor-
rower's security. Foote v. Utah,
Com. & Sav. Bank, 17 Utah, 283.
32 Haynes v. Gay, 37 Wash. 230;
Sheppard v. Wood, 78 111. App. 428.
33 Manson v. Simplot, 119 Iowa, 94;
Chapman v. Hughes, 134 Cal. 641.
3* Day v. Exchange Bank of Ken-
tucky, 117 Ky. 357.
ssGithens v. Murray, 92 Ga. 748;
Straus Gunst. Co. v. Sparrow, 148 N.
C. 309; Jenkins v. Renfrew, 151 N.
C. 323:
i8o 4 ]
THE LAW OF AGENCY
[BOOK iv
where an agent authorized to sell goods had notice of the mental in-
capacity of the vendee ; 38 where an agent making a sale of land had no-
tice as to who the real purchaser was ; ST where a sales agent had notice
of defects in machinery sold by him with a warranty ; 88 where an agent
in charge of a lumber yard had notice of the dangerous manner in
which the lumber was piled; 89 where a leasing agent had notice that
the lessee was making improvements; 40 where an agent in whose de-
partment it was to receive such notice had notice of the assignment of
a claim ; 41 where an agent charged with the duty of receiving goods
for export had notice that the exportation of the particular goods was
prohibited;* 2 where an agent charged with the control of a team of
horses had notice that they were in the habit of running away j 43 where
a coachman having charge of a dog had notice that the dog was vi-
cious. 4 * So knowledge of an attorney, present and acting for his client,
as to the character of a document signed by his client, is imputed to the
client.* 6 So where an agent had sufficient authority to institute an ac-
tion based on his own knowledge, the principal was held to have notice
of all the facts under which the agent acted. 46
38 Kelly v. Burke, 132 Ala. 235; or
of a notice not to sell to one who
was an habitual drunkard. Jackson
Co. v. Schmid, 141 Mo. App. 229.
37 Tilleny v. Wolverton, 50 Minn.
419.
ss Marion Mfg. Co. v. Harding, 155
Ind. 648; Buckeye Saw Co. v. Ruth-
erford, 65 W. Va. 395. But see, Neal
v. Smith, 54 C. C. A. 226, 116 Fed. 20.
so Baldwin v. St Louis K. & N. W.
Ry. Co., 75 Iowa, 297, 9 Am. St. Rep.
479.
40 Jefferson v. Leithauser, 60 Minn.
251.
*i Illinois Cent. Ry. Co. v. Bryant,
70 Miss. 665.
42Dickerson v. Matheson, 50 Fed.
73, affirmed 6 C. C. A. 466, 57 Fed.
524.
43 Lynch v. Kineth, 36 Wash. 368,
104 Am. St. Rep. 958; Gropp v.
Great Atlantic Tea Co., 141 N. Y.
App. Div. 372; Henry v. Omaha Pack-
ing Co., 81 Neb. 237.
44 Baldwin v. Casella, 26 L. T. Rep.
N. S. 707. Compare Stiles v. Cardiff
Steam Nav. Co., 10 L. T. Rep. N. S.
1388
844, 33 L. J. Q. B. 310. See also,
Brice v. Bauer, 108 N. Y. 428, 2 Am.
St. Rep. 454.
4G Chicago, etc., Ry. Co. v. Belli-
with, 83 Fed. 437, 28 C. C. A. 358.
46 Campau v. Konan, 39 Mich. 362.
Knowledge of an attorney engaged
in collecting a claim of mortgage not
properly recorded, is notice to his
principal. Littauer v. Houck, 92
Mich. 162, 31 Am. St. Rep. 572.
Where defendant's agent to con-
tract for the delivery of flues knew
or should have known the special
purpose for which the flues were
purchased, his knowledge is the
principal's in determining liability
for special damage to plaintiff for
breach of contract. Neal v. Pender-
Hyman Hdwe. Co., 122 N. Car. 104,
65 Am. St. Rep. 697.
Notice of a defective ceiling to an
agent to collect rent and make re-
pairs is chargeable to the principal
In an action of damages by the ten-
ant. Bollard v. Roberts, 130 N. Y.
269, 14 L. R. A. 238.
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES
[
In a great variety of cases, too numerous to be enumerated here, no-
tice to or knowledge of the agent acting for an insurance company has
been imputed to his principal. 47
1805. The theories of the rule a. Identification. Two gen-
eral theories prevail as to the foundation upon which this rule is based,
and the results of these respective theories are not entirely alike. The
first finds the reason of the rule in the legal identity of the agent with
the principal during the continuance of the agency in the fact that
the agent, while keeping within the scope of his authority, is, as to the
matters embraced within it, for the time being the principal himself, or,
at all events, the alter ego of the principal the principal's other self.
If the principal had acted in person, he would or would not, under the
same circumstances, have received the notice or knowledge in person.
In legal effect the situation should not be different where he acts by his
agent. Whatever notice or knowledge, then, reaches the agent during
this time and under these circumstances, in law reaches the principal,
whether it does so in fact or not. It is thought to be the legitimate and
necessary result of this view, therefore, that only such notice or knowl-
edge as comes to the agent, while he is agent, is thus binding upon the
principal. 4 *
4? See ante, 1066-1073. Creed
v. Sun F. Ins. Co., 101 Ala. 522, 23
L. R. A. 177; Phoenix Ins. Co. v.
Flemming, 65 Ark. 54, 39 L. R. A.
789; Home Ins. Co. v. Mendenhall,
164 111. 458, 36 L. R. A. 374; Hamil-
ton v. Dwelling House Ins. Co., 98
Mich. 535, 22 L. R. A. 527; Dailey v.
Preferred, etc., Ass'n, 102 Mich. 289,
26 L. R. A. 171; Humphreys v. Na-
tional Ben. Ass'n, 139 Pa. 264, 11 L.
R. A. 564; Bawden v. London, etc.,
Ass'n Co., F1892] 2 Q. B. 534. (This
list does not purport to be complete.)
48 "The agent stands in place of
the principal, and notice therefore to
the agent is notice to the principal;
but he cannot stand in the place of
the principal until the relation of
principal and agent is constituted,
and as to all the information which
he previously acquired, the principal
is a mere stranger." Sir John Leach
in Mountford v. Scott, 3 Madd. 34.
"It is only during the agency that
the agent represents and stands in
the shoes of the principal. Notice
to him, then, is notice to the princi-
pal. 'Notice to him twenty-four hours
before the relation commenced is no
more notice than twenty-four hours
after it has ceased would be."
Sharswood, J., in Houseman v. Gir-
ard, etc., Building Ass'n, 81 Pa. 256.
[But in Gunster v. Scranton, etc.,
Co., 181 Pa. 327, 59 Am. St. Rep. 650,
the rule is said to be based upon the
duty to communicate the informa-
tion to the principal.]
Somewhat of double ground was
taken by the Supreme Court of
Michigan: "The reason upon which
the doctrine of notice to the agent
being held notice to the principal
rests, is that the agent is substituted
in the place of, and represents, the
principal in, the particular trans-
action, and therefore while acting in
such matters he takes the place of
the principal, and the latter is bound
by the agent's act in the light of
the knowledge then possessed by the
1389
i8o6]
THE LAW OF AGENCY
[BOOK iv
A theory of identification, however, which shall take the agent as it
finds him, that is, with his then existing knowledge, is not difficult to
imagine. It exists in other fields. If, for example, I buy a horse and
then employ the former owner as driver, in determining my liability as
his master to third persons for his negligent driving, his previous knowl-
edge of the habits and characteristics of the horse would be taken into
account; in determining his liability to me for negligent use of the
horse, I should expect to take advantage of the same knowledge ; if now
I should authorize him as my agent to sell the horse, why should not the
same thing be true?
1806. b. Conclusive presumption of communication.
The other theory is based upon the rule that it is the duty of the agent
to disclose to his principal all notice or knowledge which the agent
may possess and which appears to be necessary for the principal's pro-
tection or guidance. This duty the law conclusively presumes the
agent to have performed, and, therefore, imputes to the principal what-
ever notice or knowledge the agent then possessed, whether he in fact
disclosed it or not. 40 According to this view it is immaterial when the
agent obtained the information, if he then possessed it.
agent." Marston, C. J., in Advertiser
& Tribune Co. v. Detroit, 43 Mich.
116.
In Boursot v. Savage, L. R. 2 Eq.
134, Kindersley, V. C., said: "It is
a moot question upon what principle
this doctrine rests. It has been held
by some that it rests on this: that
the probability is so strong that the
solicitor would tell his client what
he knows himself, that it amounts to
an irresistible presumption that he
did tell him; and so you must pre-
sume actual knowledge on the part
of the client. I confess my own im-
pression is that the principle on
which the doctrine rests is this:
that my solicitor is alter ego; he is
myself; I stand in precisely the same
situation as he does in the trans-
action, and therefore his knowledge
is my knowledge; and it would be a
monstrous injustice that I should
have the advantage of what he
knows without the disadvantage.
But whatever be the principle upon
which the doctrine rests, the doc-
trine itself is unquestionable."
49 "The general rule that a princi-
pal is bound by the knowledge of
his agent is based on the principle of
law, that it is the agent's duty to
communicate to his principal the
knowledge which he has respecting
the subject-matter of negotiation,
and the presumption that he will per-
form that duty." Bradley, J., in The
Distilled Spirits, 11 Wall. (U. S.) at
p. 367, 20 L. Ed. 167. See also,
Irvine v. Grady, 85 Tex. 120.
In New Jersey a somewhat differ-
ent theory apparently prevails and
the principal is only charged with no-
tice where he would have acquired
it if he had acted in person. See
Sooy v. State, 41 N. J. L. 394; Wil-
lard v. Denise, 50 N. J. Eq. 483, 26
Atl. 29, 35 Am. St. Rep. 788; Vulcan
Detinning Co. v. American Can Co.,
70 N. J. L. 588, 67 Atl. 339; Lanning
v. Johnson, 75 N. J. L. 259, 69 Atl.
490.
1390
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES [ 1807, l8o8
It is obvious that this is rather a justification of the. rule than a rea-
son for it. A rule based upon the performance of a duty which, so far as
the point here involved is concerned is one from which the agent can-
not escape, from which the principal can not release him, and which
the law conclusively presumes has been performed whether it has been
in fact or not, seems to differ little from a purely arbitrary requirement.
Its real justification is doubtless found in the conviction that it can
not be tolerated that an agent shall act in a transaction, with his mind
full of material knowledge respecting it, and yet the principal be wholly
unaffected by that knowledge, merely because the agent happened to
acquire it before the agency began.
The courts have not, however, always recognized these differences,
nor have their decisions in all cases been consistent with the theory
adopted.
1807. I. Notice acquired during agency. So far as that notice
or knowledge which is acquired during the agency is concerned, the
result under either theory is obviously the same.
Such notice or knowledge is chargeable to the principal in the same
manner, and with the same effect, as though it had been communicated
to or acquired by him in person.
As has been pointed out, it is, of course, entirely immaterial that the
agent has not in fact communicated his information to the principal.
If the. agent fails to do his duty in this respect, and the principal suffers
injury thereby, he has his remedy against the agent.
1808. II. Knowledge acquired prior to agency. With reference
to knowledge acquired before the agency began, however, there is more
difficulty, and the two theories lead to different results. The theory
based upon the legal identity of the parties, as has been seen, limits the
application of the rule to such notice or knowledge as was acquired dur-
ing the agency. This was at first adopted by the English courts, 50 and
has since been followed by many of the courts in the United States."
. (' :/ or .noVifloO
BO Preston v. Tubbin, 1 Vern. 287; ""It is well settled," said Shars-
Brotherton v. Hatt, 2 Vern. 574; wood, C. J., "that the principal is
Fitzgerald v. Fauconberg, Fitz Gib- only to be affected by knowledge ac-
bon, 207; Lowther v. Carlton, 2 Atk. quired in the course of the business
242; Warrick v. Warrick, 3 Atk. 291; in which the agent was employed."
Worsley v. Scarborough, 3 Atk. 392; Houseman v. Girard, etc., Ass'n, 81
Le Neve v. Le Neve, 3 Atk. 648; Pa. 256 [citing Hood v. Fahnestock,
Mountford v. Scott, 3 Madd. 34 s. c. 8 Watts (Pa.), 489, 44 Am. Dec. 147;
on appeal, 1 Turn. & Russ. 274; Bracken v. Miller, 4 Watts & Serg.
Hiern v. Mill, 13 Ves. Jr. 114. See (Pa.) 102; Martin v. Jackson, 2
also, Taylor v. Yorkshire Ins. Co.. Casey (27 Pa.), 504, 67 Am. Dec.
[1913] 1 Irish, 1. 489]. See also, Wetzel v. Linnard,
1391
1809]
THE LAW OF AGENCY
[BOOK iv
The other theory, however, based upon the duty of the agent to disclose
to his principal all knowledge and information actually possessed by the
agent in relation to the subject-matter of the agency, no matter when
acquired, and therefore charging the principal with it, has since been
firmly established by the English courts, 52 and has been adopted by the
supreme court of the United States, 53 and by many of the states. 54
1809. Requirement of present knowledge. It is indis-
pensable to this rule imputing to the principal knowledge which the
agent acquired before the creation of the agency, that it shall still be
present in the agent's mind when he becomes charged with the duty of
15 Pa. Sup. Ct. Rep. 503; Langen-
heim v. Anschutz-Bradberry Co., 2
Pa. Sup. Ct. 285; Bangor, etc., Ry.
Co. v. American Slate Co., 203 Pa. 6.
See also, the recent case declaring
this the rule in Pennsylvania, al-
though it is held otherwise by the
United States supreme court. Satter-
field v. Malone, 35 Fed. Rep. 445, 1
L. R. A. 35.
To the same effect are: Willis v.
Vallette, 4 Mete. (Ky.) 186; Howard
Ins. Co. v. Halsey, 8 N. Y. 271, 59 Am.
Dec. 478; McCormick v. Wheeler, 36
111. 114, 85 Am. Dec. 388; Mundine v.
Pitts, 14 Ala. 84; Pepper v. George,
51 Ala. 190; McCormick v. Joseph, 83
Ala. 401; Wheeler v. McGuire, 86
Ala. 398, 2 L. R. A. 808; Goodbar v.
Daniel, 88 Ala. 583, 16 Am. St. Rep.
76. [But see, Lea v. Iron Belt Merc.
Co., 147 Ala. '421, 119 Am. St. Rep.
93, 8 L. R. A. (N. S.) 279, since
overruled in Hall, etc., Mach. Co. v.
Haley Furn. Mfg. Co., 174 Ala. 190,
56 South. 726]; Pritchett v. Sessions,
10 Rich. (S. C.) L. 293; Weisser v.
Denison, 10 N. Y. 68; 61 Am. Dec.
731; Farmers, etc., Bank v. Payne, 25
Conn. 444, 68 Am. Dec. 362; Bank of
United States v. Davis, 2 Hill (N.
Y.), 451; Hayward v. National Ins.
Co., 52 Mo. 181, 14 Am. Rep. 400;
Blumenthal v. Brainerd, 38 Vt. 402,
91 Am. Dec. 349; Second Nat. Bank
v. Curren, 36 Iowa, 555; Atchison,
etc., R. R. Co. v. Benton, 42 Kan. 698;
Kauffman v. Robey, 60 Tex. 308, 48
Am. Rep. 264; Texas Loan Agency
v. Taylor, 88 Tex. 47; Allen v. Gar-
rison, 92 Tex. 546; Teagarden v.
Lumber Co., Tex. , 154 S. W.
973; Meyers V. Gerhart, 54 Wash.
657.
82 Dresser v. Norwood, 17 Com.
Bench (N. S.), 466; Rolland v. Hart,
L, R. 6 Ch. App. 678.
53 The Distilled Spirits, 11 Wall.
(U. S.) 356, 20 L. Ed. 167.
"Schwind v. Boyce, 94 Md. 510;
Trentor v. Pothen, 46 Minn. 298, 24
Am. St. Rep. 225; Hunter v. Watson,
12 Cal. 363, 73 Am. Dec. 543; Bierce
v. Red Bluff Hotel, 31 Cal. 160; Hart
v. Bank, 33 Vt. 252; Whitten v. Jen-
kins, 34 Ga. 297; Day v. Wamsley,
33 Ind. 145; Cummings v. Harsa-
brauch, 14 La. Ann. 711; Hovey v.
Blanchard, 13 N. H. 145; Bank v.
Campbell, 4 Hump. (Tenn.) 394;
Campau v. Konan, 39 Mich. 362;
Chouteau v. Allen, 70 Mo. 290; Leb-
anon Savings Bank v. Hollenbeck, 29
Minn. 322; Abell v. Howe, 43 Vt. 403;
Yerger v. Barz, 56 Iowa, 77; Fairfleld
Savings Bank v. Chase, 72 Me. 226,
39 Am. Rep. 319; Suit v. Woodhall,
113 Mass. 391; Shafer v. Phoenix
Ins. Co., 53 Wis. 361; Brothers v.
Bank, 84 Wis. 381, 36 Am. St. Rep.
932; Wilson v. Minnesota, etc., Ins.
Ass'n, 36 Minn. 112, 1 Am. St. Rep.
659; Constant v. University of Ro-
chester, 111 N. Y. 604, 7 Am. St. Rep.
769, 2 L. R. A. 734; Gaspard v. Four-
teenth St. Store, 143 N. Y. App. Div.
402; Snyder v. Partridge, 138 III.
173, 32 Am. St. Rep. 130; Wright
v. Hooker, 55 Tex. Civ. App. 47;
Cabin Branch Min. Co. v. Hutchison,
1392
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES
[ I80 9
acting with reference to the matter to which the knowledge relates. 55
A principal may be affected by knowledge which he himself once had,
but has now forgotten. He may also be affected by knowledge which
his agent acquired or had during the agency and under such circum-
stances as to make it notice, but which the agent has since forgotten. 58
But he cannot be affected by information which one who is now his
agent once had, but had forgotten before he became agent and before
112 Va. 37, Ann. Gas. 1912, D. 93, and between the acts, it was said that no
the many other cases cited in the
following notes.
ss Lebanon Savings Bank v. Hol-
lenbeck, 29 Minn. 322; Dresser v.
Norwood, 17 C. B. (N, S.) 466; The
Distilled Spirits, 11 Wall. (U. S.)
356, 20 L. Ed. 167; Fairfield Savings
Bank v. Chase, 72 Me. 226, 39 Am.
Rep. 319.
Knowledge or notice will not bind
if it does not appear to have been
retained. Yerger v. Barz, 56 Iowa, 77.
To the same effect: Brothers v. Bank
of Kaukauna, 84 Wis. 381, 36 Am.
St. Rep. 932; Wilson v. Minn. Farm-
ers Ins. Ass'n, 36 Minn. 112, 1 Am.
St. Rep. 659; Gregg v. Baldwin, 9
N. D. 515.
In Constant v. University of Ro-
chester, 111 N. Y. 604, 7 Am. St. Rep.
769, 2 L. R. A. 734, where an agent
who acted for the defendant in tak-
ing a mortgage, the agent, being an
attorney in active practice, had
eleven months before acted for the
plaintiffs in taking a mortgage upon
the same premises which was not re-
corded, it was held that in the ab-
sence of clear and satisfactory show-
ing that the agent remembered the
existence of the plaintiffs' mortgage
when he acted for the defendant, no
notice of the existence of the first
mortgage could be imputed to de-
fendant. To the same effect: Slat-
tery v. Schwannecke, 118 N. Y. 543;
Comey v. Harris, 133 N. Y. App. Div.
686.
In Equitable Securities Co. v.
Sheppard, 78 Miss. 217, where the
same sort of question was involved,
court could assume, in the absence
of clear and satisfactory proof, that
the first act was present to the
agent's mind.
In Badger v. Cook, 117 N. Y. App.
Div. 328, where a person had acted
as agent in a transaction involving
the ownership of cattle, and it ap-
peared that while the cattle were
still calves and before he became
agent he had received notice of cer-
tain facts respecting their owner-
ship, it was held that this notice
could not be imputed to his princi-
pal unless it was shown by clear and
satisfactory proof that he actually
remembered it at the time of the
transaction in question.
In a number of cases information
acquired apparently before the com-
mencement of the agency has been
held to be binding upon the princi-
pal, no question being raised as to
whether the agent ill fact remem-
bered it or not; but they were all
cases wherein the events constituted
practically one continuous transac-
tion, and there was probably no
room for question that the agent ac-
tually remembered. See Henry v.
Omaha Packing Co., 81 Neb. 237;
Walker v. Grand Rapids Flouring
Mill Co., 70 Wis. 92; Brothers v.
Bank of Kaukauna, 84 Wis. 381, 36
Am. St. Rep. 932; White v. King, 53
Ala. 162; Dunklin v. Harvey, 56 Ala.
177; Wiley, Banks & Co. v. Knight,
27 Ala. 336; Miller v. Jones (Ky.),
107 S. W. 783.
so Cox v. Pearce, 112 N. Y. 637, 3
L. R. A. 563.
but more than six years had elapsed
88 1393
i8io]
THE LAW OF AGENCY
[BOOK iv
there were any facts to make it significant or any duty to report it or
remember it or to govern one's conduct with reference to it. The
agent's recollection must be not simply hazy and indefinite, but as defi-
nite and precise as would be required if now coming to the agent for
the first time. 57 It must also be present to his mind so nearly at least
in relation to the actual transaction which it affects as to impose upon
the agent the obvious duty to communicate it in reference to that trans-
action ; it is sometimes said that it must be "present to his mind at the
very time of the transaction in question." 58 The question is a question
of fact, 59 and the burden of proving that the agent had such recollec-
tion is held to be upon the party alleging it, and not upon the principal
to show that the agent did not have it. 60
The same considerations apply to the case in which the agent during
the agency acquires knowledge respecting a matter not then so related
to his authority as to make it notice, but which, it is alleged, subse-
quently became notice because, with the information still in mind, he
acts as agent respecting the subject matter to which the notice relates.
1810. There may, however, doubtless be cases in which
the information was received so immediately before the transaction as
ST See Burton v. Perry, 146 Til. 71;
Roderick v. McMeekin, 204 111. 625;
Snyder v. Partridge, 138 111. 173, 32
Am. St. Rep. 130.
ss This is the language of Constant
v. University of Rochester, 111 N. Y.
604, 7 Am. St. Rep. 769, 2 L. R. A.
734; Slattery v. Schwannecke, 118 N.
Y. 543.
so Gregg v. Baldwin, 9 N. D. 515.
That the agent had received notice
may be shown by circumstances as
well as by direct evidence. Fore-
man v. German Ins. Ass'n, 104 Va.
694, 113 Am. St. Rep. 1071, 3 L. R.
A. (N. S.) 444. But it must be fol-
lowed up with proof that it was
present in the agent's mind at the
time of the transaction in question.
Brown v. Cranberry Iron Co., 18
C. C. A. 444, 72 Fed. 96.
eo Constant v. University of Ro-
chester, 111 N. Y. 604, 7 Am. St. Rep.
769, 2 L. R. A. 734; Denton v. On-
tario Bank, 150 N. Y. 126; Equitable
Securities Co. v. Sheppard, 78 Miss.
217; Morrison v. Bausemer, 32 Gratt.
(Va.) 225; Johnson v. Nat. Exch.
1394
Pank, 33 Gratt. (Va.) 473; Foreman
v. German Ins. Ass'n, 104 Va. 694,
113 Am. St. Rep. 1071; Brown v.
Cranberry Iron Co., 18 C. C. A. 444,
72 Fed. 96; Red River Val. Land &
Inv. Co. v. Smith, 7 N. D. 236.
Not only is the burden of proof up-
on the party alleging recollection, but
in Constant v. University, supra, it is
said that the burden is on the plaintiff
to prove "clearly and beyond question"
that the agent remembered; that the
proof must be "clear and satisfac-
tory," and that language is repeated
in many New York cases. The same
language is used in Equitable Secur-
ities Co. v. Sheppard, supra. In Mor-
rison v. Bausemer, supra, it is said
that there must be "very strong evi-
dence."
In Equitable Securities Co. v.
Sheppard, supra, the court goes so
far as to say that it "appears that
the courts will presume forgetfulness
until overcome by evidence unless
the occurrence was so recent as to
make it incredible."
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES [ l8ll, l8l2
to warrant the presumption that it could not have been forgotten. "It
may fall to be considered," said Lord Eldon, "whether one transaction
might not follow so close upon the other as to render it impossible to
give a man credit for having forgotten it. I should be unwilling to
go so far as 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." ul
1811. This theory, however, recognizes certain excep-
tions which are clearly founded upon and consistent with it. Thus the
agent could not reasonably be expected to disclose information which,
though once possessed by him, had been, in fact, forgotten. So the law
would not compel him to disclose what it was his legal duty to conceal.
So the agent could not be deemed to have disclosed information where,
from his relations to the subject-matter, or his previous conduct, his
agency relation was practically non existent. Subject to these excep-
tions, it is believed that this theory is supported by the better reason
and by a clear preponderance of authority.
1812. What is meant by notice acquired "during the
agency" or "prior to agency." When it is said that notice received
by the agent "during the agency" is imputed to the principal it is neces-
sary to consider when the agency in this respect is to be deemed to
begin. When the agency relates to a single non-continuing transaction
it would be clear that the notice to be imputed to the principal under
this rule must relate to that transaction and come to the agent after
he has undertaken to act with reference to it. Where the agent is em-
ployed for a continuing period, but is to act with reference to a series
of disconnected and unrelated transactions, the notice which is to af-
fect the principal with reference to any such transactions must ordi-
i In Mountford v. Scott, 1 Turn, that "it will be presumed that the
& Russ. 274. agent retains the knowledge for a
In Brothers v. Bank of Kaukauna, reasonable time." By this it is as-
84 Wis. 381, 36 Am. St. Rep. 932, it sumed that the court means nothing
is said "if the agent acquires his in- more than is meant by the quotation
formation as recently as to make it above from the Wisconsin court,
incredible that he should have for- "Knowledge acquired not only dur-
gotten it, his principal will be bound, ing the continuance of his agency,
although not acquired while trans- but also that possessed by him so
acting the business of the principal." shortly prior to his employment as
To same effect: see McDonald v. necessarily to give rise to the infer-
Fire Ass'n of Phila., 93 Wis. 348; ence that it remained fixed in his
Red River Val. Land & Inv. Co. v. memory when the employment be-
Smith, 7 N. D. 236. gan," binds the principal. Chouteau
In McClelland v. Saul, 113 Iowa, v. Allen, 70 Mo. 290.
208, 86 Am. St. Rep. 370, it is said
1395
1813] THE LAW OF AGENCY [BOOK IV
narily, to be deemed to be notice acquired during the agency, be notice
which came to the agent after he had undertaken to act with reference
to that transaction. "But where the agency is continuous and con-
cerned with a business made up of a long series of transactions of a
like nature, of the same general character, it will," it is said in one
case, 62 "be held that knowledge acquired as agent in -that business, in
any one or more of the transactions, making up from time to time the
whole business of the principal, is notice to the agent and to the princi-
pal, which will affect the latter in any other of those transactions in
which that agent was engaged, in which that knowledge is material."
Some consideration of the latter rule is necessary. Suppose an agent
is employed for a period to buy cattle for his principal. While so em-
ployed he receives information concerning the cattle of A. At that
time it is not his duty and he does not expect then or ever to buy the
cattle of A, for his principal, and he does not know and has no reason
to believe that the principal then or ever expects to buy the cattle of A,
either in person or through some other agent. 63 If, notwithstanding
this, the principal should, either in person or through some other agent,
buy the cattle of A, would he be affected with notice of the information
which his agent had so received? It is assumed that he would not be.
If, however, the purchase of A's cattle was an act which it was ex-
pected this agent would perform and which he afterwards did perform,
the notice would doubtless bind the principal, even though it was re-
ceived before the agent had actually entered upon the negotiation of
that particular purchase. And so even though the agent, as first sup-
posed above, had, at the time he received the notice, no duty or expec-
tation of buying the cattle of A, yet if he afterwards did buy them,
with the information still in mind, the notice would' be imputed, in those
states at least in which notice is imputed if actually remembered, though
acquired previously, even though it were held not to be imputable un-
der the rule above quoted, as notice acquired during the agency.
1813. The resulting rule. After this much of consideration it
is, perhaps, now desirable and possible to frame a rule which will be
62Holden v. New York & Erie notice to the general attorney of a
Bank, 72 N. Y. 286; Cragie v. Had- railroad company of a certain claim
ley, 99 N. Y. 131, 52 Am. Rep. 9; given while no suit was pending in
Brothers v. Bank of Kaukauna, 81 respect to it, before the matter had
Wis. 381, 36 Am. St. Rep. 932; Foote been referred to him in any way, and
v. Utah Commercial Bank, 17 Utah, while he had no duty in respect to
it or any reason to attach import-
es Thus in Atchison, etc., R. Co. v. ance to it, was not notice to the com-
Benton, 42 Kan. 698, it was held that pany.
1396
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES [
fuller and more accurate than the general statement with which the
discussion began. Stated with the qualifications which have been thus
suggested, the rule deducible from these authorities may be said to be
the followng:
The law imputes to the principal, and charges him with, all notice
or knowledge relating to the subject-matter of the agency which the
agent acquires or obtains while acting as such agent and within the
scope of his authority, or, according to the weight of authority, which
he may previously have acquired, and which he then had in mind, 64 or
which he had acquired so recently as to reasonably warrant the assump-
tion that he still retained it. 85 Provided, however, that such notice or
knowledge will not be imputed : (i) Where it is such as it is the agent's
duty not to disclose; 68 (2) Where the agent's relations to the subject-
matter are so adverse as to practically destroy the relation of agency ; 6T
and, (3) Where the person claiming the benefit of the notice, or those
whom he represents, colluded with the agent to cheat or defraud the
principal. 68
This rule does not depend, in either case, upon the fact that the agent
has disclosed the knowledge or information to his principal ; subject to
the exceptions named, the law conclusively presumes that he has done
so, and charges the principal accordingly. 69
The rule applies as well in the case of a servant as of an agent if the
servant is really the master's representative in the matter ; 70 to the case
of an undisclosed principal as to a disclosed one ; n and to the case of
a special agent as well as to that of a general one. 72
And when once notice has attached, the fact that there is no occasion
to act upon or heed it until after the agent through whom it was ac-
quired has ceased to be such or has changed his position, and the like,
will be immaterial. 73
e* See ante, 1809. 137 Iowa, 135; Martin v. Richards,
es See ante, 1810. 155 Mass. 381; Lingren v. Williams
66 See post, 1814. Bros. Mfg. Co., 112 Minn. 186; Schaaf
67 See post, 1815. v. St. Louis Basket Co., 151 Mo. App.
es See post, 1826. 35. Compare 1834, post.
SB See The Distilled Spirits, 11 71 Street Lumber Co. v. Sullivan,
Wall. (U. S.) 367; Dresser v. Nor- 201 Mass. 484, 16 Ann. Gas. 354.
wood, 17 C. B. (N. S.) 466, and Brown v. Peoples Nat. Bank, 170
many other cases cited in subsequent Mich. 416, 40 L. R. A. (N. S.) 657.
sections. Of course, if notice which " Birmingham Trust Co. v. Louisi-
would not be imputed is actually ana Sav. Bank, 99 Ala. 379, 20 L. R.
communicated, it is effective. Hicks A. 600; Bland v. Shreveport Ry. Co.,
v. Southern Ry. Co., 63 S. Car. 559. 48 La. Ann. 1057, 36 L. R. A. 114;
TO Higman v. Camody, 112 Ala. 267, United States National Bank v. For-
57 Am. St. Rep. 33; Merritt v. Huber, stedt, 64 Neb. 855; Loring v. Brodie,
1397
i8i4]
THE LAW OF AGENCY
[BOOK iv
Although the rule of notice is ordinarily invoked to charge the prin-
cipal, it is also held that he may have the benefit of it in a proper case. 74
The several qualifications upon the rule must now receive more de-
tailed consideration.
1814. The first exception Privileged communications. The
first of the exceptions referred to in the statement of the rule, namely,
that relating to knowledge which it is the agent's duty to some other
principal not to disclose, is well settled, both in England and in this
country. It is most frequently applied to the case of attorneys and
134 Mass. 453. But in Great Western
Ry. v. Wheeler, 20 Mich. 419, it was
held that notice acquired by a form-
er agent of such a casual and non-
continuous fact as that certain ini-
tials marked upon goods received for
shipment indicated a certain con-
signee would not be imputed to the
company after he had ceased to be
agent.
74 Haines v. Starkey, 82 Minn. 230
(a partnership case wherein an un-
disclosed principal was given the
benefit of his agent's knowledge as
to the existence of a partnership);
Harrison v. Legore, 109 Iowa, 618.
75 Notice to attorney. The general
question of notice to attorneys will
be considered in the chapter devoted
to attorneys. A distinction may be
made between the attorney's employ-
ment as a lawyer and as an agent,
though the distinction is not always
observed. The question here arises
where he is employed as an agent-.
It is held in many cases that notice
to an attorney, while engaged in the
performance of the business of his
principal, is notice to the principal.
Price v. Carney, 75 Ala. 546; Bierce
v. Red Bluff Hotel Co., 31 Cal. ICC,
Sweeney v. Pratt, 70 Conn. 274, 66
Am. St. Rep. 101; Brown v. Oattis, 55
Ga. 416; Hass v. Sternbach, 156 111.
44; Blake v. Clary, 83 Me. 154; Shart-
zer v. Mountain Lake Park Ass'n, 86
Md. 335; Mayor v. Whittington, 78
Md. 231; Bates v. Johnson, 79 Minn.
354; Edwards v. Hillier, 70 Miss.
803; Bank of Commerce v. Hoeber,
88 Mo. 37, 57 Am. Rep. 359; Peeplrs
v. Warren, 51 S. C. 560; Riordan v.
Britton, 69 Tex. 198, 5 Am. St. Rep.
37; Hyman v. Barmon, 6 Wash. 516;
Rogers v. Palmer, 102 U. S. 263, 26 L.
Ed. 164.
It has, however, been held general-
ly in many cases that knowledge ac-
quired by an attorney while acting
for one client will not affect a sub-
sequent client. Hood v. Fahnestock,
8 Watts (Pa.), 489, 34 Am. Dec. 489;
Willis v. Vallette, 4 Mete. (Ky.) 186;
McCormick v. Wheeler, 36 111. 114,
85 Am. Dec. 388; Herrington v. Mc-
Collum, 73 111. 476; McCormick v.
Joseph, 83 Ala. 401; Pepper v.
George, 51 Ala. 190; Terrell v. Bank,
12 Ala. 502; Chapman v. Hughes, 134
Cal. 641; Wittenbrock v. Parker, 102
Cal. 93, 41 Am. St. Rep. 172, 24 L. R.
A. 197; Bierce v. Red Bluff Hotel Co.,
31 Cal. 160; Martin v. Jackson, 27
Pa. 504, 67 Am. Dec. 489; Allen v.
McCalla, 25 Iowa, 464, 96 Am. Dec.
56; Sante Fe R. R. v. Benton, 42 Kan.
698; Haven v. Snow, 14 Pick. (Mass.)
28; Lowther v. Carlton, 2 Atk. 242;
Worsley v. Scarborough, 3 Id. 392;
Warrick v. Warrick, 3 Id. 291; Camp-
bell v. Benjamin, 69 111. 244; Warner
v. Hall, 53 Mich. 371; Fidelity Trust
Co. v. Baker, 60 N. J. Eq. 170; Tuck-
er v. Tilton, 55 N. H. 223; Arrington
v. Arrington, 114 N. C. 151; Neilson
v. Weber, 107 Tenn. 161; Denton v.
Ontario Co. Nat. Bank, 150 N. Y. 126;
Akers v. Rowan, 33 S. Car. 451, 10 L.
R. A. 705; Steinmeyer v. Steinmeyer,
55 S. C. 9; Meuley v. Zeigler, 23 Tex.
I 39 8
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES
[ i8is
others, upon whom rests the duty of maintaining a professional secrecy.
This secrecy the law will not permit, much less require, to be violated.
As is well said by Mr. Justice Bradley, "When it is not the agent's duty
to communicate such knowledge, when it would be unlawful for him to
do so, as, for example, when it has been acquired confidentially as at-
torney for a former client in a prior transaction, the reason of the rule
ceases, and in such a case an agent would not be expected to do that
which would involve the betrayal of professional confidence, and his
principal ought not to be bound by his agent's secret and confidential
information." 7e
1815. The second exception Agent acting adversely to prin-
cipal. The rule imputing notice is usually based, as has been seen,
upon the theory that it is the duty of the agent to communicate to his
principal the knowledge possessed by him relating to the subject-matter
of the agency, material to the principal's protection and interests, and
the presumption that he has performed this duty. This presumption,
however, it is said, will not prevail where it is certainly to be expected
that the agent will not perform his duty, as where the agent, though
nominally acting as such, is in reality acting in his own or another's in-
88; Pacific Mfg. Co. v. Brown, 8
,Wash. 347; Melms v. Pabst Brewing
Co., 93 Wis. 153, 57 Am. St. Rep. 899;
Union Nat. Bank v. German Ins. Co ,
18 C. C. A. 203, 71 Fed. 473.
JMany of these cases can be recon-
ciled upon the ground already point-
ed out, namely, that the theory of
legal identification, which is adopted
in several states as the foundation
for imputing notice, confines the ef-
fect of the notice to the time when
such identification exists, namely,
the period when the agent is actually
representing the principal. Other of
the cases seem to have adopted the
rule, without much consideration, as
one peculiar to attorneys. Still oth-
er of them, such as Wittenbrock v.
Parker, supra, may be distinguished
upon the ground that there was 110
evidence that the attorney at the
time actually remembered the infor-
mation; or, like Tucker v. Tiltoii,
Fidelity Trust Co. v. Baker, Arring-
ton v. Arrington, supra, upon the
ground that the notice formerly re-
ceived had no real relation to the
service which he was now called
upon to perform.]
And feo it has been held that
knowledge acquired by an attorney
while acting for one client will not
affect another client for whom he is
acting in another matter at the same
time. Ford v. French, 72 Mo. 250.
But if notice acquired before the
agency is to be imputed in any case,
and if the attorney really acts not
as a lawyer, but as an agent, no rea-
son is seen why he should stand up-
on a different ground than other
agents, and the better rule is be-
lieved to be that in either case such
notice binds the principal unless ac-
quired under such circumstances as
to make it privileged. Abell v. Howe,
43 Vt. 403; Hunter v. Watson, 12
Cal. 363, 73 Am. Dec. 543; Hart v.
Bank, 33 Vt. 252; The Distilled
Spirits, 11 Wall. (U. S.) at p. 367, 20
L. Ed. 167.
TO The Distilled Spirits, 11 Wall.
(U. S.) 356, 20 L. Ed. 167; Melms v.
1399
THE LAW OF AGENCY
[BOOK iv
terest, and adversely to that of his principal." Much less will it be en-
tertained where the agent is openly and avowedly acting for himself
and not as agent. 7 * In such cases the presumption is that the agent will
conceal any fact which might be detrimental to his own interests, rather
than that he will disclose it.
Pabst Brewing Co., 93 Wis. 153, 57
Am. St. Rep. 899; Sebald v. Citizens
Bank (Ky.), 105 S. W. 130.
T> Thus in a leading case in this
country, it is said: "While the
knowledge of an agent is ordinarily
to be imputed to the principal, it
would appear now to be well estab-
lished that there is an exception to
the construction or imputation of
notice from the agent to the princi-
pal in case of such conduct by the
agent as raises a clear presumption
that he would not communicate thft
fact in controversy, as where tho
communication of such a fact would
necessarily prevent the consumma-
tion of a fraudulent scheme which
the agent was engaged in perpetrat-
ing." Devens, J., in Innerarity v.
Merchants' National Bank, 139 Mass.
332, 52 Am. Rep. 710 [citing Ken-
nedy v. Green, 3 Myl. & Keene, 699;
Cave v. Cave, 15 Ch. Div. 639; In re
European Bank, 5 Ch. Ap. 358; In re
Marseilles Extension Ry., L. R. 7 Ch.
Ap. 161; Atlantic National Bank v.
Harris, 118 Mass. 147; Loring v.
Brodie, 134 Mass. 453.]
This rule, however, went beyond
the needs of the case at bar, as the
agent was there acting openly as an
adverse party. It is believed to be
too wide, though some of the cases
cited do seem to give it support.
See also, Kennedy v. Green, 3 Myl.
& Keene, 699; Dillaway v. Butler, 135
Mass. 479; Findley v. Cowles, 93
Iowa, 389; Shephard & Morse Lumber
Co. v. Eldridge, 171 Mass. 516, 68 Am.
St. Rep. 446, 41 L. R. A. 617; Indian
Head Nat. Bank v. Clark, 166 Mass.
27; United Security Co. v. Central
Nat. Bank, 185 Pa. 586; Houghton v.
Todd, 58 Neb. 360.
Obviously, as between the princl-
pal and his agent, the latter cannot
claim that the principal must be
deemed to have constructive notice
of the agent's fraudulent acts which
the agent was in fact diligently con-
cealing from him. Sankey v. Alex-
ander, Ir. Rep. 9 Eq. 259.
In American Surety Co. v. Pauly,
170 U. S. 133, 42 L. Ed. 977, supra,
it is said: "The presumption that
the agent informed his principal of
that which his duty and the interests
of his principal required him to
communicate does not arise where
the agent acts or makes declara
tions not in execution of any duty
that he owes to the principal, nor I
within any authority possessed by /
him, but to subserve simply his own
personal ends or tp_ commit soniqj
foaud agamsttheprincipal. In such'
cases the "priricTpaT^s^ot bound by
the acts or declarations of the agent
unless it be proved that he had at
the time actual notice of them, dr.
having received notice of them,
failed to disavow what was assumed
to be said and done in his behalf."
See also, Fidelity & Deposit Co. v.
Courtney, 186 U. S. 342, 362, 46 L.
Ed. 1193.
Agent practicing fraud on third j
person, not on principal. The fact *"
that the agent is engaged in practic-
ing a fraud not on his principal but
upon the other party does not, it is
held, defeat the rule imputing no-
tice. Lockhart v. Washington Gold
Min. Co., 16 N. Mex. 223.
78 Speaking of the general rule,
in Frenkel v. Hudson, 82 Ala. 158.
60 Am. Rep. 736, Somerville, J., says:
"It has no application, however, to a
case where the agent acts for him-
self, in his own interest, and ad-
versely to that of the principal. Hia
1400
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES
[ 1815
The case most frequently arising is that in which the agent is secretly
engaged in prosecuting some fraudulent or illegal enterprise the suc-
cess of which would be impaired or defeated by the disclosure to his
principal of the notice or knowledge now sought to be imputed. The
application of the rule is not, however, confined to cases of such actual
fraud, but will extend, as has been stated, to cases in which the agent /
is temporarily acting on his own account and adversely to his principal. *
This exception has been applied in a great number and in a great
variety of cases. 79 In many of them it seems to have been applied quite
adversary character and antagonistic
interests take him out of the opera-
tion of the general rule, for two rea-
sons: first, that he will very likely,
in such case, act for himself, rather
than for his principal; and, secondly,
he will not be likely to communicate
to the principal a fact which he is
interested in concealing. It would
be both unjust and unreasonable to
impute notice by mere construction
under such circumstances, and such
is the established rule of law on this
subject." [Citing Terrell v. Branch
Bank of Mobile, 12 Ala. 502; Lucas
v. Bank of Darien, 2 Stew. (Ala.)
280; Wickersham v. Chicago Zinc
Co., 18 Kan. 481, 26 Am. Rep. 784;
Angell & Ames on Corp., 308,
309; Story on Agency, 140.] See
also, La Brie v. Cartwright, 55 Tex.
Civ. App. 144; Commercial Bank v.
Burgwyn, 110 N. Car. 267, 17 L. R.
A. (N. S. }326; Johnston v. Short-
ridge, 93 Mo. 227; First National
Bank v. Briggs, 70 Vt. 594.
79 Thus, see Whelan v. McCreary,
64 Ala. 319; Frenkel v. Hudson, 82
Ala. 158, 60 Am. Rep. 736; Pursley
v. Stahley, 122 Ga. 362; Seaverns v.
Presbyterian Hospital, 173 111. 414,
64 Am. St. Rep. 125; Cowan v. Cur-
ran, 216 111. 598; Merchants Nat.
Bank v. Nichols & Co., 223 111. 41,
7 L. R. A. (N. S.) 752; Metcalf v.
Draper, 98 111. App. 399; Hummel v.
Bank of Monroe, 75 Iowa, 689; Se-
bald v. Citizens Bank (Ky.), 105 S.
W. 130; Seixas v. Citizens Bank, 38
La. Ann. 424; Richardson v. Watson,
51 La. Ann. 1390; Allen v. South
Boston Ry., 150 Mass. 200, 15 Am. St
Rep. 185, 5 L. R. A. 716; Corcoran v.
Snow Cattle Co., 151 Mass. 74;
Brown v. Harris, 139 Mich. 372;
Fort Dearborn Bank v. Seymour, 71
Minn. 81; Keyser v. Hinkle, 127 Mo.
App. 62; Houghton v. Todd, 58 Neb.
360; Graham v. Orange Co. Bank,
59 N. J. L. 225; Camden Safe De-
posit Co. v. Lord, 67 N. J. E. 489;
Henry v. Allen, 151 N. Y. 1, 36 L. R.
A. 658; Benedict v. Arnoux, 154 N.
Y. 715; First Nat. Bank v. German
Am. Ins. Co. (N. Dak.), 134 N.
W. 873; Gunster v. Scranton Illumi-
nating Co., 181 Pa. 327, 59 Am. St.
Rep. 650; Knobelock v. Germania
Savings Bank, 50 S. Car. 259; Cooper
v. Ford, 29 Tex. Civ. App. 253;
Jungk v. Reed, 12 Utah, 196; First
Nat. Bank v. Foote, 12 Utah, 157;
Victor Gold, etc., Min. Co. v. Bank,
15 Utah, 391; Traders, etc., Bank v.
Black, 108 Va. 59; Baker v. Berry
Hill, etc., Co., 112 Va. 280: In re
Plankinton Bank, 87 Wis. 378; Cole
v. Getzinger, 96 Wis. 559; Rock
Springs Nat. Bank v. Luman, 5 Wyo.
159; Thompson-Houston 'Co. v. Capi-
tal Blec. Co., 12 C. C. A. 643, 65 Fed.
341; Investment Co. v. Ganzer, 11 C.
C. A. 371, 63 Fed. 647; Hudson v.
Randolph, 13 C. C. A. 402, 66 Fed.
216; Hart v. Bier, 74 Fed. 592; Waite
v. Santa Cruz, 89 Fed. 619; Bank of
Overton v. Thompson, 56 C. C. A.
554, 118 Fed. 798; Union Central Life
Ins. Co. v. Robinson, 78 C. C. A. 268,
148 Fed. 358, 8 L. R. A. (N. S.) 883;
Reed v. Munn, 80 C. C. A. 215, 148
Fed. 737; American Surety Co. V.
1401
i8i6]
THE LAW OF AGENCY
[BOOK iv
arbitrarily and without much consideration of the reasons involved.
Many conflicting results have necessarily ensued, and have led to the
necessity of a more careful investigation into the reason and scope of
this exception.
1816. Reasons for the exception. The reasons given
Ifor the exception are not always the same. That most commonly given
and relied upon is the one already stated, namely, that there is, from
the circumstances, a presumption that the agent will not perform his
duty. Another reason which has been suggested is that inasmuch as
the pretended agent is, by the hypothesis, really acting on his own ac-
count, he does not receive the notice as agent and while acting within
the scope of his authority. 80 This is, of course, the identification the-
ory. Another, which is very similar, is that inasmuch as he is really
acting in pursuance of a fraudulent design and committing an inde-
pendent fraud, his whole act, including the notice, is beyond the scope
of his employment and therefore neither the act nor the knowledge re-
lating to it, as matter of law, can be imputed to his principal. 81
Pauly, 170 U. S. 133, 42 L. Ed. 977;
Real Estate Trust Co. v. Washington,
etc., Ry., 113 C. C. A. 124, 191 Fed.
566; Lilly v. Hamilton Bank, 102 C.
C. A. 1, 178 Fed. 73; Eccles v. Louis-
ville, etc., R. Co., 198 Fed. 898. [This
list does not purport to be exhaust-
ive.]
so Thus in In re Plankinton Bank,
87 Wis. 378, it is said: "Where an
officer or agent of the corporation
himself deals with the corporation,
it will not be charged with notice of
the information which he possesses
relating to the transaction, and which
he does not disclose, for the reason
that in such case he does not rep-
resent the corporation, but is acting
for himself, and ceases, pro hoc vice,
to act as an agent of the corporation.
The corporation, in such case, is in
reality the adverse party, and the of-
ficer does not act for it as its agent
at all."
So in Pursley v. Stahley, 122 Ga.
362, it is said: "But when the agent
departs from the scope of the agency,
and begins to act for himself and not
for the principal; when his private
interest is allowed to outweigh his
duty as a representative; when to
communicate the information would
prevent the accomplishment of his
fraudulent scheme, he becomes an op-
posite party, not an agent. The rea-
son for the rule then ceases. Where,
therefore, the agent who is an inter-
mediary is guilty of independent
fraud for his own benefit, the law
does not impute to the principal no-
tice of such fraud."
si In Allen v. South Boston Rail-
road, 150 Mass. 200, 15 Am. St. Rep.
185, 5 L. R. A. 716, it 'was said:
"The general rule is that notice to
an agent, while acting for his princi-
pal, of facts affecting the character of
the transaction, is constructive notice
to the principal. There is an exception
to this rule when the agent is en-
gaged in committing an independent
fraudulent act on his own account,
and the facts to be imputed relate to
this fraudulent act. It is sometimes
said that it cannot be presumed that
an agent will communicate to his
principal acts of fraud which he has
committed on his own account in
transacting the business of his prin-
cipal, and that the doctrine of im-
1402
CHAP. V] LIABILITY OF PRINCIPAL TO THIRL) PARTIES
[
1817.
Further of these reasons, A serious difficulty in
the way of the adoption of the reason first assigned is found in the fact
that it is not ordinarily a satisfactory theory for exempting the princi-
pal to presume that his agent will not do, or has not done, his duty.
That suggestion usually and properly meets with very little favor and
it is certain that the exception cannot be sustained upon the grounds
usually assigned for it. A more satisfactory reason would be to say,
as has been suggested, that the assumed agent is not really acting as
agent at all and therefore the general rule imputing knowledge has no
application. Where the agent is openly and avowedly acting adversely
or otherwise than as an agent, and the principal or some other agent
is representing the principal's interests, there is little difficulty in reach-
ing this conclusion. 82 And even where he is not openly acting ad-
puted knowledge rests upon a pre-
sumption that an agent will com-
municate to his principal whatever
he knows concerning the business he
is engaged in transacting as agent.
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 an agent on his own account is
beyond the scope of his employment,
and therefore knowledge of it, as
matter of law, cannot be imputed to
the principal, and the principal can-
not be held responsible for it. On
this view, such a fraud bears some
analogy to a tort wilfully committed
by a servant for his own purposes,
and not as a means of performing the
business intrusted to him by his mas-
ter. Whatever the reason may be,
the exception is well established."
82 This was the fact in the leading
case of Innerarity v. Merchants Na-
tional Bank, 139 Mass. 332, 52 Am.
Rep. 710, cited above (though it has
been overlooked in many of the cases
which purport to follow it). There
an agent, who was also a director in
the bank, undertook to pledge, for a
loan to himself, a bill of lading which
really belonged to his principal. He
first negotiated the loan on this se-
curity with the president of the bank.
Later, when the board of directors
met, the president laid this loan, with
others, before the board for approval.
The agent was present at this meet-
ing, though the case says it does not
appear what part, if any, he took in
the action upon this loan. The board
approved the loan. It was held that
his knowledge was not imputable to
the bank, and the court treated him
like any other outsider who applied
for a loan. It is clear that he was
not the agent through whom the
bank acted.
The same is true of Corcoran v.
Snow Cattle Co., 151 Mass. 74; Louisi-
ana State Bank v. Senecal, 13 La.
525; English- American Loan Co. v.
Hiers, 112 Ga. 823; Traders Bank v.
Black, 108 Va. 59; In re Plankinton
Bank, 87 Wis. 378.
This is also the ground upon which
Lilly v. Hamilton Bank, 102 C. C. A.
1, 178 Fed. 53, 29 L. R. A. (N. S.)
558 is to be based. The court point
out that the two agents, through
whom notice to the bank might have
been imputed, "studiously refrained
from acting to any extent whatever
as agents of the bank," but proposed
to deal with the bank and left other
agents of the bank to decide whether
the proposal should be accepted.
Similar are, National Bank v. Fen-
ney, 9 S. Dak. 550, 46 L. R. A. 732;
M03
l8l8] THE LAW OF AGENCY [BOOK IV
versely but has secretly such an adverse interest that he would not be
permitted to become or remain an agent without his principal's full and
intelligent consent, it would seem that the same result should ensue
and that he should be treated as practically not an agent of the prin-
cipal whose interests he is, for the promotion of his own ends, secretly
betraying or ignoring. If this be done, however, what is the result?
Either that the principal was in that transaction not represented by an
agent at all and therefore, so far as it depends upon agency, there was
no act of the principal, unless the principal later with knowledge elects
to stand by it; or that the assumed agent dealt in this transaction as
an independent party, giving to the principal the same rights and the
same obligations which he would have if he were dealing with any
other independent party. Where the principal did not, in fact, know
anything about the transaction at the time and the whole matter was
confined to the hands of the agent alone, the latter alternative seems too
contrary to the facts to be accepted.
1818. If it be said that there was no act, because there
was no agent, then any contract or transfer involved in it must be of
no effect, and if anything has come to the principal's possession by rea-
son of the act, it must be surrendered if the act be repudiated. 83 Inas-
much as the principal may consent to being represented by an interested
agent, and may do so after the act as well as before, he may well, if he
First Nat. Bank v. Babbidge, 160 cannot be fully applicable to a case
Mass. 563; Louisiana State Bank v. where one party, having knowledge
Senecal, 13 La. 525; Westfleld Bank of the invalidity of a paper of which
v. Cornen, 37 N. Y. 320, 93 Am. Dec. he is the ostensible owner, discounts
573. See also, Knobelock v. Germania it in a bank of which he is the duly
Savings Bank, 50 S. Car. 259; Sproul authorized agent, and is himself the
v. Standard Glass Co., 201 Pa. 103. only actor for the bank and by his
83 in Morris v. Georgia Loan, Sav- act enables the bank to collect and
ings & Banking Co., 109 Ga. 12, 46 L. retain the proceeds of such paper
R. A. 506, the cashier of the bank against the rights of the true owner,
was individually interested in a note In such a transaction he is either the
which he knew to be without con- agent of the bank to discount the
sideration. He discounted it to the paper, or he is not. If he is not,
bank, and the bank claims now to be then the discounting was illegal, and
a bona fide holder, without notice of the owner is entitled to it or its pro-
the defense. The court, however, ceeds. If he is the agent of the bank,
held it must stand charged with the and the facts insisted on here existed,
notice of the cashier if it ratified his his action would be a fraud upon the
act and claimed to own the note so rights of the owner, of which the
discounted by it. The court distin- bank cannot take advantage." The
guished the principle recognized court then adopts the excerpt from
where an officer of a corporation is First Nat. Bank v. New Milford, 36
the adverse party, and said: "But Conn. 93, quoted in the following
the principle involved in those cases note.
1404
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES
[ 1818
attempts with knowledge to obtain or retain benefits flowing from the
act, be held to have approved it with all its incidents. 84
84 Thus in a number of cases in
which an agent, acting for both par-
ties and being in default to one of
them, has secretly abstracted funds
or securities from the other to make
good his deficiency to the former,
it has been held that the one
to whom they have been so trans-
ferred cannot keep or enforce them,
after knowledge, without being
chargeable with notice. See Bank of
New Milford v. Town of New Mil-
ford, 36 Conn. 93. (The court
said: "He [the cashier] as agent of
the bank had full knowledge, there-
fore, of the fraud; and now the bank,
if they ratify his contract and con-
firm his agency, must accept his
knowledge and be bound by it, pre-
cisely as if the loan had been made
and the knowledge had by the board
of directors.") Loring v. Brodie, 134
Mass. 453; Atlantic Cotton Mills v.
Indian Orchard Mills, 147 Mass. 268,
9 Am. St. Rep. 698. (The court said:
"It [the plaintiff] must be deemed to
have known what he knew; and it
cannot retain the benefit of his act
without accepting the consequences
of his knowledge. The plaintiff can-
not obtain greater rights from his act
than if it did the thing itself, know-
ing what he knew.") Holden v. New
York & Erie Bank, 72 N. Y. 286.
(The court said: "The knowledge of
Ganson [the common agent] as an
individual or an executor was not
imputable to the bank merely be-
cause he was its president, but be-
cause when it acted through him as
president, in any transaction where
that knowledge was material and ap-
plicable, it acted through an agent
who at that very time had knowl-
edge of facts which gave a character
to the transaction . . . and whose
duty it was to make that knowledge
known to his principal." And, hav-
ing such knowledge, it was the bank's
"duty to those interested in that
money to refuse to take it upon de-
posit to his individual account.")
Fishkill Savings Institute v. Bost-
wick, 19 Hun (N. Y.), 354; Fouche v.
Merchants Nat. Bank, 110 Ga. 827.
(The court said: "We do not see how
it could claim the advantages and
privileges of this possession and
ownership without becoming charge-
able with notice of the burdens
it had likewise assumed, of which
it had knowledge, through its
president, when it thus became
the owner of this property.")
Singleton v. Bank, 113 Ga. 527;
First National Bank of Monmouth
v. Dunbar, 118 111. 625. (The
case can be sustained on the ground
that the bank acquired no right to
the bonds except through the act of
its cashier. If the cashier was au-
thorized to receive these bonds, his
notice is its notice. If he was not so
authorized, the bank must ratify or
repudiate his act. If it repudiates
it, then it has never had any claim
to them; if it ratifies the act, it must
be charged with all knowledge its
agent had. The case also comes with-
in the exception to the general ex-
ception suggested by the editors of
the Case Note appended to Brook-
house v. Union Publishing Co., 2 L.
R. A. (N. S.) 993.)
In Warren v. Dixon, 74 N. H. 355,
the plaintiff had been defrauded of
land, on which the defendant after-
ward acquired, in good faith and for
value, a mortgage. The defendant
sent J. B. Dixon, an agent, who knew
of the fraud on plaintiff, to collect
the mortgage. The agent procured a
conveyance of the land to defendant
in satisfaction of her mortgage, but,
in so doing, was in reality acting in
the interests of the defendant's mort-
gagor. The plaintiff seeks to compel
her to hold the legal title impressed
with notice of the fraud on him. The
defendant denies the agency of her
1405
i8i8]
THE LAW OF AGENCY
[BOOK iv
Of course, however, if the principal does not thus take with notice,
the fact that he may afterwards acquire it will be as immaterial here as
it is in other similar cases.
representative, as he acted for the
mortgagor, and she apparently claims
nothing by the deed to her, but falls
back on her mortgage which was hon-
estly acquired. As to whether she is
estopped to deny his agency for her,
the court says: "Although the plain-
tiff cannot maintain this action by
merely showing that J. B. Dixon was
in Mrs. Dixon's employ when the con-
veyance was made, she cannot set
that conveyance up to defeat the
plaintiff's right to redeem the prop-
erty from her. The reason is, not
that she is charged with J. B. Dix-
on's knowledge, but because a person
cannot claim the benefit of so much
of his agent's unauthorized act as is
beneficial to him and repudiate the
remainder. If he accepts any bene-
fit from it after he knows and appre-
ciates what his agent has done, he
will be estopped to deny that the
agent was acting for him. In other
words, such conduct constitutes a
ratification of the agent's act." See
also, Morris v. Georgia Loan Co., 109
Ga. 12, 46 L. R. A. 506; Brobston v.
Penniman, 97 Ga. 527.
To the same effect: Curtis v. Stur-
gis, Jackson & Co., 64 Mo. App. 535;
Smith v. Farrell, 66 Mo. App. 8; Wil-
son v. Pauly, 18 C. C. A. 475, 72 Fed.
129. See also, Black Hills Nat.
Bank v. Kellogg, 4 S. Dak. 312.
It is not to be denied that there are
cases opposed to this view. Certain
of the New Jersey cases, for exam-
ple, can not be reconciled with it,
though it does not appear that the
point now urged against them was
raised. See DeKay v. Hackensack
Water Co., 38 N. J. Eq. 158; Camdpn
Safe Deposit Co. v. Lord, 67 N. J. Eq.
489; Barnes v. Trenton Gas L. Co., 27
N. J. Eq. 33, though it does not clear-
ly appear in all of them whether
there was another agent acting for
the principal or not. Cole v. Getz-
inger, 96 Wis. 559, is apparently op-
1406
posed. So in First National Bank v.
Foote, 12 Utah, 157, where it is said,
"This is a distinction which seems
to us less substantial than technical."
Fort Dearborn Bank v. Seymour, 71
Minn. 81, admits the principle, but
denies its application to the facts at
bar.
In Hummell v. Bank of Monroe, 75
Iowa, 689, one A was cashier of the
defendant bank, to which he was con-
siderably indebted. By fraudulent
representations he procured from the
plaintiff an accommodation note. In
violation of his promise to the plain-
tiff he negotiated this note to the Des
Moines bank, receiving therefor a
draft, which he cashed at his own
bank, and therewith paid his in-
debtedness and received non-nego-
tiable cashier's checks for the resi-
due. The plaintiff seeks to pur-
sue the entire fund into defendant's
hands, on the ground that the
notice of their cashier being im
puted to it, it had knowledge of the
fraud by which the money was pro-
cured. The court refused to charge
it with such notice and held it was
only liable for such sum as remained
to A's credit when the bank was ac-
tually-notified of the fraud. It was
held that the doctrine of ratification
did not apply to the case. The con-
clusion in this case cannot be sus-
tained except by force of the strict
application of the exception to the
rule of notice as it is ordinarily stat-
ed. The bank acquired the drafts in
question only through the act of its
cashier. If it repudiated that act it
could not retain the draft. It. would
not seem that the bank could stand
in the attitude 'of a purchaser from
the cashier as an independent person
because he did not deal with the
bank as an independent person, and
the bank was not Represented in the
transaction by any other agenL.
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES
[ 1819
1819. But there may also be cases in which, because no
act of agency resulted, the principal would be entitled to stand upon
the footing of a transferee from the agent, or from the other principal
whom he represented, and be entitled to protection to the same extent
as any purchaser for value without notice. In such a case, there be-
ing really no agency relation, notice could not be imputed upon that
ground, and, if the principal had no notice which would bind him other-
wise, he would be protected. 85 This result would not seem to be pos-
ss Thus, in a number of cases in
which the same person was ordinarily
agent for each party but in the given
case was acting as an outside party
:so far as the principal in question
was concerned, it has been held that
if he fraudulently obtains from one
principal that which he sells or trans-
fers to the other who is acting for
Jiimself, the latter who takes in good
faith and for value cannot be charged
with what the agent knew, since in
this transaction he was not agent for
the latter.
Thus in Thompson-Houston Elec-
tric Co. v. Capitol Electric Co., 12 C.
C. A. 643, 65 Fed. 341, it appeared that
one D., who was the agent of Mrs. R.
to loan her money upon securities
and who had received money from
her for that purpose, which it was
his duty to account to her for from
time to time, was also the secretary,
treasurer and general manager ol a
certain corporation. He owed this
corporation upon a note, and the note
was secured by a deposit with the cor-
poration of certain bonds which be-
longed to D. This note and bonds
were in his custody among the other
papers of the corporation. In order
to settle his account with Mrs. R. he
induced an irresponsible person to
give him a note. He them abstracted
the bonds from the papers of the cor-
poration, attached them to the note
BO procured as though they had been
Civen to secure it, and delivered the
note and the bonds to Mrs. R. in
Gettlement of his account with her.
Mrs. R. received them in good faith
and without actual notice of the claim
of the corporation to the bonds. In
an action to determine the title to
them, it was contended that Mrs. R.
must be charged with the knowledge
which D. had respecting the rights
of the corporation, and that therefore
she cowld not hold the bonds as
against it. It was held that his
knowledge would not be imputed to
her, and the exception now under
discussion to the general rule was
relied upon. But more specifically
the court said: "When he abstracted
the bonds he was not taking them for
Mrs. R.; he was taking them for
himself, so that he might use them
to obtain money from Mrs. R. He
was not abstracting them for the
benefit of Mrs. R. any more than for
the benefit of any stranger to whom
he might have sold them for value.
In delivering these bonds to Mrs. R.,
D was actually dealing with her as a
purchaser from him and not as her
agent." And, by another judge: "In
the present case I do not think D.
was acting as agent of either of the
supposed principals, but, having pos-
session of the bonds entrusted to him
by the company, made the manual
abstraction and tradition of them
which brought them to the hands of
an innocent holder." Atlantic Cot-
ton Mills v. Indian Orchard Mills, 147
Mass. 268, supra, was distinguished.
To same effect: Henry v. Allen, 151
N. Y. 1, 36 L. R. A. 658, 9 Am. St.
Rep. 698; Allen v. South Boston Ry.
Co., 150 Mass. 200, 15 Am. St. Rep.
1S5, 5 L. R. A. 716; Clark v. Marshall,
62 N. H. 498.
1407
1820]
THE LAW OF AGENCY
sible, however, in cases in which the agent was the sole actor on both
sides.
jgao. In many cases the matter seems to resolve itself
into the familiar but always difficult question of which of two innocent
parties should bear the loss. This is often settled by the application of
the alleged maxim that he should bear it by whose act it was made pos-
sible. 86 In other cases the only solution seems to be to leave it where
se This is the ground upon which
Real Estate Trust Co. v. Washington,
etc., Ry. Co., 113 C. C. A. 124,
191 Fed. 566 (reversing Washing-
ton, etc., Ry. Co. v. Real Es-
tate Trust Co., 177 Fed. 306) is
really based. Here the complain-
ant had left in the possession of
two of its officers certain uncancelled
bonds after they had in fact become
obsolete. One of these officers pledged
these bonds to the defendant Held,
that defendant was to be protected.
The court also says that this Is one
of the cases in which notice would
not be imputed. See also, Witten-
brock v. Parker, 102 Cal. 93, 41 Am.
St. Rep. 172, 24 L. R. A. 197.
In Smith v. Boyd, 162 Mo. 146, two
separate mortgages, both duly re-
corded, securing notes, were outstand-
ing upon the same land. The second
of these had really been given in sub-
stitution for the first, and with the
understanding that the first should
be cancelled and discharged. This,
however, was not done, but the holder
transferred the second note and mort-
gage to ' Smith, falsely assuring him
that it was a first note and mortgage.
Smith afterward foreclosed his mort-
gage and bid in the land, not yet be-
ing actually apprised of the existence
of the first mortgage, although it was
duly recorded. Later proceedings
were instituted to foreclose the first
mortgage, and Boyd entered into ne-
gotiations through one King for the
purchase of the land at or after the
foreclosure sale. An abstract was
procured, which showed the existence
of the mortgage to Smith and its
foreclosure, but Boyd was advised
that the first mortgage, called the
Tyler mortgage, would take preced-
ence over the title held by Smith,
and he entered into a contract with
King, by which he agreed to take the
land from King, either upon a deed
from King or upon the deed made at
the foreclosure sale, and King bought
the property at the foreclosure sale
and had the deed made to Boyd. Boyd
had no knowledge of the fact that the
mortgage under which he claimed had
really been satisfied by the execution
of the mortgage under which Smith
claimed and that it should have been
discharged of record, but King knew
all these facts. Smith brought
this action to cancel the convey-
ance to Boyd, claiming that King
was Boyd's agent in the purchase,
and that King's knowledge would
be imputed to Boyd. * The court
held that even if King could be
regarded as Boyd's agent, King'&
knowledge could not be imputed to
Boyd, as he was acting adversely.
The court also held that King was
not really an agent, but a seller, and
therefore the ordinary rule imputing
the agent's knowledge would not be
implied, and finally also held that in-
asmuch as Smith had constructive
knowledge of the existence of the first
mortgage, from the fact of its being
recorded, and did nothing for a con-
siderable period to correct the record,
and inasmuch as Boyd relied upon
the record priority of the mortgage
under which he purchased, Smith
must bear the loss, even though act-
ually as innocent as Boyd, upon the
principle that it was his act or fail-
ure to act that had made the loss
1408
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES
[ 1821
it has fallen, since there is no reason or justification for shifting it to
the other party. 87
1821. In a few cases it has been said that the principal
could not be held because he really had not participated in the transac-
tion, that he had at most been a mere unconscious party or a mere
conduit, and that therefore no responsibility could be attached to him. 88
possible. In re Marseilles Extens.
Ry. Co., L. R. 7 Ch. 161, belongs to
'this class.
87 in Gunster, Assignee of The
Scranton Bank v. The Scranton Il-
luminating, etc., Co., 181 Pa. 327, 59
Am. St. Rep. 650, one Jessup was vice-
president of the plaintiff bank, and its
principal manager, and, in the trans-
action in question, its sole repre-
sentative. He was also treasurer of
the defendant corporation, and as
such treasurer drew the notes of such
company to the bank, which the bank
discounted and gave the defendant
company credit for the proceeds. Jes-
sup then, by check of the company,
drew this fund from the bank and
appropriated it to his own use. The
company defends in a suit to collect
the notes, claiming that the bank
knew of the fraudulent inception of
them, because Jessup, its cashier,
knew of it. But the court refused to
charge the bank with such knowl-
edge, and, aftsr discussing that ques-
tion, says: "But we do not regard
knowledge as the pivotal point of the
case. Upon that point both parties
would stand equal. Both might by
mere inference be charged with
knowledge, as the fraud was commit-
ted by an agent with authority to act
for both, but in fact neither had or
in the nature of things could have
any knowledge at all, and neither
was under any obligation to presume
that its agent would be guilty of
fraud. The real question is, in what
capacity did Jessup commit the
fraud? And it is clear that it was as
treasurer of the appellee. It was as
treasurer he presented the notes for
discount, and as treasurer he drew
the checks for the proceeda Both
acts were within his authority as
treasurer and would have been lawful
if they had been honest, but he drew
the money on drafts which were the
property of the company, and when
he embezzled the money it was the
money of the company. The bank had
no part in his act, and gained noth-
ing by it. The fraud had its incep-
tion and its consummation in acts
done in his capacity of treasurer of
the defendant company, and it should
bear the loss."
In Lyndon Mill Co. v. Lyndon Lit-
erary Institution, 63 Vt. 581, 25 Am.
St. Rep. 783, the court says that the
question of imputing notice "depends
upon the circumstances of each case."
Innerarity v. Merchants National
Bank, supra, and Fairfleld Savings
Bank v. Chase, 72 Me. 226, 39 Am.
Rep. 319, are cited, but neither is an-
alogous in its facts.
ss in Bank of Overton v. Thompson,
56 C. C. A. 554, 118 Fed. 798, the cash-
ier of the bank, one Hardinger, and
the complainant were jointly inter-
ested in some cattle. The cashier
sold them and received therefor from
the buyer a draft and somo credit
slips. These he deposited with the
bank to his individual credit, and af-
terward checked out on his personal
check the entire amount, using it all
himself and making no settlement
with the complainant. In all the
transactions he was the sole repre-
sentative of the bank, no other per-
son connected therewith having any
knowledge of the complainant's in-
terest in the funds. The complainant
seeks to hold the bank as construc-
tive trustee, alleging that it knew,
through its cashier, when it received
the funds, that they belonged to the
8 9
1409
1822]
THE LAW OF AGENCY
[BOOK IV
1822. The true exception. For the reasons that have
been advanced, it is believed that this second exception, as it is ordi-
narily stated, is ill-founded and too broad. It rests properly upon the
ground that, under the circumstances, there was really no agency, and
not upon the ground that the law presumes that the agent will violate
his duty. It should be confined, therefore, to the cases which really
fall within the reason : and notice should be imputed wherever there is
agency or ratification.
complainant. The court held that the
bank could not be so held, but seemed
to put the case on another ground,
wherein the question of notice would
not arise, commenting in the follow-
ing language: "In the present case,
Hardinger, for his own purposes, and
without the knowledge of anyone else
connected with the defendant bank,
deposited the proceeds of the sale of
the cattle, as his own money, in de-
fendant bank, and, while the facts re-
mained wholly unknown to anyone
connected with the bank but himself,
by his own act he withdrew the same
money from the bank. As depositor,
both in making and withdrawing the
deposit, his interests were adversary
to the bank. If he was engaged in de-
frauding the complainant, the pre-
sumption is that he would not dis-
close to the bank his fraud, or com-
plainant's interest in the fund, and
the evidence of the actual fact corres-
ponds to this presumption. The bank
had no knowledge of any interest of
complainant in the fund, and was un-
der no obligation to him. The com-
plainant, by authorizing Hardinger to
sell the cattle, authorized him to re-
ceive the money for them and to care
for it. In caring for it, he placed it
temporarily in defendant bank, but
retained, as he properly might, the
control over it, and afterwards re-
sumed, as he had a right to, the pos-
session of it. If it was a trust fund,
Hardinger was the complainant's
trustee. He might put it in a bank,
and remove it at his discretion to an-
other bank, or put it in his pocket."
In Brookhouse v. Union Publishing
Co., 93 N. H. 368, 111 Am. St. Rep.
623, 2 L. R. A. (N. S.) 993, the facts
alleged were that one M was the
guardian of the plaintiff. He was al-
so the treasurer of the defendant cor-
poration, and used it for his private
banking purposes, depositing money
with its general funds and crediting
his account, and charging his account
as he withdrew it. He withdrew from
his guardian bank account money, for
which he received drafts payable to
himself as guardian, or order. These
he endorsed and directed the assist-
ant treasurer of defendant to deposit
to his credit. For his personal pur-
poses he afterward checked out the
money. In this action the ward seeks
to charge the defendant with notice
of the fraudulent character of the
transaction. The court held that the
defendant was an innocent conduit,
through which the guardian temporar-
ily passed the money, and that it
could not be charged therefor. The
court said: "In the case at bar the
defendant does not set up any claim
to the funds in dispute. The funds
have passed beyond its reach without
being of any advantage to it." And
again: "The defendant was not real-
ly the principal of Moore in respect to
the deposits and withdrawals of the
plaintiff's money in and from its bank
account; it was his agent. The trans-
actions were solely on his account
and for his benefit. The defendant re-
ceived no substantial benefit from
them. The only authority conferred
upon Moore by it which he used was
the authority to use its bank account
for his private purposes. In drawing
I4IO
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES [ 1823-1825
1823. It is not enough to prevent the application of the
general rule that an agent to whom notice comes which would other-
wise be imputed, shall, however wickedly or fraudulently, fail to com-
municate it to his principal. An innocent third person, not claiming
through the agent's act, and otherwise entitled to the benefit of notice,
can not be denied it merely because the agent, for some fraudulent pur-
pose of his own, conceals the notice from his principal. The rule can
only apply where the person claiming the benefit of the notice is a party
to the transaction or claims through the agent's act, and the agent must
also have some interest or motive of his own, adverse to his principal's
interests, which prompts him to conceal his knowledge and which prac-
tically destroys the agency relation. 89
1824. Inasmuch as an agent, with the full knowledge
and consent of his principal, may also act for himself or for the ad-
verse party, notice acquired by the agent in the course of his agency,
though while he was also acting for the adverse party with the prin-
cipal's knowledge and consent, will be imputed to the principal. 90
1825. Applicability of exception to corporate agents.
The exception to the general rule applies ordinarily to the agents of
corporations as well as of natural persons. A doubt, however, has been
suggested "whether this exception can apply to directors, presidents
and other such managing officers of a corporation, through whom alone
the corporation can act ;" 01 but this distinction has not been generally
approved, 92 and no sound reason is perceived why such a distinction
should be made.
A different distinction has also been suggested, namely, that the ex-
ception in question will not apply where the agent, "though he acts
for himself or for a third person, is the sole representative of the cor-
checks, he fulfilled its obligation to principal, but upon the other party,
himself. He was really acting for does not, it is held, alter the general
himself." rule. Lockhart v. Washington, etc.,
89 Armstrong v. Ashley, 204 U. S. Min. Co., 16 N. Mex. 223.
272, 51 L. Ed. 482; Boursot v. Savage, eo pi ne Mt. Iron Co. v. Bailey, 36
L. R. 2 Eq. 134. Letters which come C. C. A. 229, 94 Fed. 258.
to the hands of the agent of a bank i Pomeroy's Equity Jurisprudence,
authorized to receive them must be 675, note. Mr. Pomeroy refers to
deemed to be received by the bank, Holden v. N. Y. & Erie Bank, 72
even though the agent suppresses N. Y. 286, and First Nat. Bank v.
them in order to prevent discovery Town of New Milford, 36 Conn. 93,
of irregularities of his own. First [cited in 1818, supra].
Nat. Bank v. Fourth Nat. Bank of f* 2 See, for example, Brookhouse v.
Louisville, 6 C. C. A. 183, 56 Fed. 967. Union Publishing Co., 73 N. H. 368,
The fact that the agent is engaged in 111 Am. St. Rep. 623, 6 Ann. Gas. 675,
practicing fraud, not upon his own 2 L. R. A. (N. S.) 993.
1411
1826] THE LAW OF AGENCY [BOOK IV
poration in the transaction in question." 93 This distinction, however,
like the preceding one, seems not to get to the root of the matter. It
is, of course, true that a corporation can only act through some agent,
and where it acts through a single agent knowledge must come through
him if it conies at all. But it seems to beg the question to say that it
must come at all, and especially to say that it must come in every case
in which the corporation is represented solely by the agent who had the
knowledge. Another distinction, though well settled, namely, that
knowledge will not be imputed where the principal was represented by
another agent in the transaction in question, 04 seems not to furnish jus-
tification for the distinction thus suggested.
The real ground upon which this situation rests is believed to be that
already stated, namely, that where the agent is the sole representative
of the corporation, the corporation can not claim anything except
through him and that therefore if it claims through him, after notice
of the facts, it must accept his agency with its attendant notice.
1826. The third exception Collusion of party claiming benefit
of notice. The rule which imputes to the principal the knowledge
of his agent is, as has been seen, commonly based upon the legal pre-
sumption that the agent has done his duty by communicating it to his
principal, a presumption which, it is said, is demanded by a sound
public policy for the protection of those who deal with the agent. Ob-
viously no policy requires that such a presumption shall be made for
the protection of a person who has conspired with the agent to defraud
the principal and who now seeks the benefit of a presumption that a
duty has been performed which he himself was interested in having
violated. Thus in a leading case in New York, where this question
was involved, the court said: "If a person colludes with an agent to
cheat the principal, the latter is not responsible for the acts or knowl-
edge of the agent. The rule which charges the principal with what the
agent knows is for the protection of innocent third persons, and not
those who use the agent to further their own frauds upon the princi-
pal." 95
s This distinction is worked out s National Life Ins. Co. v. Minch,
with much care and fullness of cita- 53 N. Y. 144. See also, to same ef-
tions in a note by the editors, ap- feet: Morrill v. Bosley, 40 Tex. Civ.
pended to the case of Brookhouse v. App. 7; Elliott v. Maccabees, 46
Union Publishing Co., in 2 L. R. A. Wash. 320, 13 L. R. A. (N. S.) 856;
(N. S.) 993, supra. It is also ap- Traders, etc., Bank v. Black, 108 Va.
proved in the late case of Cook v. 59; Van Buren County v. American
American Tubing & Webbing Co., 28 Surety Co., 137 Iowa, 490, 126 Am. St.
R. I. 41, 9 L. R. A. (N. S.) 193. Rep. 290; Hickman v. Green, 123 Mo.
*See post, 1837. 165, 29 L. R. A. 39; Cooper v. Ford,
1412
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES [ 1827, 1828
The identification theory would reach a similar result here upon the
ground that the collusion destroyed the agency and with it the founda-
tion for identification.
1827. Who can avail himself of the notice. The rule respecting
the imputation of notice is usually resorted to by third persons seeking
a remedy against the principal. Ordinarily they are persons who have
dealt with the principal through the agent in question ; but it is not es-
sential that they shall have dealt with the agent. The rule respecting
notice may apply although they have not known of or dealt with the
agent, if they have had dealings with the principal, or with some other
agent of his, which make the matter of notice material to the protection
of their interests. 90 As has been seen, however, they will not be permit-
ted to avail themselves of the rule, where they were colluding with the
agent to defraud the principal. 97
As has already been stated, it has been held that the principal him-
self, in his dealings with third persons, may avail himself of the rule,
although the agent has not in fact communicated his knowledge to
him. 98
The agent himself, however, in his relations to his principal, could
rarely, if ever, be permitted to set up, as constructive notice to his prin-
cipal, information which, in disregard of his duty, he had failed to com-
municate to the principal. 99
1828. What notice includes Actual and constructive notice.
The notice which will affect the principal may be the direct and un-
equivocal information of the fact, or it may, in certain cases, be infer-
red from the existence of other facts. The former is sometimes termed
actual notice, and the latter constructive notice. The distinction, how-
ever, is not of any great practical importance, and perhaps, strictly, the
latter is to be deemed as much actual notice as the former. In either
event, it is well settled that the principal may ordinarily be bound by
29 Tex. Civ. App. 253; Benedict v. same principle. Ga. Civ. Code, 3028.
Arnoux, 154 N. Y. 715; Brooklyn Dis- Socute des Mines v. Mackintosh, 5
tilling Co. v. Standard Distilling & Utah, 568.
Distributing Co., 120 N. Y. App. Div. Armstrong v. Ashley, 204 U. S.
237; Traber v. Hicks, 131 Mo. 180; 272, 51 L. Ed. 482.
Cowan v. Curran, 216 111. 598; Ham- ST See ante, 1826.
burg-Bremen Ins. Co. v. Lewis, 4 App. See ante, 1813. Haines v.
D. C. 66; Western Mfg. Co. v. Ganzer, Starkey, 82 Minn. 230; Harrison v.
11 C. C. A. 371, 63 Fed. 647; Hudson Legore, 109 Iowa, 618.
v. Randolph, 13 C. C. A. 402, 66 Fed. See McDermott v. Hayes, 116 C.
216. C. A. 553, 197 Fed. 129; Sankey v.
The Georgia Civil Code declares the Alexander, Ir. Rep. 9 Eq. 259.
1413
1829]
THE LAW OF AGENCY
[BOOK IV
the one as fully as by the other. 1 The rule as to what will constitute
constructive notice may be said to be that wherever a party has knowl-
edge of any fact sufficient to put a prudent man upon an inquiry which,
if prosecuted with ordinary diligence, would lead to actual notice, he
will be charged with the knowledge which might have been acquired
by such diligence. 2 The presumption that he would have acquired such
knowledge is not, however, indisputable, and it is always open to the
party to show that he used such diligence without avail. 8
Within this rule constructive notice to the agent which would, if fol-
lowed with reasonable diligence, have led to further information, would
doubtless charge the principal with notice of the information which
might have been so obtained.*
1829. Whether the principal can be charged with con-
structive notice by reason of what the agent knew, but which would
not be constructive notice to the agent, would seem to be doubtful. 5
If, for example, information comes to an agent which reasonably seems
to him immaterial, but which, if he had known what the principal knew,
would have led to material information, can it be said that the princi-
pal is chargeable with the latter information? If he had acted in per-
1 But constructive notice alone will
not suffice where actual knowledge is
required, e. g., in conspiracy, etc.,
Benton v. Minneapolis Tailoring Co.,
73 Minn. 498; Reisan v. Mott, 42
Minn. 49, 18 Am. St. Rep. 489.
2 Williamson v. Brown, 15 N. Y.
354; Baker v. Bliss, 39 id. 70; Cam-
bridge Valley Bank v. Delano, 48 id.
326; Hood v. Fahnestock, 1 Pa. 470,
44 Am. Dec. 147; Chapman v. Glas-
sell, 13 Ala. 50, 48 Am. Dec. 41. The
mere fact that there was opportunity
to learn where there was nothing to
suggest any necessity or occasion to
know, is not enough. Economy Sav.
Bank v. Gordon, 90 Md. 486, 48 L. R.
A. 63.
s Williamson v. Brown, 15 N. Y. 354.
* Furry v. Ferguson, 105 Iowa, 231;
Field v. Campbell, 164 Ind. 389, 108
Am. St. Rep. 301; Wiley v. Knight,
27 Ala. 336; Pepper v. George, 51 Ala.
190; Gallagher v. Equitable Gas L.
Co., 141 Cal. 699; Wells v. McMahon,
3 Wash. Ter. 532.
Where the agent owes a duty to
investigate, as in the case of an
agent charged with the master's duty
to keep premises, etc., in repair, what
he would have learned is imputable.
Johnson v. First Nat. Bank, 79 Wis.
414, 24 Am. St. Rep. 722.
5 In Wittenbrock v. Parker, 102 Cal.
93, 41 Am. St. Rep. 172, 24 L. R. A.
197, where T and H were lawyers
and partners, and T while acting for
one client acquired certain informa-
tion, it was held that this would not
be imputed to Y, a client who sub-
sequently acted with H respecting the
same property, both Y and H being
actually ignorant of what T knew.
The court said that while, for the
purposes of his liability as a member
of the firm of T and H, H might be
charged with constructive notice of
what his partner T knew, Y, the
client of H, was not to be charged
with constructive knowledge of the
same matter of which for some pur-
poses H had thus constructive but not
actual knowledge.
1414
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES [ 1830, 183!
son he would be chargeable. But if the duty of the agent to communi-
cate is limited to the communication of that which, from his standpoint,
reasonably seems material to the principal's interests as must cer-
tainly be the case if the duty is considered from the standpoint of the
principal and the agent and if the obligation of the principal depends
upon the presumption that the agent has performed his duty, the knowl-
edge imputed to the principal could not include the information in ques-
tion. The same result would seem to flow from the theory of the legal
identity of the principal and agent, unless we are prepared to say that
that theory leads to the conclusion that the principal knows what the
agent knows, and is therefore bound by the results of an investigation
which the knowledge of two facts would have prompted, although as a
matter of fact he is actually ignorant of one of them.
1830. Agent must be agent of person to whom notice is to be
imputed. It would seem to go without saying that notice can not
be imputed under the rules here being considered unless the agent who
had the notice or knowledge stood in that relation to the person to
whom the notice is sought to be imputed. If he was the agent of the
other party only, or only of some one else than the alleged principal, his
notice or knowledge cannot be imputed to the person in question. 8
1831. Rule applies only to notice respecting matters within
agent's authority. This rule which imputes to the principal the
knowledge possessed or notice received by the agent applies only to
cases where the knowledge is possessed or notice received by an agent
within the scope of whose authority the subject-matter lies. An agent,
may be put forward for the express purpose of receiving notice, or be
referred to as the one to whom notice may be given, and in such a case,
of course, no further evidence of authority to receive it would be re-
quired. 7 An agent may also be put in such a position of general
authority, in such a managerial or directing situation, as in the
case of the chief officer of a corporation or of an individual, that
notice to him will be notice to his principal because it must be
deemed within his authority to receive it, even though he never
personally acts in respect of the matters to which the notice re-
lates. 8 But^ in other cases,_notice binds the principal because the
See Goodwynne v. Bellerby, 116 * See Hardin Grain Co. v. Chicago,
Ga. 901; International Building & L. etc., Ry. Co., 134 Mo. App. 681.
Ass'n v. Watson, 158 Ind. 508; s gee Cragie v. Hadley, 99 N. Y.
Weightman v. Washington Critic Co., 131, 52 Am. Rep. 9 (the president of
4 App. Gas. D. C. 136 (mere rela- a bank); New Hope Bridge Co. v.
tion of husband and wife not Phenix Bank, 3 N. Y. 156 (same);
enough). Mihills Mfg. Co. v. Camp, 49 Wis.
1415
[BOOK iv
receipt of it can be deemed to be an incident to the act which the
agent is authorized to perform, and it can not be notice unless
it is such an incident. In other words, the knowledge or notice
must come to an agent who has authority~~to deal in reference to
those matters which the knowledge or notice affects, and whose
duty_it therefore is to communicate it to his principal. The fact
that some other agent, employed in reference to different and distinct
transacti6ns, may have had notice or knowledge will not affect the
princ ipul. ''^X*'
130; Port Jervis v. First National the latter is employed, unless the
Bank, 96 N. Y. 550 (president
and executive head of bank); Lea
v. Iron Belt Co., 147 Ala. 421, 119
Am. St. Rep. 93, 8 L. R. A. (N. S.)
279 (president and chief executive).
But the divisions of function be-
tween the officers of a corporation
may be so narrow that notice to a
president, for example, of some mat-
ter within another officer's sphere,
will not be notice to the corporation.
Bank v. Craig, 6 Leigh (Va.), 399.
Congar v. Chicago, etc., Ry. Co.,
24 Wis. 157, 1 Am. Rep. 164; Stewart
v. Sonneborn, 49 Ala. 178; Cook v.
Anamosa, 66 Iowa, 427; Russell v.
Cedar Rapids Ins. Co., 78 Iowa, 216,
4 L. R. A. 538; Tate v. Hyslop, 15
Q. B. Div. 368; Columbia Paper
Stock Co. v. Fidelity & Casualty
Co., 104 Mo. App. 157; Trentor
v. Pothen, 46 Minn. 298, 24 Am. St.
Rep. 225; Strauch v. May, 80 Minn.
343; Comey v. Harris, 133 N. Y.
App. Div. 686; Johnson v. Valido
Marble Co., 64 Vt. 337; Walker v.
Hannibal, etc., R. Co., 121 Mo. 575,
42 Am. St. Rep. 547, 24 L. R. A. 363;
Missouri, etc., Ry. Co. v. Belcher, 88
Tex. 549; Topliff v. Shadwell, 68 Kan.
317; Fidelity Trust Co. v. Baker, 60
N. J. Eq. 170; Foote v. Getting, 195
Mass. 55, 15 L. R. A. (N. SO 693.
In Warren v. Dixon, 74 N. H. 355,
the court, commenting on the gen-
eral rule, said: "That rule does not
charge the principal with his agent's
knowledge of facts affecting the sub-
ject matter of the business in which
agent, in fact, acts for the principal
in what he does in the matter in re-
spect to which it is sought to charge
the principal with his knowledge.
Henry v. Allen, 151 N. Y. 1, 10, 36
L. R. A. 658. In other words, the
principal is not charged with his
agent's knowledge in respect to a
particular transaction, unless the lat-
ter's acts in respect to it were with-
in the scope of his employment. To
illustrate: If a person employs an
agent to buy property and the latter,
instead of buying, sells to the princi-
pal property procured from a stranger
by fraud, the agent's knowledge of
that fraud will not be imputed to the
principal (Allen v. Railroad, 150
Mass. 200, 206, 5 L. R. A. 716, 15 Am.
St. Rep. 185); but, if the agent buys
property for the principal, the latter
will be charged with the agent's
knowledge of any defects in the grant-
or's title (Hovey v. Blanchard, 13 N.
H. 145, 149). The test, therefore, to
determine whether an agent's knowl-
edge is to be imputed to his princi-
pal is to inquire whether or not the
agent was acting for the principal
when he did that in respect to which'
it is sought to charge the principal
with his knowledge. Clark v. Marsh-
all, 62 N. H. 498, 500; Brookhouse v.
Company, 73 N. H. 368, 374, 111 Am.
St. Rep. 623, 6 Ann. Cas. 675, 2 L.
R. A. (N. S.) 993; Gunster v. Com-
pany, 181 Pa. 327, 59 Am. St. Rep.
650, 658, note; Akers v. Rowan, 36
S. C. 87, 10 L. R. A. 705, 706, note."
1416
CHAP. Vj LIABILITY OF PRINCIPAL TO THIRD PARTIES
[ 1831
"This," says Dixon, C. J., "seems very clear when we consider
the reason and ground upon which this doctrine of constructive
Where the principal had undertak-
en through an agent to effect insur-
ance on an overdue ship, and failed,
that agent knowing the ship was lost
but not communicating the fact to
any one, insurance effected by the
principal through another agent will
not be avoided on the ground that the
first agent's knowledge was the
knowledge of the principal. Black-
burn Low & Co. v. Vigors, 12 App.
Cases, 531.
In the following cases notice was
not imputed because the matter to
which the knowledge related was not
within the agent's authority. King
v. Rowlett, 120 Mo. App. 120 (an ac-
tion for buying corn grown, on plain-
tiff's land, where defendant's serv-
ant, hired to weigh and receive the
corn, knew where it was grown);
Cook v. Anamosa, 66 Iowa, 427 (ac-
tion against a city, where the mar-
shal had notice of the defects in the
sidewalk, but no authority to repair
it); Arrington v. Arrington, 114 N.
C. 151 (where an attorney, employed
to examine title, knew from other
sources facts affecting title); Trentor
v. Pothen, 46 Minn. 298, 24 Am. St.
Rep. 225 (same effect); (but see Al-
lison v. Falconer, 75 Ark. 343, where
notice was imputed in the case of an
attorney to examine title and procure
the execution of the proper papers to
effect the conveyance); Hickman v.
-7 Green, 123 Mo. 165, 29 L. R. A. 39
(where a real estate firm hired "to
effect an exchange," but not to ex-
amine title, knew of an unrecorded
deed); Mackay-Nisbet Co. v. Kuhl-
man, 119 111. App. 144 (action for
goods sold, where, in a social con-
versation before the sale, defendant
told plaintiff's salesman, employed in
another territory, that he had sold
the business); Collins & Toole v.
Crews (Ga.), 59 S. E. 727 (a similar
case involving notice of bankruptcy) ;
German Ins. Co. v. Goodfrlend, 97
S. W. 1098 (Ky.) (notice to a clerk
in plaintiff's store that an insurance
company would not renew plaintiff's
policy) ; McCalmont v. Lanning, 154
Fed. 353 (where a bank president
knew from his official position in an-
other corporation, of the fraudulent
inception of a note, purchased by an-
other officer without the president's
knowledge) ; Stringfellow v. Brasel-
ton, 54 Tex. Civ. App. 1 (where a
notary, the grantee's agent to obtain
the signatures in a deed, knew of cir-
cumstances of a wife's joining in her
husband's deeds) ; Lowden v. Wilson,
233 111. 340 (where an agent entrusted
with a check to be handed over when
delivery of possession of property was
made knew of an adverse claim);
Tennent v. Union Life Ins. Co., 133
Mo. App. 345 (where a husband au-
thorized by his wife to pledge Iris in-
surance policy of which his wife was
beneficiary, knew that the company
subsequently made an irregular sale
of the policy) ; Pennoyer v. Willis,
26 Ore. 1, 46 Am. St. Rep. 594 (where
an agent to care for but not invest
funds knew of a defect in a security
offered for a loan of the funds);
Strauch v. May, 80 Minn. 343 (where
a "cashier" to pay as the principal or-
dered had notice of an assignment of
wages); Atchison, etc., R. R. Co. v.
Benton, 42 Kan. 698 (where, before
action was brought, a general at-
torney of a railroad company had
notice of matters connected with its
land department); Day v. Exchange
Bank, 117 Ky. 357 (deceit for mis-
representations in a sale of bank
stock, where the question was on the
running of the statute of limitations
from time of plaintiff's purchase,
plaintiff's agent appeared to have had
notice in subsequent sales of the
stock to third persons or in other
transactions); Davis v. Steeps, 87
Wis. 472, 41 Am. St. Rep. 51, 23 L. R.
A. 818 (where the vendor of land,
1417
1832]
THE LAW OF AGENCY
[BOOK iv
notice rests. The principal is chargeable with the knowledge of
his agent because the agent is substituted in his place and represents
him in the particular transaction ; and it would seem to be an obvious
perversion of the doctrine, and lead to most injurious results, if, in the
same transaction, the principal were likewise to be charged with the
knowledge of other agents, not engaged in it and to whom he had del-
egated no authority with respect to it, but who were employed by him
in other and wholly different departments of his business." 10 Whether
the rule be based upon the ground specified by the learned judge, or
upon the duty of the agent to communicate, the result is the same,
no duty of communication would rest upon an agent where, from the
nature of the acts to be performed by him, the knowledge or notice
would appear to have no relation to or connection with those acts.
1832. Notice after termination of authority does not bind. It
follows as a necessary conclusion from the principles considered that
notice to an agent, after his authority has entirely ceased, or after his
authority to represent the principal in respect to the matters to which
the notice relates has terminated, is not ordinarily notice to the princi-
pal. 11 Under neither of the theories discussed could such notice be
imputed to the principal.
who, though not the vendee's agent
for any purpose concerning the con-
veyance, furnished the abstract of
title, had notice of a judgment lien);
Boy.d v. Boyd, 128 Iowa, 699, 111 Am.
St. Rep. 215 (a similar case, where
the knowledge of the mortgagor's
agent who prepared the abstract was
not imputed to the mortgagee) ; Labbe
v. Corbett, 69 Tex. 503 (where, under
a contract to deliver sheep, diseased
animals' were delivered, and vendee's
servants to assist in driving and car-
ing for the sheep knew this); Storms
v. Mundy, 46 Tex. Civ. App. 88 (where
an agent to see if he could obtain an
increase in the price of land, but not
to negotiate or make the sale, ap-
peared to have notice of fraud con-
nected with the sale); Lewis v.
Equitable Mortgage Co., 94 Ga. 572
(knowledge of an equity in land by
an agent to inspect merely); Hock-
field v. Southern Ry. Co., 150 N. C. 419,
134 Am. St. Rep. 945 (where notice
of arrival of goods was given to a
transfer company in the habit of haul-
ing goods for consignee, but not told
to haul the goods in question); but
see, Rothchild v. Northern Pac. Ry.
Co., 68 Wash. 527, 40 L. R. A. (N. S.)
773 (where the transfer company was
employed to receive the goods, and
notice was imputed). See also,
Mims v. Brooks, 3 Ga. App. 247.
10 In Congar v. Chicago, etc., Ry. Co.,
24 Wis. 157, 1 Am. Rep. 164, cited,
supra.
nBoardman v. Taylor, 66 Ga. 638;
Great Western Ry. v. Wheeler, 20
Mich. 419; Irvine v. Grady, 85 Tex.
120; Traber v. Hicks, 131 Mo. 180;
First Nat. Bank of Emmetsburg v.
Gunhus, 133 Iowa, 409, 9 L. R. A. (N.
S.) 471.
Notice to former agent of a corpora-
tion is not notice to the corporation
after the agent has severed his con-
nection with it. Great Western Ry. v.
Wheeler, supra.
So notice to an agent while nego-
tiating for the purchase of some cat-
tle is not notice to his principal,
where the agent's negotiations were
1418
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES [ 1833, 1834
The case of an agent accredited to receive notice and whose author-
ity had been terminated without the knowledge of the other party
would, of course, stand on different ground.
1833. Notice must be of some material matter. The
knowledge or notice which is to bind the principal must under the the-
ory of a duty to disclose, at least, be of some matter so material to the
transaction as to make it the agent's duty to communicate it to the prin-
cipal, 12 and, doubtless, the identification theory would not lead to prac-
tically different result. It must also come from such an apparently au-
thentic and reliable source that an ordinarily prudent man would be
required to give heed to it. But neither the principal nor the agent is
bound to regard that which appears to be mere idle and baseless rumor
or report. 13 ' ^ o
1834. Notice must come to someone who is an agent. In' or-
der to bind the principal, the notice must come to someone who stands
in the attitude of an agent to him that is to say, someone 'Who repre-
sents him, who owes him some duty, to whom the principal looks for
protection of his interests in the field in question. 14 Thus notice to an
broken off and the purchase subse-
quently consummated by the princi-
pal in person. Irvine v. Grady, supra.
Nor does the fact that the cashier
of the plaintiff bank had at one time
been a stockholder in and the presi-
dent of the defendant bank, and his
successor had never been elected,
charge the plaintiff with knowledge
of the character of a transaction car-
ried on by defendant's cashier. First
Nat. Bank v. Gunhus, supra.
Notice to attorneys after termina-
tion of relation does not bind former
client. Chicago Sugar Ref. Co. v.
Jackson Brew. Co. (Tenn. Ch.) 48 S.
W. 275; Beck v. Avondino, 20 Tex.
Civ. App. 330; Pedlar v. Stroud, 116
Cal. 461.
12 Fairfield Savings Bank v. Chase,
72 Me. 226, 39 Am. Rep. 319.
is Thus in Stanley v. Schwalby, 162
U. S. 255, it is said, p. 276, 40 L. Ed.
960: "In order to charge a purchaser
with notice of a prior unrecorded con-
veyance, he or his agent must either
have knowledge of the conveyance,
or, at least, of such circumstances as
would, by the exercise of ordinary
diligence and judgment, lead to that
knowledge; and vague rumor or sus-
picion is not a sufficient foundation
upon which to charge a purchaser
with knowledge of a title in a third
person."
See also Kerns v. Swape, 2 Watts
(Pa.) 75; Mulliken v. Graham, 72 Pa.
484; Jaques v. Weeks, 7 Watts (Pa.),
261; Pittman v. Sofley, 64 111. 155;
Vance v. Hickman, 95 111. App. 554.
14 See, for example: Booker v.
Booker, 208 111. 529, 100 Am. St. Rep.
250; Jummel v. Mann, 80 111. App.
288; Doyle v. Teas, 4 Scammon
(111.), 202; Aetna Indemnity Co. v.
Schroeder, 12 N. D. 110; Columbia
Paper Stock Co. v. Fidelity & Casu-
alty Co. (Mo. App.), 78 S. W. 320;
Central Coal Co. v. George S. Good &
C6., 120 Fed. 793, 57 C. C. A. 161;
Wyllie v. Pollen, 3 De Gex, J. & S.,
596, 601.
The circumstances of a mortgagor
being a solicitor, and preparing the
mortgage deed, and of the mortgagee
employing no other solicitor, are not
sufficient to constitute the former the
solicitor of the -latter, so as to affect
1419
1834]
THE
AGENCY
[BOOK iv
independent contractor, a mere bailee, a carrier, a postman, and the
like, would not ordinarily be imputed. It is sometimes said that notice
to a mere messenger or to one acting merely in a ministerial capacity
would not be imputed. If the theory upon which notice is to be im-
puted be the legal identity of the principal with the agent, then the per-
son to whom the notice comes must be such a person and acting in
such a capacity that it may fairly be said that, for the time being, he
is the principal. If the true theory be that the agent owes a duty to
communicate, then the person to whom the notice comes must be such
a one and acting in such a capacity that it may fairly be said that
the principal looks to him for information concerning the subject-mat-
ter ; that he is the person to whom information is likely to come, and
whose duty it would be to communicate it. Such a rule would seem
to exclude all persons having merely such a casual, temporary, me-
chanical, non-discretionary relation to the subject-matter that they
owe no duty to heed or report the information. 16
him with notice of an incumbrance chase, it was held that the vendor in
obtaining and making over the quit
claim did not stand as an agent of
the vendee so as to charge vendee
with notice of an outstanding unre-
corded deed. Riley v. Robinson, 128
App. Div. 178, affirmed without opin-
ion in 202 N. Y. 531.
is In Royle Min. Co. v. Fidelity
etc., Co., 161 Mo. App. 185, it is said
that the rule imputing notice does not
apply "where the agent is acting in a
merely ministerial capacity. When
so acting, the agent does not act a$ a
substitute for the principal, nor is
there imposed upon the agent the
duty of communicating to his princi-
pal the knowledge thus acquired."
To the same effect are: Labbe v. Cor-
bett, 69 Tex. 503; Storms v. Mundy,
46 Tex. Civ. App. 88.
But see Conrad v. Graham, 54
Wash. 641, 132 Am. St. Rep. 1137,
where notice to a "messenger" sent
out to buy a certain article was held
to be notice to the employer.
In Edson & Foulke Co. v. Winsell,
160 Cal. 783, where notice to a ditch
tender of the third person's adverse
claim was held to bind the principal.
"It matters not how lowly may be the
position of the agent or servant of a
known to the solicitor. Espin v.
Pemberton, 3 De G. & J. 547. Notice
to a sub-contractor is not notice to
the contractor. Coal & Coke Co. v.
Good & Co., supra. One employed as
a messenger and not a negotiator is
not an agent within the rule. Doyle
v. Teas, supra; Booker v. Booker,
supra.
Where a surety company requests
one agent of a concern to inform an-
other that a bond is required from
the latter and he does so, this does
not make the first agent an agent in
procuring the bond so that knowledge
which he may have had of the other's
conduct was imputable. Aetna In-
demnity Co. v. Schroeder, supra.
A trustee under a deed of trust is
not the agent of the holder of securi-
ties. Jummel v. Mann, 80 111. App.
288. Notice to an officer employed to
make an attachment is notice to the
plaintiff. But notice to the plaintiff's
of a tax title required the vendor to
provide a quit claim deed from the
last regular owner of record before
the vendee would complete the pur-
tachment, would not be. Tucker v.
Tilton, 55 N. H. 223. Where a vendee
attorney, who sued out the writ of at-
1420
CHAP. Vj LIABILITY OF PRINCIPAL TO THIRD PARTIES [ 1835-1837
1835. Ratification. Although the one who acted may
not have been an agent, or an agent for the act in question, at the
time the act was done, responsibility for the act with the notice af-
fecting it may be assumed by ratification with full knowledge of the
facts. But knowledge of the facts to which the notice relates would
usually be deemed as material and essential to be known as any others,
and, notwithstanding an occasional utterance to the contrary, the rules
of ratification can be based only upon actual knowledge and not merely
upon imputed knowledge. 16
It must be kept in mind, however, that the result of an alleged rati-
fication without knowledge is that the whole act fails, and not that it
can be affirmed as to all the beneficial parts and rejected as to the
burden of the notice. 17
It is also to be observed that, though one may not have had knowl-
edge at the outset, to insist upon retaining or enforcing the benefits,
after knowledge of the means by which they were obtained, must also
often count as a ratification with knowledge.
1836. Releasing agent from duty Enlarging it. In seeking for
a duty to communicate, reference must ordinarily be had to the duty
which the law would impose. It surely cannot be true that the prin-
cipal can save himself from the effects of notice by attempting to ex-
onerate the agent from a duty to communicate it, whatever might be
the effect of such exoneration between the principal and the agent
themselves. On the other hand, it is doubtless true that the princi-
pal's obligations might be enlarged by his expressly imposing a duty
or authority to receive notice greater than that which the law would
otherwise imply.
1837. Agent of two principals. Where the same person acts
with their consent, as agent of two or more principals, all interested in
the same subject-matter, and concerning which he owes a duty of com-
munication to each, notice to this agent must doubtless be deemed no-
tice to all his principals in accordance with the ordinary rules. 18
company or corporation; If, within the text (though not always made
the limits of his assigned duty, he clear in the opinions), that cases like
has notice, or is charged with notice the following are to be upheld:
of a particular matter or thing, apper- Haas v. Sterabach, 156 111. 44; Rus-
taining to that duty, that notice is no- sell v. Peavy, 131 Ala. 563; Singleton
tice to his principal." v. Bank of Monticello, 113 Ga. 527;
ie Thomson v. Central Pass. Ry. Backman v. Wright, 27 Vt. 187, 65
Co., 80 N. J. L. 328; Bohanon v. Bos- Am. Dec. 187.
ton & Me. R. Co., 70 N. H. 526. " See Sullivan Co. R. Co', v. Con-
" It is, of course, upon this ground necticut Riv. Lum. Co., 76 Conn. 464;
and that of the following clause in Consolidated Ice Mach. Co. v. Keifer,
1421
i8 3 8]
l THE LAW OF AGENCY
[BOOK iv
Where, however, the same person happens to be agent of two princi-
pals not thus interested, notice to him will not necessarily be notice
to both principals. To make it so there must be some duty imposed
upon him to communicate it to the principal sought to be affected. 19
1838. Where an agent stands in such a relation to two
principals (who have not knowingly consented to his double employ-
ment) that his present duty to one conflicts with his present duty to
the other, it is said that notice which he has with reference to the busi-
ness of one principal will not be imputed to the other. 20
134 111. 481, 23 Am. St R. 688; Holden
v. New York, 'etc., Bank/72 N. Y. 286;
Berry v. Rood, 168 Mo. 316; Gale v.
Lewis, 9 Q. B. 730.
19 Where one person is an officer of
two companies, it was held In re
"Hampshire Laiid Co., [18961 2 Ch.
.Div. 743, that knowledge which he
has acquired as officer of one .com-
pany will not be imputed to the other
company unless he has some duty im-
posed upon him to communicate his
knowledge to the company sought to
be affected by the notice, and some
duty imposed upon him by that com-
pany to receive the notice.
.. This holding was followed In In re
Fenwick, [1902] 1 Ch., 507; In re
David Payne & Co., [1904] 2 Ch. 608;
"where two companies have the same
person as director, and enter into
dealings with each other, the knowl-
edge of the common director cannot
He attributed to either company in a
transaction In which he did not rep-
resent it." Martin v. South Salem
Land Co., 94 Va. 28; Benton v, Ger-
man Am. Nat. Bank, 122 Mo. 332.
Where there is a common agent
whose duty It would be on one side
to give and on the other to receive
notice, notice to him will be imputed.
Mason v. United Press, 94 N. Y. App.
Div. 617.
20 In Constant v. The University of
Rochester, 111 N. Y. 604, 7 Am. St.
Rep. 769, 2 L. R. A. 734, an agent act-
ing for Constant had taken a mort-
gage for-him which it was the agent's
duty to promptly put upon record.
Instead of recording this mortgage.
'
however, he left it In his safe,
through what was claimed to be an
oversight. Some months later, but
while this mortgage was still in his
safe, and while he owed a constant
and present duty to have it recorded,
he acted for the university in taking
another mortgage, supposed by the
university to be a first mortgage upon
the same premises. This second mort-
gage was also left with the agent to
be recorded, and it was recorded. For
a short period, therefore, the agent
had in his hands two unrecorded
mortgages and owed to each princi-
pal the duty to record his first so as
to secure priority. It was urged that
the notice which the agent had of the
first mortgage, though unrecorded,
should be imputed to the university
and that therefore its mortgage was
subordinate to the first one. But the
court said that it could not be im-
puted, though it was not necessary to
decide it.
Compare Rolland v. Hart, L. R. 6
Ch. 678, where a solicitor induced a
client to loan money upon a mortgage
on certain lands and soon afterward
induced another client to do the
same without advising him of the
first. The second mortgage was first
recorded. Held, subject to the first.
The solicitor does not appear to have
expressly undertaken to record .either
mortgage.
In Pursley v. Stahley, 122 Ga. 362,
A, an illiterate person, owed X, who
had been her attorney, $50. At his
request and to enable him to get the
money,. A consented to give a note
1422
CHAP. V] ' LIABILITY OF PRINCIPAL TO THIRD PARTIES [ 1839,
If, however, anything more is meant by- this than one of the excep-
tions already considered, it is believed to be unfounded and not to be
approved.
1839. Where such an agent attempts dealings between
his two principals (both not having consented thereto) either may, in
accordance with well settled rules, repudiate the dealings. If, however,
either one, instead of repudiating, elects to affirm the transaction and
seeks to acquire or retain a benefit from it after knowledge of the facts,
he must take the benefit subject to the means by which it was acquired.
This is frequently exemplified in the cases already cited in which such
an agent, for his own purposes, abstracts from one principal and at-
tempts to convey to the other neither one being represented by any
other agent : if the latter principal claims the benefit of the act he must
take it subject to his agent's knowledge. If A, being the agent of X
and also of Y, and being indebted to Y, abstracts bonds from X and
receives them for Y as security for that debt, then, though when he
attempts to transfer them he may be acting as agent for X, yet when
he attempts to receive them and acquire title to them he is acting as
agent for Y. Y did not act in person, no one else than A acted for
him, if Y has obtained any title he obtained it through A, and he must
be charged with the knowledge his agent had at the time.
1840. Two agents of same principal. Where two or more per-
sons are jointly acting as agents for one principal, with reference to
the same subject-matter, notice to any one of them would be ordinarily
deemed notice to the principal within the rules already considered. 21
for that amount. X fraudulently held that this would not be imputed
made the note for $500 and A signed to client Y, who subsequently acted
ft. The note was made payable to B, with B respecting the same subject
who had money to lend and who was matter, B having actually no notice
also a client of X. The latter ob- of what A knew. In Phoenix Ins. Co. .
tained the money on the note from B v. Flemming, 65 Ark. 54, 39 L. R. A.
and kept it. Held, that B was not 789, 67 Am. St. R. 900, where two
chargeable with notice of the fraud partners were insurance agents and
of X. The court said that X was one of them issued a policy contain-
really not the agent of either A or B, ing a provision against the keeping
but, if he were agent, he was as much of fire-works, the fact that the other
the agent of A as of B. partner later happened to purchase
21 Bank of United States v. Davis, fire works for his own individual use
2 Hill (N. Y.), 451; Brown v. at the store does not charge the com-
Oattis, 55 Ga. 416. In Witten- pany with notice, where he never
brock v. Parker, 102 Cal. 93, 41 acted with reference to this insnr-
Am. St. Rep. 172, 24 L. R. A. ance, or knew that this policy had
197, where A and. B were lawyers and been issued.
partners, and A acting for client X Suretyship Imputing knowledge
acquired certain knowledge, it was l>y one agent of default of another
1423
1841]
THE LAW OF AGENCY
[BOOK iv
But where the agents are several, and only one acts, the knowledge of
the others who did not act would not ordinarily be imputed.
Where two agents are successively employed to accomplish the same
object, it has been held that notice to, or knowledge by, one of them
only, is not notice to the principal, where the one to whom notice is
given is not the one who finally accomplishes the object, but he has
ceased to act before that time and he did not impart the notice or
knowledge to his principal. 22
This rule, however, must be subject to the qualification that if the
first agent were such an one that notice to him woud be at once deemed
notice to his principal, the fact that he subsequently ceased to act would
not change that result.
1841. Notice to subagent when notice to principal. The ques-
tion whether notice to a subagent is notice to the principal depends
upon considerations already stated. 23 If the subagent be one whom
the agent was expressly or impliedly authorized to appoint, he is to
be deemed to be the agent of the principal, and notice to such subagent
would be notice to the principal as in the case of other agents. 84 But
agent to release a surety. In a num-
ber of cases, put upon varying
grounds, it has been held that a
surety company which has given bond
for the conduct of one agent is not
released by the fact that other agents
of the same principal subsequently
learn that the agent in question is
violating the terms of the bond but
do not report it to the principal.
Fidelity Co. v. Courtney, 186 U. S.
342, 46 L. Ed. 1193; Fidelity Co. v.
Gate City Nat Bank, 97 Ga. 634, 33
L. R. A. 821, 54 Am. St. R. 440; Pitts-
burgh, etc., R. Co. v. Shaeffer, 59 Pa.
350.
22 In Blackburn v. Vigors, 17 Q. B.
Div. 553, the plaintiff had instructed
a broker to effect for him a reinsur-
ance upon an over-due ship. While
this broker was acting on behalf of
the plaintiff, he received information
of a material fact tending to show
that the ship was lost. He did not
communicate this information to the
plaintiff and failed to effect the insur-
ance. Afterwards the plaintiff em-
ployed another broker who obtained
insurance from the defendant upon
the ship, lost or not lost. Subsequent
events showed that the ship had in
fact been lost some time before the
plaintiff attempted to 'effect the rein-
surance, but neither the plaintiff nor
the broker who finally obtained the
insurance knew of, or concealed from
defendant, any fact tending to show
that the ship was lost. It was held
by the Court of Appeal, that the
knowledge of the first broker must be
imputed to the plaintiff and that he
could not recover on the policy, cit-
ing Fitzherbert v. Mather, 1 T. R. 12;
Gladstone v. King, 1 M. & S. 35, and
Proudfoot v. Montefiore, L. R. 2 Q. B.
511.
This case was, however, reversed
by the House of Lords in 12 App.
Cases, 531. Lord Halsbury said:
"When a person is the agent to know,
his knowledge does bind the princi-
pal. But in this case I think the
agency of the broker had ceased be-
fore the policy sued upon was ef-
fected."
23 Ante, 332, 333.
2*Merritt v. Huber, 137 Iowa, 135;
Bates v. American Mtg. Co., 37 S. C.
1424
CHAP. VJ LIABILITY OF PRINCIPAL TO THIRD PARTIES
if the subagent be the agent of the agent merely, then there is no priv-
ity between him and the principal, and his knowledge cannot be im-
puted to the principal. 25
1842. Notice of what sort of facts imputed Agent's own de-
fault. The notice or knowledge which is to be imputed to the prin-
cipal is ordinarily that of extrinsic facts relating to the subject matter
of the agency as distinguished from the fact that the agent in acting
has violated his duty or done an unauthorized act. 20 Such acts would
88, 21 L. R. A. 340; Carpenter v. Ger-
man-Am. Ins. Co., 135 N. Y. 298;
Bergeron v. Pamlico Ins. & B. Co., Ill
N. C. 45; Phoenix Ins. Co. v. Ward, 7
Tex. Civ. App. 13; Goode v. Georgia
Home Ins. Co., 92 Va. 392, 53 Am. St.
Rep. 817, 30 L. R. A. 842; Arff v.
Star Fire Ins. Co., 125 N. Y. 57, 21
Am. St. Rep. 721, 10 L. R. A. 609.
25 Hoover v. Wise, 91 U. S. 308, 23
L. Ed. 392; Boyd v. Vanderkemp, 1
Barb. Ch. (N. Y.) 273; Waldman v.
North British Ins. Co., 91 Ala. 170, 24
Am. St. Rep. 883.
26 See Shepard & Morse Lumber Co.
v. Eldridge, 171 Mass. 516, 68 Am. St.
Rep. 446, 41 L. R. A. 617. In Fidelity
Co. v. Courtney, 186 U. S. 342, 46 L.
Ed. 1193, it is said that the rule that
knowledge of an agent is in law the
knowledge of his principal, "is in-
tended for the protection of the other
party (actually or constructively) to
a transaction for and on account of
the principal had with such agent.
In the very nature of things, such a
principle does not obtain in favor of
a surety who has bonded one officer
of a corporation, so as to relieve him
from the obligations of his bond, by
imputing to the corporation knowl-
edge acquired by another employee
subsequent to the execution of the
bond (and, from negligence or wrong-
ful motives, not disclosed to the cor-
poration) of a wrong committed by
the official whose faithful perform-
ance of duty was guaranteed by the
bond." ( See other cases, 1840.)
But the real reason in this case
was that the agent who had the no-
tice owed no duty to report it as
against the other agent; and, with
deference, it is believed that the
statement above quoted is too wide.
Agent's knowledge of his own con-
dition. Whether the agent's knowl-
edge of his own condition, e. g., that
he has, or has been exposed to, a con-
tagious disease, can be imputed to his
principal so as to make him liable for
its communication to the principal's
patrons, e. g., passengers dealing with
a ticket agent who is infected, is dis-
puted. It was denied in Long v. Chi-
cago, etc., R. Co., 48 Kan. 28, 30 Am.
St. Rep. 271, 15 L. R. A. 319, but af-
firmed in Missouri, etc., R. Co. v.
Raney, 44 Tex. Civ. App. 517.
Knowledge by agent of His own
forgeries Duty to examine the prin-
cipal's oanJc vouchers. Forgery by
an agent is not ordinarily an act for
which the principal is responsible.
See Weisser v. Denison, 10 N. Y. 68,
61 Am. Dec. 731; Hardy v. Chesa-
peake Bank, 51 Md. 562, 34 Am. Rep.
325. Whether a principal owes the
bank the duty to examine his bank
vouchers with a view to the detection
of a possible forgery, is a question
upon which the authorities are not
agreed. That there is no such duty,
see Weisser v. Denison, 10 N. Y. 68,
61 Am. Dec. 731; Welsh v. German
American Bank, 73 N. Y. 424, 29 Am.
Rep. 175; Frank v. Chemical Nat.
Bank, 84 N. Y. 209, 38 Am. Rep. 501;
Shipman v. Bank of N. Y., 126 N. Y.
318, 22 Am. St. Rep. 821, 12 L. R. A.
791; Manufacturing Bank v. Barnes,
65 111. 69, 16 Am. Rep. 576. But com-
pare Critten v. Chemical Nat. Bank,
171 N. Y. 219, 57 L. R. A. 529.
9
1425
1843]
THE LAW OF AGENCY
[BOOK iv
ordinarily be done under such circumstances of adverse interest that
notice of them would be non-imputable under the second exception al-
ready discussed ; 27 but where the purpose is to impute them and then
draw an inference of ratification or acquiescence, the attempt is met
by the sound rule of ratification that ratification with knowledge must
be based upon actual knowledge and will not be predicated upon a
mere fiction like that of imputed knowledge.? 8
1843. These rules apply to corporations Notice to officer or
agent. These rules apply with particular force to the case of cor-
porations. From the very nature of the case, the executive functions
of a corporation can only be exercised through the medium of the cor-
porate agents to whom and through whom all notice to the corpora-
tion must come. Notice to the officers and agents of a corporation
therefore, in reference to those matters to which their authority re-
lates, is, in general, notice to the corporation. 29
That there is such a duty, see Dana
v. National Bank, 132 Mass. 156;
First Nat Bank v. Allen, 100 Ala.
476, 46 Am. St. Rep. 80, 27 L. R. A.
426; Leather Mfrs. Nat. Bank v. Mor-
gan, 117 U. S. 107, 29 L. Ed. 819.
Where the duty is held to exist and
the principal confides the perform-
ance of the duty to an agent and this
agent commits the forgery, the duty
is not performed. Many of the cases
say that in this instance the knowl-
edge of the examining agent of his
own forgery is imputed to the prin-
cipal. See First Nat. Bank v. Allen,
100 Ala. 476, 46 Am. St. Rep. 80, 27
L. R. A. 426; Dana v. National Bank,
132 Mass. 156; First Nat. Bank v.
Richmond Elec. Co., 106 Va. 347, 7
L. R. A. (N. S.) 744. But it would
seem that the question of notice is
not material in these cases, which
may well rest on the non-perform-
ance of the duty. See Myers v.
Southwestern Nat. Bank, 193 Pa. 1.
27 Thus in American Surety Co. v.
Pauly, 170 U. S. 133, 42 L. Ed. 977,
it is said: "The presumption that
the agent informed his principal of
that which his duty and the inter-
ests of his principal required him to
communicate does not arise where
the agent acts or makes declarations
not in execution of any duty that he
owes to the principal, nor within
any authority possessed by him, but
to subserve simply his own personal
ends or to commit some fraud
against the principal. In such cases
the principal is not bound by the
acts or declarations of the agent un-
less it be proved that he had at the
time actual notice of them, or having
received notice of them, failed to
disavow what was assumed to be
said and done in his behalf." See
also Thomson v. Central Pass. Ry.
Co., 80 N. J. L. 328; Brown v. Har-
ris, 139 Mich. 372'; Traders Bank v.
Black, 108 Va. 59; Shepard & Morse
Lumber Co. v. Eldridge, 171 Mass.
516, 68 Am. St Rep. 446, 41 L. R. A.
617.
28 See ante, 403, 407.
There is language in United States
Fidelity Co. v. Shirk, 20 Okla. 576,
which seems contrary and from
which the present writer is con-
strained to dissent, though the con-
clusion can probably be sustained
upon the ground that the company
actually knew that only one agent
was signing the bonds (p. 579).
2 Holden v. New York, etc., Bank,
72 N. Y. 286; Union Bank v. Camp-
bell, 4 Humph. (Tenn.) 394; Waynes-
1426
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES [ 1844
But the peculiar characteristics of corporations render it imperative
that this rule be kept within its proper limits. Not every person who
is a member of a corporation, or who is connected with it, is its agent.
Nor is every agent to be deemed to be an agent for all purposes. The
magnitude of their business and the extent of territory over which their
operations extend require, in the case of many corporations, that their
business be divided into several departments, each with its own com-
plement of superior and inferior agents, and that' agents be employed
in various capacities, at different points. Attention/ then, must be
given to the questions whether the assumed agent is, in reality, the
agent of the corporation in the given transaction/and, if so, does the
notice or knowledge relate toma'ttejg^TtHin 1 the scope of his authority. ^^
S* 1844. -~Wriat" "officer or agent. The officer oFlagent of
the corporation may be of such a general, managerial, alter ego, sort
that notice to him concerning matters in which the corporation is inter- c^
ested niay be notice to it nierely_J^yjrtjii^^ though _
such cases are not common.
The president of a BanTT or other corporation for 'example, is not
usually per ^ such an agent, although he undoubtedly may be made
such. 81 Usually notice to him is notice to the corporation, as in the
case of other agents, only when it concerns something which falls
within the sphere of his authority or concerning which he acts as agent
with the knowledge in his mind. Notice or knowledge coming to him
in his private and unofficial capacity, concerning matters in which he
does not act as agent of the corporation, is not imputed to it. 82 The
ville Nat. Bank v. Irons, 8 Fed. Rep. officer and agent and the sole stock-
1; Hart v. Farmers', etc., Bank, 33 holder with the exception of one per-
Vt. 252; Mihills Mfg. Co. v. Camp, 49 son who was non-resident and inac-
Wis. 130; Webb v. Graniteville Mfg. tive. Lea v. Iron Belt Merc. Co., 147
Co., 11 S. C. 396, 32 Am. Rep. 479; Ala. 421, 119 Am. St. Rep. 93, 8 L. R.
Farmers', etc., Bank v. Payne, 25 A. (N. S.) 279. To same effect: An-
Conn. 444, 68 Am. Dec. 362; Wilson derson v. Kinley, 90 Iowa, 554;
v. McCullough, 23 Pa. 440, 62 Am. Huron Printing Co. v. Kittleson, 4
Dec. 347; Fairfleld Savings Bank v. S. Dak. 520; Steam Stonecutter Co.
Chase, 72 Me. 226, 39 Am. Rep. 319; v. Myers, 64 Mo. App. 527.
Maryland Trust Co. v. National Me- 31 Thus in Cragie v. Hadley, 99 N.
chanics Bank, 102 Md. 608; Petersen Y. 131, 52 Am. Rep. 9, it was found
v. Elholm, 130 Wis. 1; Scripture v. that "the entire control and manage-
Francistown Soapstone Co., 50 N. H. ment of the bank was in fact in-
571; Mechanics Bank v. Schaumburg, trusted to and conducted by its presi-
38 Mo. 228. dent."
s This is said to be necessarily and 32 Peoples Bank v. Exchange Bank,
particularly true where the agent 116 Ga. 820, 94 Am. St. Rep. 144;
who receives the notice is practically Platt v. Birmingham Axle Co., 41
the corporation itself, being the only Conn. 255; McCalmont v. Lanning,
1427
1845] THE LAW OF AGENCY [BOOK IV
same would be still more true perhaps of the vice-president. 88 Cashiers
of banks have usually a wide range of authority respecting financial
transactions, and notice to them in transactions in which they act is im-
puted to the bank. 34 Where the cashier is made the chief executive of-
ficer and manager of the bank, his authority to receive notice is corre-
spondingly increased. 85
Where the officer or agent is not thus one to whom notice may be
given because of his position, it must, as in other cases, be notice or
knowledge of one who is agent with reference to the subject matter to
which it relates^jj^*
1845. Ordinary exceptions apply here. Regard must
also be had to the exceptions to the general rules which have been pre-
viously considered. Thus, where an officer or agent of the corporation
himself deals openly as a party in interest, with the corporation, selling
it property, borrowing money of it, discounting notes with it, and the
like, the corporation will not be charged with notice of the informa-
tion which he possesses relating to the transaction and which he does
not disclose. In such a case the assumed agent is in reality the adverse
party, and cannot be treated as an agent at all. He is seeking to pro-
mote and protect his own interests, and it is not to be expected that he
can or will at the same time protect and advance those of the corpora-
tion. 37 The same rule applies, as in the other cases already discussed,
84 C. C. A. 138, 154 Fed. 353; Smith 34 See Birmingham Trust Co. v.
v. Carmack (Tenn. Ch.), 64 S. W. Louisiana Nat. Bank, 99 Ala. 379;
372; Mathis v. Pridham, 1 Tex. Civ. Loring v. Brodie, 134 Mass. 453;
App. 58; Curtice v. Crawford County Black Hills Nat. Bank v. Kellogg, 4
Bank, 110 Fed. 830. S. Dak. 312; Niblack v. Cosier, 26 C.
But where he acts for the corpora- C. A. 16, 80 Fed. 596; Cooper v. Hill,
tion in the matter with the knowl- 36 C. C. A. 402, 94 Fed. 582. ^
edge in his mind it is imputed. This was the fact in Bank v. Pen-
Louisville Trust Co. v. Louisville, land, 101 Tenn. 445.
etc., R. Co., 22 C. C. A. 378, 75 Fed. 36 McDermott v. Hayes, 116 C. C. A. L-
433; Willard v. Denise, 50 N. J. Eq. 553, 197 Fed. 129.
482, 35 Am. St. Rep. 788. But see 37 Wickersham v. Chicago Zinc Co.,
Lanning v. Johnson, 75 N. J. L. 259. 18 Kan. 481, 26 Am. Rep. 784; First
^Very wide range is given to the Nat. Bank of Hightstown v. Christo-
president of the bank to receive no- pher, 40 N. J. L. 435, 29 Am. Rep.
tice in Port Jervis v. First National 262; Innerarity v. Merchants' Nat.
Bank, 96 N. Y. 550. Bank, 139 Mass. 332, 52 Am. Rep. 710;
Knowledge by the treasurer of the Washington Bank v. Lewis, 22 Pick,
acts of the president was imputed (Mass.) 24; Winchester v. Baltimore,
in Hotchkiss, etc., Co. v. Union Nat. etc!, R, R., 4 Md. 231; Louisiana State
Bank, 15 C. C. A. 284, 68 Fed. 76. Bank v. Senecal, 13 La. 525; Seneca
33 Aycock Bros. Lumber Co. v. First County Bank v. Neass, 5 Den. (N. Y.)
National Bank, 54 Fla. 604; Holm v. 329; National Bank of Commerce v.
Atlas Nat. Bank, 28 C. C. A. 297, 84 Feeney, 9 S. Dak. 550, 46 L. R. A.
Fed. 119. 732; Commercial Bank v. Burgwyne,
LIABILITY OF PRINCIPAL TO THIRD PARTIES
[ 1847
CHAP. Vj
where the corporate agent, though not acting openly as the adverse
party, is secretly engaged in furthering some fraudulent scheme ad-
verse to his principal's interest, and which would destroy the agency
relation between them. 38
1847. These cases, however, are to be distinguished
from those in which the agent, for some purpose of his own, fraudu-
lently assigns, conveys or appropriates to the use of his principal the
property of another. In such a case, if the principal after knowledge
of the fraud seeks to appropriate and retain the benefit derived from
the agent's fraud, he will ordinarily be held to have ratified the act
and to have assumed responsibility for the means through which it
was brought about. This question has already been fully considered
in a preceding section. 39
110 N. C. 267, 17 L. R. A. 326; Rob-
erts v. Hughes, (Vt.) 83 Atl. 807;
Lee v. Elliott, 113 Va. 618; Arlington
Brewing Co. v. Bluethenthal, 36 App.
Cas. (D. C.) 209, Ann. Gas. 1912, C.
294; Whittle v. Vanderbilt Mining
Co., 83 Fed. 48; First Nat Bank v.
German Am. Ins. Co., N. Dak. ,
134 N. W. 873; Findley v. Cowles, 93
Iowa, 389; First Nat Bank v. Foote,
12 Utah, 157; American 'Nat. Bank v.
Ritz, 70 W. Va. 409, 40 L. R. A. (N.
S.) 156; Merchants Nat. Bank v. Lov-
ett, 114 Mo. 519, 35 Am. St. Rep. 770;
Seaverns v. Presbyterian Hospital,
173 111. 414, 64 Am. St Rep. 125; Dorr
v. Life Ins. Co., 71 Minn. 38, 70 Am.
St. Rep. 309; National Bank v.
Feeney, 9 S. Dak. 550, 46 L. R. A.
732; First Nat. Bank v. Tompkins, 6
C. C. A. 237, 57 Fed. 20; Third Nat.
Bank v. Harrison, 10 Fed. 243. Thus
where the general superintendent of
a corporation conveyed to it, with
warranty, lands which he had pur-
chased in his own interests and
which were subject to a prior lease,
of which he had actual knowl-
edge, it was held that his knowl-
edge could not be imputed to
the corporation. Wickersham v. Chi-
cago Zinc Co., 18 Kan. 481, 26 Am.
Rep. 784. So where the president of
a corporation conveyed to it land
subject to a prior equity against him-
self, the corporation was held not
chargeable with his knowledge.
Frenkel v. Hudson, 82 Ala. 158, 60
Am. Rep. 736.
as See ante, 1815 et seq.
3 See ante, 1818, note 84. Thus
if the cashier or other officer of a
bank who is secretly a defaulter
takes or uses the money of A with-
out authority to make good or cover
up his default, the bank, if it seeks
to retain the money after notice of
the fraud will be held charged with
the cashier's fraud and can acquire
no title against A. Atlantic Cotton
Mills v. Indian Orchard Mills, 147
Mass. 268, 9 Am. St Rep. 698. So a
bank is chargeable with notice of
facts vitiating the title to securities
obtained by the collusion of its teller
with an officer of another bank, by
certifying as "good" the check of an
irresponsible person which is taken
by such other bank. Atlantic Bank
v. Merchants' Bank, 10 Gray (Mass.),
532. So where the treasurer of a
town, being also cashier of a bank,
gave a note as treasurer of the town
to raise money for his private use,
and discounted the note as cashier,
the bank was held charged with
knowledge of his fraud. First Nat.
Bank of New Milford v. Town of
New Milford, 36 Conn. 93. So where
the cashier of a bank, who was also
treasurer of another corporation, de-
posited securities of the latter to ob-
1429
1848] THE LAW OF AGENCY [BOOK IV
1848. When notice must be acquired. It has been said
in many cases that notice to an officer or agent of a corporation will
not be notice to the corporation unless such notice was received while
the officer or agent in question was actually acting as such ; or, to put
it in a- different form, that the corporation will not be charged with
notice which comes to its officer or agent while the latter was acting
in his private or individual capacity. 40 This question deserves a some-
what closer analysis than it ordinarily receives. As has already been
pointed out, it is held by some courts, proceeding upon the theory of
the legal identification of the principal with his agent, that notice re-
ceived prior to the commencement of the agency is not to be imputed
to the principal, because at that time it was impossible that they
should be identified. Certain of the cases referred to can be dis-
posed of upon this ground, and are entirely consistent with it. The
same statement, however, is riot infrequently made by courts which
base the imputation of notice upon the agent's duty to communicate,
and these are the cases which chiefly require consideration. The ex-
planation here is simple and consistent. If information comes to an
agent while he is actually acting about the subject-matter of his
agency, and the information relates to it, such information is imputa-
ble to the principal under either rule. This is notice per se, and if is
immaterial whether the agent heeds it or forgets it or not. If, how r
ever, the information comes to him while he is not actually engaged
in the exercise of his agency, even though it be conceded that he was
agent at the time, the question whether it is to be imputed to his princi-
pal will depend upon a variety of circumstances. Under the second
tain a loan for the use of the former 72 Me. 226, 39 Am. Rep. 319; General
bank. Fishkill Savings Inst v. Bost- Ins. Co. v. United States Ins. Co., 10
wick, 19 Hun (N. Y.), 354. See also, Md. 517, 69 Am. Dec. 174; Washing-
Holden v. New York, etc., Bank, 72 ton Bank v. Lewis, 22 Pick. (Mass.)
N. Y. 286. But see Hummell v. Bank 24; First Nat. Bank v.' Christopher,
of Monroe, 75 Iowa, 689. 40 N. J. L. 435, 29 Am. Rep. 262;
*o People's Bank of Talbotton v. Casco Nat. Bank v. Clark, 139 N. Y.
Exchange Bank of Macon, 116 Ga. 307, 36 Am. St Rep. 705; Westfleld
820, 94 Am. St Rep. 144; The Texas Bank v. Cornen, 37 N. Y. 320, 93 Am.
Loan Agency v. Taylor, 88 Tex. 47; Dec. 573; Bank of U. S. v. Davis, 2
Reid v. Bank of Mobile, 70 Ala. 199; Hill (N. Y.), 451; Bank of Pittsburg
Brennan v. Emery, etc., Dry Goods v. Whitehead, 10 Watts (Pa.), 397, 36
Co., 99 Fed. 971; Grayson Co. Nat. Am. Dec. 186; Kearney Bank v. Fro-
Bank v. Hall, 91 S. W. 807 (Tex. Civ. man, 129 Mo. 427, 50 Am. St. Rep.
App.); Farmers, etc., Bank v. Payne, 456; Benton v. German American
25 Conn. 444, 68 Am. Dec. 362; Lyne National Bank, 122 Mo. 332; Penfield
v. Bank of Ky., 5 J. J. Marsh. (Ky. ) Invest. Co. v. Bruce, 132 Mo. App.
545; Mercier v. Canonge, 8 La. Ann. 257.
37; Fairfield Savings Bank v. Chase,
1430
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES [ 1849
theory, the question at once arises, was it his duty to communicate it to
his principal ? This will depend upon two considerations, i. Whether
he is such a general, managerial officer that notice to him is notice
to the corporation merely by virtue of his position ; and 2. Whether
though it is not imputable per se, it becomes notice because the
agent afterward acts with reference to the subject matter with the
knowledge present in his mind. Suppose an agent, who regularly and
habitually acts, during business hours, with reference to a certain sub-
ject, during the evening, while away from his place of business and at
his home or in some social gathering, receives in his "private and in-
dividual capacity" information pertinent and material to the subject
upon which he has been acting during the day and upon which he re-
sumes action at the opening of business on the morrow, with this in-
formation actually in his mind. Would it be contended, under either
rule, that this information would not be imputed to his principal?
1849. Suppose that the president of a bank, while ab-
sent from the bank and engaged upon his private affairs, learns some-
thing concerning X. X is not at that time a customer of the bank,
and, so far as the president knows, neither has nor contemplates hav-
ing any business relations or dealings with it. Suppose, however, that
the next day X, without the knowledge of the president, and with ref-
erence to matters not within the president's authority, has dealings,
with the bank through its cashier or board of directors, to which deal-
ings the information received by the president would be material.
Would it now be contended that such information would be imputed?
Obviously it could not be, because it did not come to an agent who
had any authority or duty with reference to the subject-matter to
which it related, and there was nothing to suggest to him that it was
a matter of any consequence to his principal or to impose any duty to
communicate it. The result would not have been different if the im
formation had come to the president while he was sitting in his office
at- the bank and actually transacting its business, if, as before, there
was nothing to suggest that it was a matter in which he or the bank
had any interest. 41 Suppose, however, that though, when the presi-
dent received this information, it seemed of no importance to the
bank, he should be called upon next day, or at any other time while
the information was actually fresh in his mind, to deal with X for the
bank with reference to a matter to which the information was material.
Would it be doubted now that the information would be imputed to the
See Washington Nat. Bank v. Pierce, 6 Wash. 491, 36 Am. St. Re-p. 174.
1431
1850, 1851] THE LAW OF AGENCY [BOOK IV
bank? Suppose still further, in the latter case, that because, when
he received it, it seemed to be a matter of no interest to him or to his
principal, the president paid little or no attention to it ; or that, for the
same reason, it soon passed from his mind, and later, when he was
unexpectedly called upon to act, the information had actually been for-
gotten. Would it now be imputed ? It is assumed that it would not be.
1850. The question, then, in all these cases, would seem
to be, not whether the information was received by the agent in his
private or individual capacity, but whether it was received at such
time and under such circumstances as to impose upon him the duty
to give heed to it or whether he afterwards acted with it present in
his mind. In the former case it is notice in itself. On the other hand,
notice or information coming to an agent of a corporation in his pri-
vate and individual capacity concerning a matter as to which he had
no authority or duty to act, or as to which he never did in fact act,
would not be imputed to the corporation, even though the corpora-
tion, through some other agent, who did not have the information,
should act upon the subject-matter to which it related. So notice com-
ing to an agent, even while acting generally in the execution of his
agency, but which had no such present relevancy or importance as to
impose a duty to communicate it, would not be imputed. 42 But if, in
any of these cases, the agent later acted as such upon some matter to
which that notice was relevant and with the knowledge still present
in his mind, it would then be notice.
1851. When notice to director is notice to corporation.
The question frequently arises whether notice to a director of a corpo-
ration is notice to the corporation. In dealing with this question, re-
gard must be had to the scope and nature of the director's powers.
The directors of a corporation are not individually its agents for the
transaction of its ordinary business, which is usually delegated to its
executive officers, such as its president, secretary, treasurer and the
like. Directors are, it is true, possessed of extensive powers even to
the extent of absolute control over the management of its affairs, but
these powers reside in them as a board and not as individuals, and only
when acting as a board in their collective capacity are they the repre-
sentatives of the corporation. Notice to them when assembled as a
See McDennott v. Hayes, 116 ence to that matter with the informa-
C. C. A. 553, 197 Fed. 129. But tion still in his mind, it would then
though the information was not no- be imputed. Pennoyer v. Willis, 26
tice when acquired, if the agent is Ore. 1, 46 Am. St. Rep. 594.
later called upon to act with refer-
1432
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES
[ 1852
board would undoubtedly be notice to the corporation. 43 So notice
to an individual director which is in fact communicated to the board
by him is notice to the corporation, for this thus becomes notice to the
board. 44
1852. But it is well settled, as a general rule, that the
mere private knowledge of one or more individual directors concern-
ing any business of the corporation (as to which such director has
then no special duty or authority to act, or upon which he does not
subsequently act with such knowledge in his mind, and which he does
not communicate to the board) is not to be imputed to the corpora-
tion. 45 This rule, however, is subject to certain exceptions resting
upon obvious principles. Thus it has been said that notice communi-
cated to a director officially for the express purpose of being com-
municated to the board is notice to the board, although he may have
failed to do so, as it is clearly his duty to so communicate it and he
ought to be conclusively presumed to have done his duty. 48 Whether
this is true, however, may perhaps be open to question.
First National Bank of Rights-
town v. Christopher, 40 N. J. L. 435,
29 Am. Rep. 262; Fulton Bank v.
New York, etc., Canal Co., 4 Paige
(N. Y.), 127; Toll Bridge Co. v. Bets-
worth, 30 Conn. 380; In re Marseilles,
etc., Ry. Co., 7 Ch. Ap. 161.
44 Farmers, etc., Bank v. Payne, 25
Conn. 444, 68 Am. Dec. 362; Bank of
Pittsburgh v. Whitehead, 10 Watts
(Pa.), 397, 36 Am. Dec. 186.
45 Ayers v. Green Gold Mining Co.,
116 Cal. 333; Lothian v. Wood, 55
Cal. 159; Murphy v. Gumaer, 12 Colo.
App. 472; Farmers, etc., Bank v.
Payne, 25 Conn. 444, 68 Am. Dec. 362;
Farrel Foundry v. Dart, 26 Conn.
376; Home Bank v. Peoria Ag'l So-
ciety, 206 111. 9, 99 Am. St. Rep. 132;
Lyne v. Bank of Ky., 5 J. J. Marsh.
(Ky.) 545; Louisiana State Bank v.
Senecal, 13 La. 525; Mercier v.
Canonge, 8 La. Ann. 37; Fairfleld
Savings Bank v. Chase, 72 Me. 226,
39 Am. Rep. 319; B. & O. R. R. Co. v.
Canton Co., 70 Md. 405; Winchester
v. Baltimore, etc., R. R. Co., 4 Md.
231; General Ins. Co. v. United
States Ins. Co., 10 Md. 517, 69 Am.
Dec. 174; United States Ins. Co. v.
Shriver, 3 Md. Ch. 381; Sawyer v.
Pawners Bank, 6 Allen (Mass.), 201;
Washington Bank v. Lewis, 22 Pick.
(Mass.) 24; Kearney Bank v. Fro-
man, 129 Mo. 427, 50 Am. St. Rep.
456; Yello.w Jacket Silver Min. Co.
v. Stevenson, 5 Nev. 224; First Nat.
Bank of Hightstown v. Christopher,
40 N. J. L. 435, 29 Am. Rep. 262;
Casco Nat. Bank v. Clark, 139 N. Y.
307, 36 Am. St. Rep. 705; Merchants
Nat. Bank v. Clark, 139 N. Y. 314, 36
Am. St. Rep. 710; Westfleld Bank v.
Cornen, 37 N. Y. 320, 93 Am. Dec.
573; Bank of U. S. v. Davis, 2 Hill
(N. Y.), 451; National Bank v. Nor-
ton, 1 Hill (N. Y.), 572; Atlantic
Bank v. Savery, 18 Hun, 36, s. c. 82
N. Y. 291; Getman v. Second National
Bank, 23 Hun (N. Y.), 498; La Farge
Fire Ins. Co. v. Bell, 22 Barb. (N. Y.)
54; Wilson v. McCullough, 23 Pa.
440, 62 Am. Dec. 347; Bank of Pitts-
burg v. Whitehead, 10 Watts (Pa.),
397, 36 Am. Dec. 186; Custer v.
Tompkins Co. Bank, 9 Pa. 27; Ward-
law v. Troy Oil Mill, 74 S. C. 368, 114
Am. St. Rep. 1004; Continental Nat.
Bank v. McGeoch, 92 Wis. 286; Law-
rence v. Holmes, 45 Fed. 357.
46 United States Ins. Co. v. Shriver,
3 Md. Ch. 381; Boyd v. Chesapeake,
1433
1853]
THE LAW OF AGENCY
[BOOK iv
1853. ' ' So it has been held that a corporation is properly
to be charged with information possessed by an individual director,
whether disclosed or not, if, while possessing such knowledge, he acts
with the board and as a member of it, upon the very matter to which
the information relates. 47 In such a case there is the strongest possi-
ble duty resting upon the director to communicate his information to
the board, and it may well be presumed, as against the corporation,
that he has done so. But, in accordance with the exception which has
been heretofore noticed, that the agent will not be presumed to com-
municate information hostile to his own interests, it has been held that
when a director is himself dealing as the other party with the corpo-
ration, the corporation will not be charged with notice of that knowl-
edge possessed by the director which his own interest impelled him to
conceal, 4 * even though he is present but does not act with the board in
etc., Canal Co., 17 Md. 195, 79 Am.
Dec. 646.
See also the case of Tryon v. White,
etc., Co., 62 Conn. 161, 20 L. R. A.
291, where the statement of a director
that he would advise the board about
a certain matter which he did not
do was held admissible. .Two judges
dissented.
47 Beacon Trust Co. v. Souther, 183
Mass. 413; National Security Bank v.
Cushman, 121 Mass. 490; Innerarity
v. Merchants' National Bank, 139
Mass. 332, 52 Am. Rep. 710; Union
Bank v. Campbell, 4 Humph. (Tenn.)
394; Bank of United States v. Davis,
2 Hill (N. Y.), 451; Clerk's Savings
Bank v. Thomas, 2 Mo. App. 367.
48 "A bank or other corporation can
act only through agents, and it Is
generally true, that if a director, who
has knowledge of the fraud or illegal-
ity of the transaction, acts for the
bank, as in discounting a note, his
act is that of the bank and it is af-
fected by his knowledge. National
Security Bank v. Cushman, 121 Mass.
490. But this principle can have no
application where the director of the
bank is the party himself contracting
with it. In such case the position he
assumes conflicts entirely with the
idea that he represents the interests
of the bank. To hold otherwise
might sanction gross frauds by im-
puting to the bank a knowledge those
properly representing it could not
have possessed." Devens, J., in Inne-
rarity v. Merchants' National Bank,
139 Mass. 332, 52 Am. Rep. 710. In this
case A shipped a cargo to B for sale
on A's account, but gave B a bill of
lading in latter's name. B was a di-
rector in defendant's bank. B bor-
rowed a large sum of money of the
bank and, without authority of A,
pledged the bill of lading as security.
B met (though he seems not to have
acted) with the board in approving
the loan but gave the board no notice
of the true ownership of the cargo,
nor did the bank have notice
from any other source. In an action
by the owner of the cargo it was held
that the bank could not be charged
with knowledge of the director's
fraud.
In First National Bank of Hights-
town v. Christopher, 40 N. J. L. 435,
29 Am. Rep. 262, P, a member of a
firm, procured at a bank of which he
was a director, the discount of a note
belonging to the firm, knowing that
the note had been obtained by fraud,
but not disclosing this fact to the
other officers of the bank. The bank
sued upon the note and were allowed
to recover, the court holding that the
1434
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES
[ 1854
reference to it. 49 A director may, also, either by custom, acquiescence
or express appointment, be charged with the performance of certain
corporate duties, in respect to which he is to be regarded like any other
agent of the corporation, and notice to him regarding such matters
will be notice to the corporation. 50
1854. Notice to stockholder not notice to the corpora-
tion. The stockholders of a corporation, as such, are in no sense
the agents of the corporation. They may, of course, be invested, like
other individuals, with representative powers by the corporation, and
would in that event be treated like other agents ; but their mere posi-
tion as stockholders gives them no such authority. Notice to one or
a part of the individual stockholders is, therefore, not notice to the
corporation unless actually communicated to it. 51
knowledge of the director could not
be imputed to the bank. [But as to
this case, see the case of Lanning v.
Johnson, 75 N. J. L. 259.] To same
effect: Commercial Bank v. Cunning-
ham, 24 Pick. (Mass.) 270, 35 Am.
Dec. 322; National Security Bank v.
Cushman, 121 Mass. 490; Frost v.
Belmont, 6 Allen (Mass.), 152. See
also, Atlantic Cotton Mills v. Indian
Orchard Mills, 147 Mass. 268, 9 Am.
St. Rep. 698.
In Mayor, etc. v. Tenth Nat. Bank,
111 N. Y. 446, the commissioners for
the building of the court house fraud-
ulently raised checks, and the de-
fendant paid them. Three of the
commissioners were directors of the
bank, but did not act for the bank
in this matter, Bliss, its president,
representing it solely, and he was
innocent of the fraud. The court re-
fused to charge the bank with the
knowledge of the fraudulent raising
of the checks, because the directors
of the bank, who participated in the
fraud, had such knowledge. English-
American Loan Co. v. Hiers, 112 Ga.
823; Martin v. South Salem Land
Co., 94 Va. 28; Hatch v. Ferguson, 15
C. C. A. 201, 66 Fed. 668.
4 Innerarity v. Merchants' Na-
tional Bank, 139 Mass. 332, 52 Am.
Rep. 710; Custer v. Tompldns County
Bank, 9 Pa. 27; Terrell v. Branch
Bank of Mobile, 12 Ala. 502.
United States Bank v. Davis, 2 Hill
(N. Y.), 451; and Union Bank v.
Campbell, 4 Hump. (Tenn.) 394, are
sometimes thought to be contra, but
there the director acted in the first
case, and in the second he withdrew
for the moment, but this was thought
to be colorable. These cases have
been criticised and denied. See In-
nerarity v. Merchants' National
Bank, supra. They are cited with
approval in Tagg v. Tennessee Na-
tional Bank, 9 Heisk. (Tenn.) 479.
50 Smith v. South Royalton Bank,
32 Vt. 341, 76 Am. Dec. 179.
51 Pittsburgh Bank v. Whitehead, 10
Watts (Penn.), 397, 36 Am. Dec. 186;
Union Canal v. Loyd, 4 Watts & S.
(Penn.) 393; Custer v. Tompkins Co.
Bank, 9 Pa. St. 27; Wilson v. McCul-
lough, 23 Pa. 440, 62 Am. Dec. 347;
Housatonic, etc., Bank v. Martin, 1
Mete. (Mass.) 294; Burt v. Batavia
Mfg. Co., 86 111. 66; Franklin Min.
Co. v. O'Brien, 22 Colo. 129, 55 Am.
St. Rep. 118; Mercantile Nat. Bank
v. Parsons, 54 Minn. 56, 40 Am. St.
Rep. 299; Seeger Refrig. Co. v. Amer-
ican Car Co., 171 Fed. 416; First Nat.
Bank v. Anderson, 28 S. C. 143.
See also, Pearsall v. Western Union
Tel. Co., 124 N. Y. 256, 21 Am. St.
Rep. 662.
Notice to promoter is not usually
notice to corporation. Franklin Min.
Co. v. O'Brien, supra.
1435
l &55> ^56] THE LAW OF AGENCY [BOOK IV
But there are many cases in which notice to all of the stockholders
must be deemed notice to the corporation. Thus where all the per-
sons who organized a corporation had notice of a defect in the title to
property acquired by the corporation through them, it was held that
the corporation must be deemed to be affected by their knowledge or
notice. 52
IV.
THE LIABILITY OF THE PRINCIPAL FOR HIS AGENT'S TORTS AND CRIMES
1855. In general. The question of the liability of the principal
for the wrongful acts of his agent may present itself in a great variety
of forms and may involve a great variety of considerations. In the
first place with reference to the nature of the act, the thing 'complained
of may be the agent's negligence ; it may be his wanton, wilful or ma-
licious act; it may be an act of fraud, misrepresentation or deceit; it
may be an act prohibited under penalty ; it may be an act that consti-
tutes a crime. With respect to the circumstances under which the act
was done, the particular act may have been specifically directed by
the principal; it may be the direct and immediate result of some act
specifically directed by the principal ; it may be an act expressly for-
bidden by the principal ; it may have been an act which the principal
feared and specifically warned against ; it may have been an act wholly
unforeseen and unanticipated by the principal ; it may have been an act
which in its precise form could not fairly have been anticipated and
was not reasonably to be foreseen.
With respect to either of these matters this enumeration of possibil-
ities is by no means exhaustive.
In many of the cases in which the questions here suggested will
arise, the relation will be more likely to be that of master and servant
than that of principal and agent. But the two relations, even if there
be a clear distinction between them, are here so much alike and the
rules governing them are in general so similar that it seems entirely
permissible to take illustrations from either field.
1856. Theories of liability. In dealing with the question of
the principal's liability in these cases, the question may perhaps be ap-
propriately asked at the outset, why should a principal be liable for
52 Simmons Creek Coal Co. v. Hoffman Steam Coal Co. v. Cumber-
Doran, 142 U. S. 417, 35 L. Ed. 1063. land Coal Co., 16 Md. 456, 77 Am.
See also, Carter v. Gray, 79 Ark. Dec. 311. See also, ante, 1844, note
273; Deal v. Chase, 31 Mich. 490; 30.
1436
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES [ 1856
the wrongful acts of his agent at all. It is, in general, true that one
man answers for his own wrongful acts only and not for those of an-
other. If an agent or servant commits a wrongful act, why, in these
days when every man is sui juris, should not the servant or agent an-
swer for his act rather than his principal or master. A great variety
of answers has been suggested and some of the cases may not be dif-
ficult to deal with. If the act be one which was specifically and immedi-
ately directed by the principal, it may be charged to him as being really
his own act, the servant or agent intervening merely as a mechanical in-
strument. The same result may perhaps be reached where the act,
though not specifically commanded, is the direct, immediate, to be ex-
pected, consequence of some act which was commanded. Again there
are many cases in which it is not difficult to see that the principal or
master was guilty of some personal default or negligence, and responsi-
bility may be traced to him on that ground. Such a case may be one
where the principal or master has been negligent in the selection or re-
tention of the servant or agent, or has failed to use proper care in su-
pervising the act or in guarding against danger. But suppose the act
cannot be brought under either of these heads, and that the principal
or master is not himself at fault, but has exercised all reasonable care
and caution in the selection and retention of his servant or agent, and
in supervising and controlling the work to be done ; and suppose further
that the work is such as can be done in safety, under the conditions
which the principal or master has selected, if now the servant or agent
injures some third person by his negligence or misconduct, why should
the principal or master, who is not himself at fault, be held responsi-
ble, instead of the servant or agent who is at fault? Many answers
to this question have been proposed, no one of which seems entirely
satisfactory. Attempts have been made to account for it on purely his-
torical grounds, but if it had no other foundation it probably should
not and would not long continue. It is sometimes said that, as the prin-
cipal or master is the one who put the force in motion, he is the one
who should answer for its consequences ; but this seems to put the em-
ployment of an agent or servant on the same perilous footing as the
keeping of a wild beast or the employment of unusually dangerous
forces. It is sometimes said that the principal or master is the one who
is to get the benefit, and therefore he should take the burdens also.
But it is not true in the ordinary case that the principal or master is
the only one who receives the benefit. Being employed may be just as
great a benefit to the servant or agent and may be just as much his
business or profession in life, as employing him may be beneficial to
the principal or master and constitute his business or calling in life.
1437
1857, !858] THE LAW OF AGENCY [BOOK IV
From the standpoint of society at large, the employment of each may
be equally beneficial. It is sometimes said that employers, as a class, '
are more likely to be pecuniarily able to respond in damages than em-
ployees as a class, and therefore, for the protection of third persons, a
remedy should be given against the employer. But this argument is
one which obviously must be confined within very narrow limits. Pe-
cuniary ability to meet it is, when standing alone, a not very just
ground for imposing a liability. Sympathy for the unfortunate, per-
haps, in some degree, prejudice against the more fortunate, neither of
them of course good legal reasons, undoubtedly often enters in.
As a result, however, of some of these reasons, perhaps of a combi-
nation of all of them, it has for many years been a definitely formu-
lated principle in our legal system that the principal should answer for
the acts of his agent, and the master respond for the conduct of his
servant, in a great variety of cases, in which no personal misconduct
or default on the part of the principal or master would furnish an ade-
quate explanation. Moreover, instead of. diminishing with the pro-
gress of time, the tendency everywhere seems to be to enlarge the lia-
bility of the principal or master, either by judicial decision or by direct
legislation.
1857. Accepting as a fact that the principal or master.
may be held liable, in many cases, for the misconduct of his agent or
servant, the effort must be to determine in what cases the liability will .
so attach, and what will be the extent of the liability. For this pur-
pose it may be convenient to consider the liability of the principal or
master, first, for acts expressly directed by him; second, for the negli-
gence of his servant or agent; third, for the wanton, wilful or ma-
licious acts of the servant or agent; fourth, for the fraud, misrepre-
sentation or deceit of the servant or agent ; fifth, the principal's civil
liability for the penal or criminal act of his servant or agent ; and sixth,
the penal or criminal liability of the principal or master for the penal
or criminal act of his servant or agent.
Before taking up these questions, however, a preliminary question
of much importance must be considered, namely whether the relation
of principal and agent or master and servant actually exists.
, ,[., .-, v fj >i--nter>ni.-io ifiqhnhij oflf lfjf!j hip? esmjJomo? ?.t il < -.a^cacfl
1. Did Relation of Principal and Agent or of Master and Servant Exist.
1858. Necessity for existence of relation. In all of the discus-
sions of this question, it is constantly assumed, and it is always a con-
dition precedent, that the relation of principal and agent, or master
and servant, shall actually exist. That this is so seems often to be
1438
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES [ 1859
easily overlooked, and it cannot very well be unduly emphasized. Two
quotations from a single court, out of many similar ones, may there-
fore be justified.
"A person, either natural or artificial, is not liable for the acts or
negligence of another, unless the relation of master and servant or
principal and agent exists between them." B3
"There can be no recovery against one charged with negligence upon
the principle of respondeat superior, unless it be made to appear that
the relation of master and servant in fact existed, whereby the negli-
gent act of the servant was legally imputable to the master." 5 *
The relation must also exist at the time in question. If it had not
yet begun, or if it had already terminated, 55 no liability can ordinarily
arise.
1859. When relation exists. It being thus true, as has been
pointed out, that in order to hold one man responsible for the torts of
another, it is. in general necessary to show that the one sought to be
held responsible stood in the relation of principal or master of the
wrongdoer with respect of the act done, it becomes material to dis-
cover the tests by which the existence of that relation, in a given case,
may be determined. In the ordinary case the matter presents no es-
sential difficulty. He is the principal or master who is designated as
such by the acts of employing and paying compensation. But, as has
been seen, formal employment is not always essential to the existence
of the relation ; neither is payment of compensation. 56 A father, for
ss Painter v. Mayor, etc., of Pitts- servant after he has been discharged,
burg, 46 Pa. 213. Johnson v. Martin, 11 La. Ann. 27, 66
s*Patton v. McDonald, 204 Pa. 517 Am. Dec. 193.
(at p. 528). See also Beard v. Lon- 56 A person is responsible as mas-
don Omnibus Co., [1900] 2 Q. B. 530. ter for the negligence of another
6 That there is no liability ordi- whom he has engaged as chauffeur
narily for what the former servant of his automobile and whom he is
or agent does after the relation is teaching to run it and to whom he
terminated, is taken for granted in has extended the use of it, even
Baston v. Hitchcock, [1912] 1 K. B. though such chauffeur is still em-
535, and therefore plaintiff attempted ployed and paid by some one else,
to establish a warranty on the part Irwin v. Judge, 81 Conn. 492.
of the principal that his agents Where a man was allowed to take
would not, after the termination of an automobile with a view to show-
the agency, disclose information ac- ing it to a possible purchaser, and,
quired during the agency. The at- after having done so without selling
tempt was unsuccessful. it, to keep it several days without
As to persons to whom the master further authority, during which time,
is not obliged to give notice of ter- while using it for his own purposes,
mination, and where there is no ele- he negligently injured the plaintiff,
ter is not liable for the acts of the it was held that there was neither
ment of estoppel involved, the rnas- such a relation of agency or of mas-
1439
1859]
THE LAW OF AGENCY
example, may make his child his servant without either of these acts ; 57
and one person may, expressly or tacitly, so far accept and adopt even
the voluntary and gratuitous service of another as to assume responsi-
bility, in legal contemplation, for his acts. 58
It is not essential, moreover, that the person sought to be held as
principal or master shall, in person, have employed or authorized the
servant or agent. He may, either expressly or by implication, confide
the performance of this act to an agent, or he may subsequently ratify
what some one without authority has assumed to do in this respect
as his agent.
It is also not indispensable that the alleged servant or agent shall ac-
tually know who was his master or principal. That is a question of
ter and servant as would make the
owner liable. Goodrich v. Musgrave
Fence & Auto Co., 154 Iowa, 637.
Range of choice as to selection
Licensed employee Compulsory
Pilots. The mere fact that one may
employ only a licensed or certified
person as servant, does not affect the
relation, where there is in fact a sub-
stantial range of choice and he may
exercise over the employee the ordi-
nary power of control. Martin v.
Temperley, 4 Q. B. 298.
A statute requiring the employ-
ment of a licensed mine foreman, and
which the court construed as prac-
tically taking away the owner's right
of control, was held unconstitutional
in Durkin v. Kingston Coal Co., 171
Pa. 193, 50 Am. St. Rep. 801, 29 L. R.
A. 808.
Not followed in Fulton v. Wilming-
ton Star Min. Co., 66 C. C. A. 247, 133
Fed. 193, relying on other cases in
Illinois.
Where the owner of a ship must
take a pilot, to be chosen arbitrarily,
e. g., the one who first offers his serv-
ices, and must give him full control
of the vessel, he cannot be held, at
common law, for his default. Rams-
dell Transp. Co. v. Compagnie Gen.,
182 U. S. 406.
57 In Stowe v. Morris, 147 Ky. 386,
39 L. R. A. (N. S.) 224, it was held
that where a father provided an au-
tomobile for family use and allowed
his son to use it whenever the family
pleasure suggested, the son in taking
it out and using- it for a pleasure ride
of himself, his sister and some invited
friends must be deemed to be using
it as the father's servant. Daily v.
Maxwell, 152 Mo. App. 415, and Lash-
brook v. Patten, 1 Duv. (Ky.) 316,
were relied upon. Doran v. Thomsen,
76 N. J. L. 754, 19 L. R. A. (N. S.)
335; McNeal v. McKain, 33 Okla. 449,
41 L. R. A. (N. S.) 775, reach the op-
posite conclusion on much the same
facts. (See also Moon v. Mathews,
227 Pa. 488, 136 Am. St. Rep. 902, 29
L. R. A. (N. S.) 856; Smith v. Jor-
dan, 211 Mass. 269.)
In Brittingham v. Stadiem, 151 N.
C. 299, there was evidence that the
defendant's minor son was prac-
tically made a clerk in defendant's
gun shop so as to charge the father
with the son's negligence.
ss Thus, in Hill v. Morey, 26 Vt.
178, where the defendant was repair-
ing a fence between his own and the
the plaintiff's land and a neighbor
began assisting the defendant, with-
out any request, but merely with the
instruction from the latter not to cut
on the plaintiff's land, the defendant
was held liable for a trespass by the
neighbor upon the plaintiff's land.
1440
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES
[ i860
law, which can not be controlled by what the agent or servant happened
to think or believe about it.
1860. Several masters of one servant General and spe-
cial master Lending servants Adopting servants of others. It. is
entirely possible, also, that two different persons may at the same time
severally stand in the attitude of principal or of master in some re-
spect of the same agent or servant, with reference to different acts
which he may perform. One may be his principal as to one act or class
of acts and the other his principal as to other acts. 50 One may be what
is often called "the general master," while the other may be "the spe-
cial master." Thus a master may, with the consent of his servant,
lend his servant to another in such a way that, while the original con-
tract of employment may still continue and the first master may con-
tinue to pay the servant's compensation, the servant will, nevertheless,
become so far the servant for the time being of the borrower as to
make the latter responsible to third persons for injuries caused by him
during the performance of the work of the borrower. 60
59 The question in such a case must
usually be, for which of his several
masters the act in question was per-
formed to whose service did it be-
long for whom was he acting when
he performed it?
Thus in a recent case a deputy
sheriff, who had been appointed at
the request of a railway company by
whom he was paid, and who spent
most of his time in guarding its prop-
erty, shot a person under circum-
stances which did not afford justi-
fication; it was held as a matter of
fact that his act was done in his ca-
pacity as private watchman of the
railway company rather than in his
capacity as a public officer, and there-
fore the company was liable. Texas,
etc., R. Co. v. Parsons, 102 Tex. 157,
132 Am. St. Rep. 857.
Many other cases involving the
same question are cited in the notes
to 1973, post.
eo Where the principal or master,
as a mere matter of courtesy or ac-
commodation, undertakes to do some
service for another involving the em-
ployment of a servant, the servant
will usually remain the servant of
the principal or master who so un-
dertakes. If I offer to send a guest
home in my carriage, or invite him
to take a ride in it, the driver will
usually remain my servant in so do-
ing. The fact that the guest gave
the general directions or chose the
route would usually be immaterial.
See Corliss v. Keown, 207 Mass. 149.
If I send my servant to assist a guest
or a friend, the servant, In so doing,
will usually remain my servant.
Performing the act of courtesy or
friendship in such a case is clearly
my business. On the other hand,
where one person lends his servant
to another to be used by the latter in
the performance of his business and
under his direction and control,
the servant, while so employed, is
usually the servant of the lat-
ter, even though the former may
continue to pay him. (It is, of
course, necessary that the servant
shall, expressly or impliedly, consent
to the arrangement and put himself
under the direction of the borrower.)
Delaware, Lackawanna & Western
R. R. v. Hardy, 59 N. J. L. 35; Hig-
gins v. Western Un. Tel. Co., 156 N. Y.
75, 66 Am. St. Rep. 537; Hasty v.
Sears, 157 Mass. 123, 34 Am. St. Rep.
1441
i860]
THE LAW OF AGENCY
[BOOK iv
Precisely the same situation may result where, instead of simply
lending his servant to another, the master, with the servant's consent,
hires him for a period to another person, not to perform any service
in which his general master is interested, but simply to perform serv-
ice for the latter as the latter's servant. 61
One person may, moreover, as to some particular act or service, so
far adopt as his own servant one who is regularly the servant of an-
other person, as to make himself liable for the conduct of such servant
in the performance of that act or service. 62
-3flB 'J(li" 3d VKfft 13fho 'Jill "ililfw "
267; Wood v. Cobb, 13 Allen (Mass.),
58; Kimball v. Cushraan, 103 Mass.
194, 4 Am. Rep. 528; Grace & Hyde
Co. v. Probst, 208 111. 147; Philadel-
phia, etc., Coal Co. v. Barrie, 102 C.
C. A. 618, 179 Fed. 50; Parkhurst v.
Swift, 31 Ind. App. 521; McCarthy v.
McCabe, 131 N. Y. App. Div. 396;
Rourke v. White Moss Colliery Co., L.
R. 2 C. P. Div. 205; Murray v. Currie,
L. R. 6 C. P. 24 (but compare
Standard Oil Co. v. Anderson, 212
U. S. 215); Donovan v. Laing, [1893]
1 Q. B. 629 (but compare Union
Steamship Co. v. Claridge, [1894]
App. Gas. 185, where the general
master did not relinquish control).
See also Muldoon v. City Fireproof-
ing Co., 134 N. Y. App. Div. 453; An-
derson v. Boyer, 156 N. Y. 93; Calla-
han v. Munson S. S. Line, 141 App.
Div. 791; Western Un. Tel. Co. v.
Rust, 55 Tex. Civ. App. 359.
The same result was reached
where, though the defendant did not
loan his servant, the latter, without
the knowledge or consent of defend-
ant, undertook to perform a service
for another person at his request,
even though the latter was then to
furnish a man in return to help the
servant do defendant's work. Casey
v. Davis, etc., Co., 138 N. Y. App. Div.
396; affirmed on appeal withdrawn,
200 N. Y. 554.
See also, Conner v. Koch, 63 N. Y.
App. Div. 257; Wyllie v. Palmer, 137
N. Y. 248, 19 L. R. A. 285; Consoli-
dated Fire Works Co. v. Koehl, 190
111. 145, 206 111. 283; Harding v. St.
Yards Co., 242 111.
Louis Stock
444; Perkins v. Stead, 23 L. T. Rep.
433.
i Coughlan v. Cambridge, 166
Mass. 268; Donovan v. Laing, etc.,
Syndicate, [1893] 1 Q. B. 629; Rourke
v. White Moss Colliery Co., 2 C.
P. Div. 205; McDowell v. Rams-
dell Trans. Co., 78 Hun (N. Y.),
228; Philadelphia, etc., Coal Co.
v. Barrie, 102 C. C. A. 618, 179
Fed. 50; Byrne v. Kansas City, etc.,
R. R. Co., 61 Fed. 605, 24 L. R. A.
693; Brown v. Smith, 86 Ga. 274, 22
Am. St. Rep. 456; Samuelian v. Amer-
ican Tool & Machine Co., 168 Mass.
12 (but it seems fairly questionable
whether the result reached in this
case can be sustained); Cunningham
v. Syracuse Imp. Co., 20 N. Y. App.
Div. 171; Koenitsky v. Matthews, 64
N. Y. Misc. 167.
Railroad employees hired to con-
tractor. Hitte v. Republican Valley
R. R. Co., 19 Neb. 620; Miller v. Minn.
& N. W. R. R, Co., 76 Iowa, 655, 14
Am. St. Rep. 258; Powell v. Const.
Co., 88 Tenn. 692, 17 Am. St. Rep. 925.
But compare New Orleans, etc., R.
R. v. Norwood, 62 Miss. 565, 52 Am.
Rep. 191.
62 See cases in which servants hired
and paid by one company were held
servants of another company for
which they also acted. Taylor v.
Western Pacific R. R. Co., 45 Cal.
323; Denver, etc., R. R. Co. v. Gustaf-
son, 21 Colo. 393; Buchanan v. Chi-
cago, etc., Ry., 75 Iowa, 393; Mills v.
Railroad Co., 2 MacArthur (Dist. of
Col.) 314; Gulf, etc., Ry. Co. v. Shel-
ton, 30 Tex. Civ. App. 72; Union Ry.
1442
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES
[ 1861
1861.
Servant performing his own master's business
under direction of master's employer. On the other hand, the per-
son who first employed the servant may continue to be his master and
responsible as such, even though the service of that master is to be per-
formed by that servant for some third person in pursuance of the mas-
ter's undertaking to perform it, and even though such third person may
have the right, under the contract with the master, to give many di-
rections to the servant respecting the time or the place or the manner
in which he shall perform his master's undertaking, or even to reject
him and demand another in his place. 63
& Transit Co. v. Kallaher, 114 111.
325; Wabash, etc., R. Co. v. Peyton,
106 111. 534, 46 Am. Rep. 705. See
also Gulf, etc., Ry. Co. v. Gaskill, 103
Tex. 441; Southern Express Co. v.
Brown, 67 Miss. 260, 19 Am. St. Rep.
306. Compare Brady v. Chicago, etc.,
Ry. Co., 114 Fed. 100, 57 L. R. A. 712;
Chicago Ry. Co. v. Volk, 45 111. 175.
3 Where the general master under-
takes to perform service or to fur-
nish a servant to perform service in
the line of his own business and in
the exercise of his own calling, the
servant remains his, and he remains
liable for the negligence of the serv-
ant while performing that service,
even though the person for whom it
was performed has the right to direct
when it shall be performed or where
or, in general, how. The typical
cases are those in which a stable-
keeper or a team owner furnishes a
vehicle and driver, or a team and
driver, in pursuance of the request of
a customer.
In Quarman v. Burnett, 6 M. & W.
499, two ladies, who had their own
carriage, were accustomed to hire
horses and a coachman from a stable-
keeper. They always had the same
driver, and had a suit of livery made
for him, which he wore while driving
for them. They handed him a small
gratuity after each trip, although his
regular wages came from the stable-
keeper. Through his negligence in
leaving the horses unattended while
he went into their house to leave his
hat at the end of a ride, plaintiff was
injured. Held, that the relation of
master and servant did not exist be-
tween the ladies and the coachman
(distinguished in Jones v. Scullard,
[1898 J 2 Q. B. 565, where the defend-
ant owned the carriage, horses and
harness, but hired a driver from the
stable-keeper and furnished him with
a suit of livery, and such driver had
driven the defendant for six weeks
continuously just preceding the in-
jury to plaintiff).
See also Joslin v. Grand Rapids
Ice Co., 50 Mich. 516, 45 Am. Rep. 54;
Lewis v. Long Island R. Co., 162 N.
Y. 52; Little v. Hackett, 116 U. S.
366, 29 L. Ed. 652; Standard Oil Co.
v. Anderson, 212 U. S. 215; Morris
v. Trudo, 83 Vt. 44, 25 L. R. A. (N. S.)
33; Jones v. Liverpool, 14 Q. B. Div.
890; Genovesia v. Pelham Co., 130
N. Y. App. Div. 200; Driscoll v. Towle,
181 Mass. 416; Harding v. St. Louis
Stock Yards, 242 111. 444; Ash v. Cen-
tury Lumber Co., 153 Iowa, 523, 38
L. R. A. (N. S.) 973; Frerker v.
Nicholson, 41 Colo. 12, 14 Ann. Gas.
730, 13 L. R. A. (N. S.) 1122; Kellogg
v. Church Charity Foundation, 203
N. Y. 191, 38 L. R. A. (N. S.) 481,
Ann. Cas. 1913,. A. 883; Higham v.
Waterman, 32 R. I. 578; Dewar v.
Tasker, 23 L. T. Rep. 259; Quinn v.
Electric Const. Co., 46 Fed. 506.
For negligence in the care of the
horses, etc., the general master is
usually liable. Ames v. Jordan, 71
Me. 540, 36 Am. Rep. 352; Huff v.
Ford, 126 Mass. 24, 30 Am. Rep. 645,
and other cases cited post, note 65.
T 443
l86i]
THE LAW OF AGENCY
[BOOK iv
As has already been pointed out, this would usually be true also \vherc
the service to be rendered to the third person was being rendered in
The owner of a taxi-cab remains
liable for the negligence of its driver,
even though by contract that particu-
lar cab has been set aside for the
exclusive use of a particular cus-
tomer. Irwin v. Waterloo Taxi-cab
Co., [1912] 3 K. B. 588.
Where a stable-keeper lets for the
afternoon a carriage, team and driver
to another stable keeper, who sup-
plied this and other carriages to an
undertaker for a funeral, the first
stable-keeper is liable for the negli-
gence of the driver while driving in
the procession (Hussey v. Franey,
205 Mass. 413, 137 Am. St. Rep. 460),
though the undertaker would be lia-
ble to any one to whom he had in-
curred a contractual obligation of
safe carriage. Radel v. Borches, 147
Ky. 506, 39 L. R. A. (N. S.) 227.
Although the servants of a steve-
dore in unloading a ship may be un-
der the general directions of the mas-
ter, that fact does not make the
servant of the master and the serv-
ants of the stevedore fellow-servants.
Cameron v. Nystrom, [1893] App.
Cas. 308; Union Steamship Co. v.
Claridge, [1894] App. Cas. 185. See
also, Winona Technical Institute v.
Stolte, 173 Ind. 39.
A passenger in a stage or similar
vehicle does not become responsible
for the negligence of the driver
merely by giving ordinary sugges-
tions to the driver as to speed, course,
etc. Richardson v. Van Ness, 53
Hun (N. Y.), 267.
A merchant who keeps no delivery
wagons, but makes a contract to get
the work done by an express man
who sends his own teams, vehicles
and drivers, is not liable for the neg-
ligence of the drivers. Moore v.
Stainton, 80 N. Y. App. Div. 295, aff'd,
177 N. Y. 581; Waldock v. Winfield,
[1901] 2 K. B. 596; Jahn v. Mc-
Knight, 117 Ky. 655. See also, Abra-
ham v. Bullock, 86 L. T. Rep. 796.
Even though the same driver is al-
uays sent. Catlin v. Peddie, 46 N.
Y. App. Div. 596. But if the express-
man surrenders and the merchant as-
sumes the complete control of a
driver and team hired from the ex-
pressman, the merchant will be lia-
ble for the negligence. Howard v.
Ludwig, 117 N. Y. .507; Diehl v. Rob-
inson, 72 N. Y. App. Div. 19; Koenit-
sky v. Matthews, 64 N. Y. Misc. 167.
The regular assistants at a bath
house are the servants of proprietor,
even though they get their entire pay
from tips given by patrons. Gaines
v. Bard, 57 Ark. 615, 38 Am. St. Rep.
266.
Where engines, hoisting apparatus,
etc., are hired out with attendants
to do particular jobs, the attendants
usually remain the servants of their
general employer. Standard Oil Co.
v. Anderson, 212 U. S. 215; Henry v.
Stanley Hod Elevator Co., 129 N. Y.
App. Div. 613; Mills v. Thomas Ele-
vator Co., 54 id. 124; Moran v. Carl-
son, 95 id. 116; Stewart v. California
Improvement Co., 131 Cal. 125, 52 L.
R. A. 205; Dewar v. Tasker, 23 L. T.
Rep. 259.
See also, Wright Engine Works v.
Cement Co., 167 N. Y. 440.
A servant doing the master's work
upon the premises of the master's
patron and subject to the general di-
rections of the latter remains the
master's servant. McCullough v.
Shoneman, 105 Pa. 169, 51 Am. Rep.
194; Stevens v. Armstrong, 6 N. Y.
435; Currier v. Henderson, 85 Hun
(N. Y.), 300.
See also, Hickey v. Merchants'
Transportation Co., 152 Mass. 39.
But if the servant on such an oc-
casion undertakes, at the request of
the occupant, some service for the
latter which his duty to his master
does not contemplate, he ceases as
to such act to be the servant of his
general master. Atherton v. Kansas
City Coal Co., 106 Mo. App. 591.
1444
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTTEb
[ 1861
pursuance of the general master's desire (for his own gratification) to
render a courtesy or friendly service to the other. 64
So also, although the work to be done may be generally that of the
master's employer, there may be such elements of the master's inter-
est to be subserved as to make what is done in doing so the act of the
master's servant. Thus, though the master has hired to another his
team and driver or his engine and driver, to do that other's work, so
as to make him generally that other's servant, yet it may be that the
master has such an interest in the care and management of the horses
or the engine in the meantime as to make what the servant does in that
particular regard the act of the first or general master. A considera-
ble number of cases have been decided upon this theory. 85
A number of cases seem to have followed these although the driv-
ing or management of the horses, etc., had nothing to do with the in-
G* See ante, 1860, note 60.
5 Thus, in Delory v. Blodgett, 185
Mass. 126, 102 Am. St. Rep. 328, 64
L. R. A. 114, it is said: "The circum-
stances are often such, that while
the driver is the servant of the per-
son to whom the team is furnished
in reference to the question what he
shall do or where he shall go, there
is an implication that, as to the par-
ticulars of the management of the
horses, he is the servant of his gen-
eral employer in whose interest and
as whose representative he will man-
age and direct, within reasonable
limits, such matters as pertain to the
health and safety of the horses and
the safety of the vehicle. In these
particulars, for the preservation of
his property, it will be presumed that
the owner of the team retains in his
driver a right of control. This is the
ground of the decisions in Huff v.
Ford, 126 Mass. 24, 30 Am. Rep. 645;
Reagan v. Casey, 160 Mass. 374, and
Driscoll v. Towle, 181 Mass. 416.
See also, Joslin v. Grand Rapids
Ice Co., 50 Mich. 516, 45 Am. Rep. 54;
Morris v. Trudo, 83 Vt. 44, 25 L. R.
A. (N. S.) 33; Harding v. St. Louis
Stock Yards, 242 111. 444; Ash v. Cen-
tury Lumber Co., 153 Iowa, 523, 38
L. R. A. (N. S.) 973; Wilbur v. For-
gione Co., 109 Me. 521. (These cases
are cited as controlling in one of the
opinions in Philadelphia, etc., Coal
Co. v. Barrie, 102 C. C. A. 618, 179
Fed. 50, but in this case the driving
had nothing to do with the injury.
The same is true of Higham v.
Waterman, 32 R. I. 578.)
Same principle was applied in the
case of an automobile let with its
licensed driver for a certain sum for
a fixed period, here two days. Shep-
ard v. Jacobs, 204 Mass. 110, 134 Am.
St. Rep. 648, 26 L. R. A. (N. S.) 171.
The court thought the case was dis-
tinguishable from cases where rail-
road trains and large machines
have been let with men to work
them, such as Coughlan v. Cam-
bridge, 166 Mass. 268; Rourke v.
White Moss Colliery Co., 2 C. P.
Div. 205; Murray v. Currie, L.
R. 6 C. P. 24; Byrne v. Kansas
City Ry. Co., 61 Fed. 605, 24 L. R. A.
693. (But it is not easy to see what
difference size makes in such a case.)
See also, Stewart v. California Im-
provement Co., 131 Cal. 125, 52 L. R.
A. 205; Cain v. Nawn Contr. Co., 202
Mass. 237; Bohan v. Metropolitan Ex-
press Co., 122 N. Y. App. Div. 590;
Alaimo v. B. J. Marrin Co., 121 N. Y.
Supp. 563.
1445
1862, 1863] THE LAW OF AGENCY [l30OK IV
jury, and thus apparently disregarding the precise ground upon which
they were made to rest. 68
1862. Furnishing persons to be employed as servants.
A person whose occupation it is to furnish to another, persons whom
the latter may employ in his business^ for example, a messenger com-
pany or an employment agency, and who has performed his undertak-
ing when he has supplied the requisite number of reasonably compe-
tent employees, is not the master of those employees while they are
performing the service confided to them by the person to whom they
were so furnished ; but that person is their master and responsible for
their negligence. 67
1863. Tests for determining question. Many attempts
have been made to prescribe the test by which to determine which of
two or more persons shall be deemed to be the master of a servant in
a given case, some of which are far from satisfactory. As has been
pointed out, it is not alone enough, in many cases, to determine who
originally hired the servant or who paid him, although these facts are
not without their significance. It is sometimes said that the person who
has the power to discharge him is the person who is to be regarded as
his master, but unless care be taken to distinguish between discharge
from the general and the special employment, this test, though often
useful, will not always prove satisfactory. Thus, for example, if I
obtain a carriage with horses and driver from the keeper of a livery-
stable, to take me to the station, I may discharge the driver from my
service by sending him back to his master if he does not perform the
service in accordance with my reasonable requirements, though I can-
not discharge him from the employment of the livery-stable keeper.
But this limited power of discharge would certainly not make him my
servant.
Again, it is often said that the power of control is the test. This
test, however, like the other, while often useful, will not always prove
so For example, see Higham v. ing and delivering the goods of the
Waterman, 32 R. I. 578; Philadelphia, hirer."
etc. Coal Co. v. Barrie, 102 C. C. A. 6- Haskell v. Boston District Mes-
618, 179 Fed. 50. In the former case, senger Co., 190 Mass. 189, 112 Am.
where the injury was caused by the St. Rep. 324, 5 Ann. Gas. 796, 2 L. R.
negligent piling of a load of lumber A. (N. S.) 1091; Swackhamer v.
by the driver, the court, referring to Johnson, 39 Ore. 383, 54 L. R. A. 625;
Driscoll v. Towle, 181 Mass. 416, said: Murray v. Postal Tel. Co., 210 Mass.
"In that case the negligent act of the 188, Ann. Cas. 1912, C. 1183.
driver complained of was the manner Same rule applied to a association
of driving his horse; but the driver organized to furnish nurses to
equally remains the teamer's servant patrons. Hall v. Lees, [1904] 2 K. B.
in respect to the manner of unload- 602.
1446
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES [ 1864
satisfactory without some discrimination. Thus, as in the illustration
last used, a person who obtains from the keeper of a livery stable a
horse, carriage and driver, for a pleasure drive, undoubtedly has a lim-
ited power of control, that is to say, he may give reasonable directions
as to the time at which he will start and stop, the direction in which he
will go, whether he will ride rapidly or slowly and the like ; but this
power of control would not, in general, make the person riding the
master of the driver and therefore responsible for the latter's negli-
gence while driving (unless perhaps where the injury resulted from
the servant's doing, at the direction of the person riding, some act
which the latter could not be deemed, in view of his contract with the
livery-stable keeper, to have the right to direct the driver to do, as the
servant of the livery-stable keeper). Any right of control which the
hirer has in such cases is by virtue of his contract with the master, and
not by virtue of any contract which the hirer has with the servant. The
ultimate and responsible control is with the stable-keeper, who must
be deemed to have directed his servant to obey the reasonable requests
of the customer, and to have assumed responsibility for what his serv-
ant may do while obeying these requests. In this sense the power of
control becomes a very important test.
Aid can often be derived from seeking to ascertain whose business
the servant was engaged in performing at the time of the act in ques-
tion. If A undertakes to loan or rent or otherwise furnish servants to
B to act under B's control doing B's business, such servants while so
engaged will be deemed to be the servants of B, even though A orig-
inally hired them and pays them. If, on the other hand, A agrees to
perform certain work for B, and to furnish servants to do it, as A's
undertaking and business, they will be A's servants, even though B
may have the right, either expressly or by implication, under his con-
tract with A, to give directions to A's servants as to the time or man-
ner or place in which they shall perform the service, and this would
not be altered by the fact that B might have the right, under his con-
tract with A, to hire or discharge servants for A, or to pay the servants
of A on A's account;
1864. Court or jury. Whether one who is usually and
normally the servant of one master has become specially and tempo-
rarily the servant of another so as to charge the latter only with his
negligence, is ordinarily a question of fact. If under the circumstances
only one inference can properly be drawn, the court will determine
it ; 08 but if reasonable men may fairly come to different conclusions re-
es Decided as question of law. Muldoon v. City Pireprooflng Co., 134 N.
Y. App. Div. 453.
1447
1865] THE LAW OF AGENCY
specting the inference to be drawn from the facts, the case will be one
for the jury. 69 The court, however, should carefully instruct the jury
as to the principles of law involved, and the nature of their duty in
the matter, and not leave them to decide the question according to
their own unguided notions of what may be just or convenient under
the circumstances.
1865. Contractual agreement as to who shall be principal. The
liabilities resulting from the relation of principal and agent have often
led to attempts on the part of organizations which deal with the public
through an army of representatives, to constitute such representatives
the agents of the persons with whom they deal. Insurance companies,
for example, often require the applicant to sign an application or a
policy which, in express terms, stipulates that the agent negotiating
the policy is the agent of the applicant for the purposes of that policy.
It would seem clear, as a matter of principle, that while this might
operate as an appointment of an agent, it could in no way alter the
often obvious fact, that such agent is, in reality, the representative of
the company. Whether the representative is the agent of the insurance
company or the insured should be determined, in each instance, in view
of the particular facts. By whom was the representative appointed ;
by whom paid; to whom did he look for instructions; whether he was
furnished with blanks or other office paraphernalia by the company,
and the like, have all been pointed out as significant facts in determin-
ing whether, in any dealing between the insurer and the insured, this
representative was acting for the interests of the insured ; or whether
he and the company were acting together, on the one side, against the
insured, on the other. 70
Such has been the attitude of the courts toward the transaction.
The learned judge in an early Illinois case expressed it forcibly:
"There is no magic power residing in the words of that stipulation to
transmute the real into the unreal. A device of words cannot be im-
9 A question for the jury. Grace question of fact whether this was a
& Hyde Co. v. Probst, 208 111. 147; bona flde appointment, or a subter-
Harding v. St. Louis Stock Yards, fuge to evade- the usury statutes).
242 111. 444; Minor v. Stevens, 65 Deitz v. Insurance Co., 31 W. Va. 851,
Wash. 423, 42 L. R. A. (N. S.) 1178. 13 Am. St. Rep. 909.
TO See ante, 301, 1071; Conti- In Lumberman's Mutual Ins. Co.
nental Ins. Co. v. Pearce, 39 Kan. v. Bell, 166 111. 400, 57 Am. St. Rep.
396, 7 Am. St. Rep. 557; New Eng- 140, the court said: "The question as
land Mtg. Co. v. Gay, 33 Fed. 636 to whose agent they [the parties cov-
( where an application for a loan ered by such stipulation] really were
denominated the agent of the mort- is open to inquiry and may be shown
gage company as the agent of the by parol evidence, notwithstanding
borrower. The court held it was a the statement in the policy."
1448
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES
[ 1866
posed upon a court in place of an actuality of fact." 71 But, of course,
the stipulation may express the real nature of the situation. 72
1866. Strangers assisting servants.; The question not infre-
quently arises as to the liability of the principal or master for the acts
of a stranger who, voluntarily, or upon the request of the servant, un-
dertakes to assist the latter in the performance of his service. 73 In
some cases liability may be predicated upon the non-performance of
some duty, incumbent upon the principal or master himself. 74 But in
71 Sheldon, J. ( in Comm. Ins. Co. v.
Ives, 56 111. 402.
The above quotation was adopted
with approval in Kansal v. Minn.,
etc., Ins. Co., 31 Minn. 17.
The same position has generally
been taken by the courts. See Con-
tinental IAS. Co. v. Pearce, 39 Kan.
396, 7 Am. St. Rep. 557; Sullivan v.
Phenix Ins. Co., 34 Kan. 170; Newark
Ins. Co. v. Sammons, 110 111. 166;
Planters' Ins. Co. v. Myers, 55 Miss.
479, 30 Am. Rep. 521.
To similar effect, see also Colum-
bia Ins. Co. v. Cooper, 50 Pa. 331.
In Kister v. Lebanon Ins. Co., 128
Pa. 553, 15 Am. St. Rep. 696, 5 L. R.
A. 646, the court construed such a
stipulation to apply only to other per-
sons than the regularly acting agents
of the company, but intimated that if
the proper construction was that it
applied also to such regularly ap-
pointed agents they would give ef-
fect to it. Susquehanna Ins. Co. v.
Perrine, 7 Watts & S. 348, was such
a case, and the court held the agent
to be the agent of the applicant.
72 In Dun v. City Bank of Birming-
ham, 58 Fed. 174, 23 L. R. A. 687, the
facts were that the Dun Commercial
Agency had offered its services to
subscribers, as intermediaries for the
transmission of information concern-
ing commercial standings. They
represented, in their contract with
the subscriber, that this information
was gathered by a large number of
co-respondents in different parts of
the country; they stipulated that
these correspondents were the sub-
agents of the subscriber, and ex-
pressly exempted themselves from
liability for the misconduct of such
correspondents. The court held that
the subscriber must be held to know
that this information could only be
gathered through such sub-agents,
and that he must be held to have im-
pliedly, as well as expressly, author-
ized their appointment by the com-
mercial agency, and that the contract
would be given effect to in this re-
spect.
73 in this connection the writer
begs leave to refer to an article writ-
ten by him some years ago and pub-
lished in 3 Michigan Law Review,
198.
7 * In this field, there may be many
cases in which he may be held liable
because the primary fault was his
own, even though the wrongful act
of a stranger may have contributed
to cause the injury. Thus, without
attempting to be exhaustive, he may
be liable
(a) For dangerous or noisome
practices which go on upon his prem-
ises with his express or implied con-
sent, whether the technical relation
of master and servant exists between
him and those upon his premises, or
not. Beaulieu v. Finglam, 2 H. IV.,
18, p. 6; 1 Beven on Negligence, p.
481, et seg.
(b) If he causes dangerous work
to be done without taking reasonable
precautions against injury even
through the intermeddling of third
persons. Illidge v. Goodwin, 5 C. &
P. 190.
(c) If he leaves dangerous agen-
cies without guarding reasonably
1449
1866J
THE LAW OF AGENCY
[BOOK jv
order to make the master liable, under the doctrine of respondeat su-
perior, it is necessary to show that the act complained of was done by
the master's servant, or by some one whom the servant was author-
ized to employ, or that the injury complained of was, under the doc-
trines governing legal cause, the consequence of some act or omission
on the part of the master's servant.
It is the general rule, as has been more fully seen in an earlier chap-
ter, 75 that an agent has ordinarily no implied authority to delegate the
performance of his duties to a subagent or to employ other agents on
his principal's account. The same rule applies also to a servant. An
agent, however, may be given authority to employ agents or servants
for his principal, and the same thing is true respecting a servant. 7 "
This authority to employ sub-agents or sub-servants may be expressly
conferred or it may, in many cases, as has been already seen, arise
by implication from the circumstances of the case or the conditions un-
der which the service is to be performed. 77 What these cases are as
respects the employment of sub-agents, has already been fully consid-
ered. 78 With respect to the employment of sub-servants, the range of
implication must necessarily be much narrower, since the servant him-
against their being put in motion
even by a stranger or wrongdoer.
Salisbury v. Erie R. Co., 66 N. J. L.
233, 88 Am. St. Rep. 480, 55 N. J. L.
578; Smith v. Railroad Co., 46 N. J.
L. 7; Southern Pac. R. Co. v. Laf-
ferty, 57 Fed. 536; Fredericks v.
North Cent. Ry. Co., 157 Pa. 103, 22
L. R. A. 306.
(d) If he owes the performance of
a positive duty and entrusts the per-
formance of it to a servant who, in-
stead of performing it himself,
wrongfully relies upon some other
person to perform it. Leavenworth
Elec. R. Co. v. Cusick, 60 Kan. 590,
72 Am. St. Rep. 374; Lakin v. Ore-
gon Pac. Co., 15 Ore. 220.
Under (a) above may probably be
included the case of Althorf v. Wolfe,
22 N. Y. 355. In this case the owner
of a house directed a general servant
to go onto the roof and throw off the
snow and ice. The servant asked a
friend, as a matter of accommoda-
tion, to assist him. While so engaged,
a passer-by was struck and killed by
a piece of ice, apparently thrown by
the friend of the servant. Wright,
J., held that the master was liable
on two grounds: first, that the serv-
ant had implied authority to employ
an assistant; and second, that the de-
fendant, as the owner of the prem-
ises, was responsible for what went
on there, whether done by a servant,
or others admitted to the premises
with the tacit consent of the mem-
bers of the household. The latter
ground was adopted by Denio, J., who
concurred in the opinion.
Followed in Ellefson v. Singer, 132
App. Div. 89; Wellman v. Miner, 19
N. Y. Misc. 644; Wooding v. Thorn,
148 N. Y. App. Div. 21.
7G See ante, 304, 334, et seg.
76 Bucki v. Cone, 25 Fla. 1, 25.
77 Jackson v. Telegraph Co., 139 N.
Car. 347, 70 L. R. A. 738.
78 See ante, 314 et seq.
The authority of agents or servants
to employ other servants has also
been considered, ante, including
cases of alleged necessity or emer-
gency.
1450
CHAP. Vj LIABILITY OF PRINCIPAL TO THIRD PARTIES [ 1867
self is ordinarily clothed with but little discretion, and acts usually in
a mechanical or ministerial capacity.
Even though the employment of a sub-agent or sub-servant has not
been thus expressly or impliedly authorized, it may subsequently, with
knowledge, be so ratified or acquiesced in, as to put it on the footing
of an authorized employment. 79
When, within these rules, the employment of the sub-servant or
agent can be deemed authorized, there is no difficulty in imposing upon
the principal or master the responsibility for the acts of such a substi-
tute, in cases in which he would be liable for the acts of any other serv-
ant or agent.
1867. Even although it cannot be held that there was
express or implied authority for the delegation of the service within
the rules of the preceding section, there may undoubtedly be cases in
which the act in question is rightfully to be deemed to be the act of the
servant, and therefore imposing liability upon *he master, notwith-
standing that the physical act of some third person, volunteering or
requested to give aid to the servant/has actually intervened. Where
the servant himself is actually in control, supplying the will and the mo-
tive, the act may be regarded as the act of the servant himself, and
if negligent, as his negligence, even though the servant has exer-
cised or permitted to be exercised, the physical act of a third person,
instead of some other instrumentality or appliance which might other-
wise have been available and permissible. 80 Where the act which the
TO Thus, see Haluptzok v. Great and friend carelessly threw ice on a
Northern Ry. Co., 55 Minn. 446, 26 passer-by, followed in Ellefson v.
L. R. A. 739; Wuhtrecht v. Fasnacht, Singer, 132 N. Y. App. Div. 89; Wood-
17 La. Ann. 166; Tennessee Coal Co. ing v. Thorn, 148 id. 21; Wellman v.
v. Hayes, 97 Ala. 201; Weinacker Ice Miner, 19 N. Y. Misc. 644); Bamberg
Co. v. Ott, 163 Ala. 230; Wellman v. v. International Ry. Co., 53 N. Y.
Miner, 19 N. Y. Misc. 644; Gleason v. Misc. 403 (like Booth v. Mister,
Anisdell, 9 Daly (N. Y.), 393; Baker supra); Appel v. Eaton, 97 Mo. App.
v. Metropolitan St. Ry. Co., 142 Mo. 428 (servant asked friend to move an
App. 354. elevator which was in his way, and
o The chief cases involving this in doing so friend injured plaintiff) ;
point are the following: Booth v. James v. Muehlebach, 34 Mo. App.
Mister, 7 C. & P. 66 (driver of a cart 512 (servant asked friend to help
permitted a friend to drive, and the him readjust his load and in doing
latter drove negligently); Simons v. so friend injured plaintiff); Hill v.
Monier, 29 Barb. (N. Y.) 419 (serv- Sheehen, 20 N. Y. Supp. 529 (servant
ant clearing -land and burning brush let a friend drive horse entrusted to
had his boy helping him, and the lat- servant for delivery to a patron) ;
ter set the fire); Althorf v. Wolfe, Hollidge v. Duncan, 199 Mass. 121, 17
22 N. Y. 355 (servant asked friend to L. R. A. (N. S.) 982 (servant asked a
help him clear snow and ice off roof, by-stander to assist him in repairing
I4SI
1868, 1869] THE LAW OF AGENCY [BOOK IV
servant thus causes or directs is in itself negligent, there could ordina-
rily be little doubt of the liability ; but even whore the fault lies rather
in the manner in which the person so used has done the act, the liabil-
ity may attach. 81
The limits of this doctrine must be narrow : it can probably be applied
only when the servant is actually directing and controlling the act, and
so personally and immediately in charge that the act of the third per-
son may fairly be regarded as the act of the servant.
The main act itself must also, in any event, be an act within the
scope of the servant's employment.
1868. And finally, even though the act cannot be deemed
to be the servant's act, within the doctrine of the preceding section,
there may be cases in which the wrongful act of the servant in permit-
ting the third person to participate at all, may be deemed to be the prox-
imate cause of the injury complained of, and liability be imposed upon
the master on that ground. 82 This question, however, is not germane
to the particular subject now under consideration.
1869. Unless, therefore, the case can be brought within
some one of the principles stated in the preceding sections, no ground
is apparent upon which to base a liability of the master for the de-
fault or neglect of a stranger who undertakes to assist his servant, and
his cart, and by-stander injured defendant was held because its agent
plaintiff); Tuller v. Talbot, 23 111. permitted a stranger to use its
357, 76 Am. Dec. 695 (stage coach lines and equipment, and he sent
driver becoming ill asked a passenger false messages. In Lakin v. Ore-
to drive); Harris v. Fiat Motors, 23 gon, etc., R. Co., 15 Ore. 220, the
L. T. Rep. 504 (servant delivering injury was caused by the negligence
automobile asked friend to drive of a learner permitted to handle an
while he made some adjustments). engine. In Carson v. Leathers, 57
See also, Geiss v. Taxicab Co., 120 Miss. 650, the injury was caused by
Minn. 368, 45 L. R. A. (N. S.) 382. the negligence of a friend of the
si Dimmitt v. Hannibal, etc., R. Co., clerk of a steamboat who permitted
40 Mo. App. 654. his friend to put off and take on pas-
82 Thus in Leavenworth Elec. R, sengers. See also Seller v. Levy, 68
Co. v. Cusick, 60 Kan. 590, 72 Am. St. N. Y. Misc. 182; Williams v. Koeh-
Rep. 374, company was held because ler, 41 N. Y. App. Div. 426.
street car conductor left car in In Setterstrom v. Brainard, etc.,
charge of a friend while he went in- Ry. Co., 89 Minn. 262, it was held
side to collect fares and the friend that it was a question for the jury
started the car too quickly. In En- whether the servant's abandonment
glehart v. Farrant, [1897] 1 Q. B. of his post, and putting some one else
240, master was held where driver of in, was negligence and the proximate
his delivery wagon, in disobedience to cause of the injury. To the same ef-
instructions, left it in charge of the feet is Vallender v. Victorian Rail-
delivery boy, and he carelessly man- ways Commissioners, 22 Victorian L.
aged it. In Bank of California v. R. 141, 18 Australian I* Times, 39.
Western Union Tel. Co., 52 Cal. 280,
CHAP. V]
LIABILITY OF PRINCIPAL TO THIRD PARTIES
there is a considerable number of cases, perhaps not always distinguish-
able, in which the master has been held not responsible. The most
important of these cases are collected in the note. 83
1870. Independent contractors. If the test of the existence of
the relation of master and servant be found in the fact that the
servant is one who is engaged in executing the master's business
under his control, then that relation does not exist where the per-
son who is doing the work, though he may be doing it at the request
and for the ultimate benefit of another, is, nevertheless, doing it as his
own business and under his own control. A person so situated may in
a wide, though not in the ordinary, sense be an agent an instrumen-
tality but he is not a servant. Such is ordinarily the attitude of .the
person commonly designated an "independent contractor." An inde-
pendent contractor is one who carries on an independent business, 8 *
ss In the following cases the mas-
ter was held not liable for the negli-
gence of the substitute employed by
the servant. Mangan v. Foley, 33
Mo. App. 250 (driver of a coal wagon
got a friend to haul a load or two for
him); Long v. Richmond, 68 N. Y.
App. Div. 466, affirmed, 175 N. Y. 495
(servant, in violation of express in-
structions, permitted a friend to ride
a horse which the servant was di-
rected to deliver); (see this case dis-
tinguished in Bamberg v. Interna-
tional Ry. Co., 53 Misc. 403); Hills v.
Strong, 132 111. App. 174 (the driver
of wagon asked a friend to perform
his duties for an hour or more while
the driver attended a hearing in po-
lice court); Taylor v. Baltimore, etc.,
R. Co., 108 Va. 817 (conductor of a
freight train requested a by-stander
to assist in the unloading of freight,
as "his men were out of place");
Board of Trade Bldg. v. Cralle, 109
Va. 246, 132 Am. St. Rep. 917, 22 L.
R. A. (N. S.) 297 ("hall-boy" em-
ployed by defendant, with no author-
ity to operate elevators or to hire
operators, requested another boy to
run the elevator); Cooper v. Lowery,
4 Ga. App. 120 (a servant employed
to deliver guano from a factory hired
a boy to help him); White v. Levi,
137 Ga. 269, is to the same effect,
where a servant sent to get an auto-
mobile directed a young boy to drive
it and while he was doing so the
plaintiff was injured.
8* In the case of ordinary me-
chanics, performing simple work, it
is often very difficult to decide
whether they are to be regarded as
independent contractors or as mere
servants. Holding that they are the
latter, see Sadler v. Henlock, 4 E. &
B. 570; Brackett v. Lubke, 4 Allen
(Mass.), 138, 81 Am. Dec. 694; But-
ton v. Amesbury Bank, 181 Mass.
154; Dickson v. Hollister, 123 Pa. 421,
10 Am. St. R. 533; Waters v. Pioneer
Fuel Co., 52 Minn. 474, 38 Am. St.
Rep. 564; Rait v. New England, etc.,
Co., 66 Minn. 76; Corrigan v. El-
singer, 81 Minn. 42.
Contra: Hexamer v. Webb, 101 N.
Y. 377, 54 Am. Rep. 703; McCarthy v.
Portland, 71 Me. 318, 36 Am. Rep.
320; Smith v. Belshaw, 89 Cal. 427.
A licensed expressman who under-
took to deliver defendant's goods at
so much a week, being at liberty to
do it in person or through a servant,
and furnishing his own team and
wagon, is an independent contractor
and not a servant, although he had
defendant's sign furnished by de-
fendant upon the wagon. Burns v.
Michigan Paint Co., 152 Mich. 613,
T453
i8;i]
THE LAW OF AGENCY
[BOOK iv
in the course of which he undertakes to accomplish some result or do
some piece of work, for another, being left at liberty in general to
choose his own means and methods, and being responsible to his em-
ployer only for the results which he has undertaken to bring about. 85
Being left at liberty in general to choose his own means and agencies
and not being subject to the control of the employer as to the manner
in which the work is to be done, he is not the servant of the employer,
nor are his servants the servants of the employer ; and the employer is
not responsible to third persons for injuries to them which result from
the manner in which the work is performed by the contractor or his
servants. For such injuries, committed either by himself or his serv-
ants, the independent contractor must answer.
1871.
The fact that the work is to be done in accord-
1
ance with plans and specifications prescribed by the employer, is not,
of itself, such a reservation of control as to change the result, so far as
liability for the manner of execution is concerned. 86 Neither does the
16 L. R. A. (N. S.) 816. But com-
pare Glover v. Richardson, 64 Wash.
403, where a verdict against the em-
ployer under almost identical facts
was sustained, except that there was,
however, a somewhat larger measure
of control.
In Higham v. Waterman, 32 R. I.
578, a substantially similar result
was reached under facts much the
same (there was no sign on the
wagon and the work was occasional),
though it was not put on the same
ground.
85 Caldwell v. Atlantic, etc., Ry. Co.,
161 Ala. 395; Hedge v. Williams, 131
Cal. 455, 82 Am. St. Rep. 366; Pot-
H>rff v. Fidelity Coal Min. Co., 86
Kan. 774; Ballard v. Lee, 131 Ky.
412; Messmer v. Bell, 133 Ky. 19, 19
Ann. Gas. 1; Madisonville, etc., R. Co.
v. Owen, Ky. , 143 S. W. 421;
Keyes v. Second Baptist Church, 99
Me. 308; Forsyth v. Hooper, 11 Allen
(Mass.), 419; Pearl v. West End St.
Ry., 176 Mass. 177, 79 Am. St. Rep.
302, 49 L. R. A. 826; Waters v. Pio-
neer Fuel Co., 52 Minn. 474, 38 Am.
St. Rep. 564; Gayle v. Mo. Car, etc.,
Co., 177 Mo. 427; Crenshaw v. Ull-
man, 113 Mo. 633; Reisman v. Public
Service Corporation, 82 N. J. L. 464,
38 L. R. A. (N. S.) 922; Midgette v.
Branning Mfg. Co., 150 N. C. 333;
Smith v. Simmons, 103 Pa. 32, 49
Am. Rep. 113; Cockran v. Rice, 26 S.
Dak. 393;' Powell v. Virginia Constr.
Co., 88 Tenn. 692, 17 Am. St. Rep.
925; McHarge v. Newcomer, 117
Tenn. 595, 9 L. R. A. (N. S.) 298;
Norfolk, etc., R. Co. v. Stevens, 97
Va. 631, 46 L. R. A. 367; Richmond
v. Sitterding, 101 Va. 354, 99 Am. St.
Rep. 879, 65 L. R. A. 445; Knicely v.
West Va., etc., R. Co., 64 W. Va. 278,
17 L. R. A. (N. S.) 370; Jenkins v.
Montgomery, 69 W. Va. 795; Smith v.
Milwaukee Bldrs., etc., Exchange, 91
Wis. 360, 51 Am. St. Rep. 912, 30 L.
R. A. 504.
(This list, of course, does not pur-
port to be complete.)
se Crenshaw v. Ullman, 113 Mo.
633; Hughes v. Cinn., etc., R. Co., 39
Ohio St., 461.
The fact that the work is to be
done "to the satisfaction" of the em-
ployer does not of itself alter the
rule. Eldred v. Mackie, 178 Mass. 1 ;
Powell v. Virginia Construction Co.,
88 Tenn. 692, 17 Am. St. Rep. 925;
Smith v. Milwaukee Builders' Ex-
change, 91 Wis. 360, 51 Am. St. Rep.
912, 30 L. R. A. 504; nor does the
1454
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES
[
fact that the employer reserves the right, either in person or by agent,
to oversee and inspect the work during its progress for the purpose of
assuring himself that the contract is being performed. 87 Nor does the
employer's right reserved to reject improper materials 88 or to insist
upon the contractor's discharging unfit servants whom he may have
employed, 89 or to terminate the contract and let the work to some one
else if not properly performed. 80 These are but means which the em-
ployer reserves for the purpose of assuring himself that the desired
end will be accomplished. Where, however, the employer goes further
than this, and reserves to himself the right to control the actual per-
formance of the work, the relation of master and servant will result. 91
tion lies outside the domain of this
work.)
88 Fitzpatrick v. Chicago, etc., R.
Co., 31 111. App. 649; Uppington v.
New York, 165 N. Y. 222, 53 L. R. A.
550. Rigby, J., arguendo, in Har-
daker v. Idle Dist Council, [1896] 1
Q. B. 335, at p. 353.
ssReedie v. London, etc., Ry. Co.,
4 Ex. 254; Callan v. Bull, 113 Cal.
593; Good v. Johnson, 38 Colo. 440,
8 L. R. A. (N. S.) 896; Norwalk Gas-
light Co. v. Norwalk, 63 Conn. 495;
Elumb v. Kansas City, 84 Mo. 112, 54
Am. Rep. 87; Uppington v. New York,
165 N. Y. 222, 53 L. R. A. 550; Cuff v.
Newark, etc., R. Co., 35 N. J. L. 17,
10 Am. Rep. 205; Rogers v. Florence,
etc., Co., 31 S. Car. 378.
But see Cooper v. Seattle, 16 Wash.
462.
oo Solberg v. Schlosser, 20 N. Dak.
307, 30 L. R. A. (N. S.) 1111.
i This, for example, was held in
Linnehan v. Rollins, 137 Mass. 123,
50 Am. Rep. 287, where the contract
was as follows: "All of said work to
be done carefully, and under the di-
rection and subject to the approval
of the trustees." It is doubtful if
this case can be reconciled with some
of the cases cited above. The same
thing may perhaps be said of Cooper
v. Seattle, supra. See also Derr Con-
struction Co. v. Gelruth, 29 Okla.
538, where very complete control was
reserved. Also Holliday v. National
Telephone Co., [1899] 2 Q. B. 392.
fact that the contract provides that
the work shall be done under the in-
structions or directions of the em-
ployer or his agent, where it is clear
that the control reserved is simply
to insure the proper performance of
the contract. Harding v. Boston, 163
Mass. 14; Norwalk Co. v. Norwalk, 63
Conn. 495; Foster v. Chicago, 96 111.
App. 4 (affirmed 197 111. 264); Frassi
v. McDonald, 122 Cal. 400; Ridge-
way v. Downing, 109 Ga. 591.
ST See St. Louis R. Co. v. Knott, 54
Ark. 424; Green v. Soule, 145 Cal.
96; Harrison v. Kiser, 79 Ga. 588;
Boyd v. Chicago, etc., R. Co., 217 111.
332, 108 Am. St. Rep. 253; Bellamy
v. Ames Co., 140 Ky. 98; Eaton v.
European, etc., R. Co., 59 Me. 520, 8
Am. Rep. 430; Dane v. Cochrane
Chemical Co., 164 Mass. 453; Larsen
v. Home Telephone Co., 164 Mich.
295; McKinley v. Chicago, etc., R. Co.,
40 Mo. App. 449; Omaha Bridge, etc.,
R. Co. v. Hagadine, 5 Neb. Unof. 418;
Uppington v. New York, 165 N. Y.
222, 53 L. R. A. 550; Denny v. Bur-
lington, 155 N. C. 33; Hughes v.
Cinn., etc., R. Co., 39 Ohio St. 461;
Miller v. Merritt, 211 Pa. 127, Bibb
v. Norfolk & W. R. Co., 87 Va. 711;
Smith v. Milwaukee Bldrs., etc., Ex-
change, 91 Wis. 360, 51 Am. St. Rep.
912, 30 L. R. A. 504; Salliotte v. King
Bridge Co., 58 C. C. A. 466, 122 Fed.
378, 65 L. R. A. 620.
(These lists of cases do not pur-
port to be exhaustive, as this ques-
H55
.- l8/2j THE LAW OF AGENCY [BOOK IV
There are a number of cases in which an employer may be liable, not-
withstanding the employment of an independent contractor, for injur-
ies resulting from the nature of the work itself, or from the circum-
stances under which it was performed, but these will be" the subject of
later consideration.
The method of payment is not without significance, but is by no
means the test. Ordinarily the independent contractor is paid by the
job, that is, a fixed sum for accomplishing a certain result, but he may
be paid in accordance with some unit of measurement, 92 and the fact
that he is paid by the day, week or month, is not of itself enough to
destroy his standing as an independent contractor;? 3
The elaborate treatment of the relation of the independent contractor
is not within the scope of this work.
1872. Subagents. The question of the liability of the principal,
for the acts of a subagent, has already been considered. It has been
seen that, where there was an express or implied consent to the appoint-
ment of the subagent as the agent of the principal, or if his appoint-
ment as such was justified by usage or necessity, there arises such a
privity between the subagent and the principal, as renders the latter li-
able for the acts of the subagent in the same manner and to the same
extent as in the case of any other agent. 9 * Where no such privity ex-
ists, where the agent stands in the attitude of an independent con-
tractor, the principal is liable only in those cases in which he would
be liable for the acts of the servants or agents of any other independ-
ent contractor. 95
J8 .ntA 801 .SEC
z Mayhew v. Sullivan Min. Co., 76 4 See ante, 332, California Bank
Me. 100; Fink v. Missouri Furnace v. Western Un. Tel. Co., 52 Cal. 289;
Co., 82 Mo. 276, 52 Am. Rep. 376; Louisville, etc., R. R. Co. v. Blair, 4
Knowlton v. Hoit, 67 N. H. 155; Fer- Baxt. (Tenn.) 407; Banks v. South-
guson v. Hubbell, 97 N. Y. 507, 49 ern Express Co., 73 S. C. 211; Mc-
Am. Rep. 544; Butler v. Townsend, Kinnon v. Vollmar, 75 Wis. 82, 17
126 N. Y. 105. Am. St. Rep. 178, 6 L. R. A. 121; Nel-
as Geer v. Darrow, 61 Conn. 220; son v. Title & Trust Co., 52 Wash.
Wadsworth Rowland Co. v. Foster, 50 258 (a case standing on doubtful
111. App. 513, affirmed in 168 111. 514; ground).
Morgan v. Smith, 159 Mass. 570; on See post, 1917-1920. Principal
Hexamer v. Webb, 101 N. Y. 377, 54 is not liable for acts of a subagent
Am. Rep. 703; Morgan v. Bowman, who is subject to the control of the
22 Mo. 538; Emmerson v. Fay, 94 agent only. Lindsay v. Singer Mfg.
Va. 60; Teller v. Bay & River Dredg- Co., 4 Mo. App. 570.
ing Co., 151 Cal. 209, 12 Ann. Gas. One who would ordinarily be re-
779, 12 L. R. A. (N. S.) 267; Harri- garded as an independent contractor
son v. Collins, 86 Pa. 153, 27 Am. and liable for the acts of a person
Rep. 699; Corbin v. America Mills, selected by him, as being his agent,
27 Conn. 274, 71 Am. Dec! 63. may, by the terms of the employ-
1456
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES [ 1 873, 1 874
2. Liability for Acts Expressly Directed.
1873. Principal liable for acts expressly directed. For injuries
which occur to third persons as the natural, direct and proximate re-
sult of an act which the principal has expressly directed or authorized
his agent to do, the principal is clearly and unquestionably liable. Such
results are the direct outgrowth of the deliberate intention of the prin-
cipal, and he is as much to be charged with the responsibility as if he
.had performed the act in person. 96 This same principle is frequently
Applied to the case of independent contractors, and while the principal
is not, as will be seen, 97 responsible for the acts of the contractor under
many circumstances, yet wherever he has authorized or directed the
doing of an act even by an independent contractor which is in itself a
source of injury, or which from its very nature is reasonably certain
to cause injury to third persons unless precautions are taken which are
in fact not taken, the principal may properly be held responsible. 98
3. Liability for Negligent Act of Servant or Agent.
1874. Liable for agent's negligent act in course of employment.
But the principal is not responsible for the .results of his own in-
tentional acts alone. He is liable also to third persons for injuries sus-
tained by them on account of the negligence of an agent or servant
not standing in the relation of independent contractor in the perform-
ance of his undertaking. 99 In determining the principal's liability for
ment, be made an agent authorized enckel, 50 Mo. 104, 11 Am. Rep. 405;
to employ such person as a subagent Wilton v. Middlesex R. Co., 107
for the employer and therefore not Mass. 108, 9 Am. Rep. 11; Pidkens v.
liable for the acts of such subagent. Diecker, 21 Ohio St. 212, 8 Am. Rep.
Dun v. City Nat. Bank, 7 C. C. A. 152, 55; Jackson v. Second Ave. R. Co.,
58 Fed. 174, 23 L. R. A. 687. 47 N. Y. 274, 7 Am. Rep. 448;
98 State v. Smith, 78 Me. 260, 57 Goddard v. Grand Trunk Ry. Co., 57
Am. Rep. 802; Scott v. Shepherd, 2 Me. 202, 2 Am. Rep. 39; Passenger
W. Blackstone, 892; Guille v. Swan, R. Co. v. Young, 21 Ohio St. 518,
19 Johns. (N. Y.) 382, 10 Am. Dec. 8 Am. Rep. 78; Bryant v. Rich, 106
234; Eaton v. European, etc., Ry. Co., Mass. 180, 8 Am. Rep. 311; Chicago,
59 Me. 520; Bacheller v. Pinkham, 68 etc., R. v. Dickson, 63 111. 151, 14
Me. 255. Am. Rep. 114; Evans v. Davidson, 53
7 See post, 1917. Md. 245, 36 Am. Rep. 400; Noblesville,
See post, 1917-1920. etc., R. R. Co. v. Gause, 76 Ind. 142,
9 The following are a few of the 40 Am. Rep. 224; Quinn v. Power, 87
exceedingly numerous cases upon N. Y. 535, 41 Am. Rep. 392; Mulve-
this point: Cosgrove v. Ogden, 49 N. hill v. Bates, 31 Minn. 364, 47 Am.
Y. 255, 10 Am. Rep. 361; Smith v. Rep. 796; Stone v. Hills, 45 Conn. 44,
Webster, 23 Mich. 298; Higgins v. 29 Am. Rep. 635; Chicago, etc., R. Co.
Watervliet Turnpike Co., 46 N. Y. 23, v. Flexman, 103 111. 546, 42 Am. Rep.
7 Am. Rep. 293; Garretzen v. Du- 33; Chandler v. Gloyd, 217 Mo. 394;
92 1457
1875] THE LAW OF AGENCY [BOOK iv
the agent's negligence, the important inquiry is, not whether the agent
was authorized to do or omit to do the act, the doing or not doing of
which constitutes the negligence complained of, or whether the act
was done or omitted in violation of the principal's instructions ; but
whether the act was clone or omitted by the agent in the course of the
employment and while he was engaged in the business of his principal. 1
In endeavoring to state a rule for such cases, it was said by a learned
judge, "In most cases where the master has been held liable for the
negligence of his servant, not only was there an absence of author-
ity to commit the wrong, but it was committed in violation of the duty
which the servant owed the master. The principal is bound by a con-
tract made in his name by an agent, only when the agent has actual or
apparent authority to make it ; but the liability of a master for the
tort of his servant does not depend primarily upon the possession of an
authority to commit it. The question is not solved by comparing the
act with the authority. It is sufficient to make the master responsible
civilitcr, if the wrongful act of the servant was committed in the busi-
ness of the master, and within the scope of his employment, and this,
although the servant, in doing it, departed from the instructions of his
master. This rule is founded upon public policy and convenience.
Every person is bound to use due care in the conduct of his business.
If the business is committed to an agent or servant, the obligation is
not changed. The omission of such care is the omission of the princi-
pal, and for injury resulting therefrom to others, the principal is justly
held liable. If he employs incompetent or untrustworthy agents, it is
his fault ; and whether the injury to third persons is caused by the neg-
ligence or positive misfeasance of the agent, the maxim respondeat
superior applies, provided, only, that the agent was acting at the time
for the principal and within the scope of the business entrusted to
him." 2
1875. Liability dependent upon agency. Nevertheless, the lia-
bility of the master in these cases is based upon the general principles
of agency, and can not otherwise exist. 3 It is simply another aspect
of the question of authority, with its incidents, which was discussed in
Thomas v. Armitage, 111 Minn. 238; a i n Byrne v. Londonderry Tram-
Gresh v. Wanamaker, 221 Pa. 28; way Co., Irish Rep., [1902] 2 K. B.
Crabb v. Wilkins, 59 Wash. 302; 457, Fitzgibbon, L. J., uses this Ian-
Jacksonville Ice Co. v. Moses, guage: "An employer is liable for an
Tex. Civ. App. , 134 S. W. 379; act done by a servant in the course
Rexroth v. Holloway, 45 Ind. App. 36. of his service, or in the scope of his
1 Cosgrove v. Ogden, supra. employment, upon the ground of
2 Andrews, J., in Higgins v. Water- agency only; in other words, upon
vliet Turnpike Co., supra. the ground that the act of the serv-
H58
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES [ l8/6
a preceding section. There is no rule of public policy or convenience
that a master shall be liable for all the acts or defaults of his servants.
For what acts or defaults is he liable ? For those and those only for
which he can in some way fairly be deemed to be responsible. He di-
rected the doing of a given act : that very act was negligently done, but
it is within the ordinary range of human experience that that may hap-
pen. He directed the doing of a given act : the servant did also some
other act which was a natural incident or attribute of the main act or a
natural and proximate consequence of it; to do that additional act at
all was negligence, or it was negligently done. This also is within the
ordinary range of human conduct. It is possible therefore in these
cases to see some direct relation between the authority and the act com-
plained of to trace some natural and direct causal connection between
the authority and the act.
This relation or connection, moreover, must be a direct and proxi-
mate and also a logical and causal one. It is not enough that the au-
thority or employment merely furnished an occasion or opportunity for
the servant to do the wrongful act, or that it was done during the
time or at the place of the service ; it must have been an incident to,
an attribute of, or a result causally flowing from, the authority or serv
ice. Otherwise the act is the act of the servant alone.
1876. Rules stated. The court in Kentucky, 4 " in endeavoring
to state the principles, used the following language which has been
approved in other cases. "The master is liable only for the authorized
f Jqg.^r^pfi hqftttftttfn&hfKbii J^ jarf| F a$iv>riUifjs >-,#, bpfcfc 1 *?
aiyb is the act of the master. The lia- * In Robards v. Bannon Sewer Pipe
bility of the master must rest upon Co., 130 Ky. 380, 132 Am. St. Rep.
authority, and upon 'authority in 394, 18 L. R. A. (N. S.) 923.
fact.' 'Apparent authority' is nuga- A briefer statement by the supreme
tory in law if 'apparent' means ficti- court of Connecticut in Stone v.
tious or non-existing. The only dis- Hills, 45 Conn. 44, 29 Am. Rep. 635,
tinction which I can understand has been often quoted: "For all acts
between 'authority in fact' and 'ap- done by a servant in obedience to the
parent authority' derived from the express orders or directions of the
scope of a servant's employment, is master, or in the execution of the
that the one is derived from express master's business within the scope of
instructions, and that the other is the employment, and for acts in any
the authority which is shown to be sense warranted by the express or
conferred on the servant by the na- implied authority conferred upon
ture of his service." him, considering the nature of the
See also good discussions in Morier services required, the instructions
v. St. Paul, etc., Ry. Co., 31 Minn. given, and the circumstances under
351, 47 Am. Rep. 793; Slater v. Ad- which the act is done, the master is
vance Thresher Co., 97 Minn. 305, 5 responsible; for acts which are not
L. R. A. (N. S.) 598. within these conditions the servant
alone Is responsible."
1459
I877J THE LAW OF AGENCY [BOOK IV
acts of the servant, and the root of his liability for the servant's acts
is his consent, express or implied, thereto. When the master is to be
considered as having authorized the wrongful act of the servant, so as
to make him liable for his misconduct, is the point of difficulty. Where
authority is conferred to act for another without special limitation, it
carries with it by implication authority to do all things necessary to its-
execution; and when it involves the exercise of the discretion of the
servant, or the use of force towards or against another, the use of such
discretion or force is a part of the thing authorized, and, when exer-
cised, becomes, as to third persons, the discretion and act of the mas-
ter, and this although the servant departed from the private instruc-
tions of the master, provided he was engaged at the time in doing his
master's business, and was acting within the general scope of his em-
ployment. It is not the test of the master's liability for the wrongful
act of the servant from which injury to a third person has resulted that
he expressly authorized the particular act and conduct which occa-
sioned it. In most cases where the master has been held liable for
the negligent or tortious act of the servant, the servant acted, not only
without express authority to do the wrong, but in violation of his duty
to the master. It is in general sufficient to make the master responsible
that he gave to the servant an authority or made it his duty to act in-
respect to the business in which he was engaged when the wrong was
committed, and that the act complained of was done in the course of
his employment. The master in that case will be deemed to have con-
sented to and authorized the act of the servant, and he will not be ex-
cused from liability, although the servant abused his authority, or was
reckless in the performance of his duty, or inflicted an unnecessary in-
jury in executing his master's orders." 8
1877. It is occasionally said that the law will not in
these cases "undertake to make any nice distinctions, fixing with pre-
cision the line that separates the act of the servant from the act of the
individual. When there is doubt, it will be resolved against the master,
upon the ground that he set in motion the servant who committed the
wrong." 6 But certainly the mere difficulty of making a distinction
which justice and the rules of law approve, is no excuse for not at-
tempting it ; and the liability of innocent masters for the acts of their
servants, which has already been carried far beyond the limits fixed by
natural justice, ought not to be still further extended merely because
it may be difficult to draw the line.
s See, for example, Weatherford, 6 Robards v. Bannon Sewer Pipe
etc., Ry. Co. v. Crutcher, Tex. Civ. Co., supra; Weatherford, etc., Ry. Co.
App. , 141 S. W. 137. v. Crutcher, supra.
1460
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES [ 1878-1880
1878. Forms of negligence. The negligence complained of may
take on a variety of forms. There may be negligence in the doing of
the very act or thing authorized. There may be negligence in the
choice of means selected for the doing of the act, where a choice is per-
missible. There may be negligence, not in the choice, but in the ex-
ecution of a permissible means, or in the execution or performance
of an act incidental to the service. Any one of these may be negligence
while acting within the course of the employment.
There may also be an intelligent not negligent choice of a wrong
means, made intentionally but not wilfully or maliciously in the sense
hereinafter discussed, for which also the principal or master may be
liable if the making of such a choice was within the course of the em-
ployment. These latter cases will be considered in another place.
1879. What meant by course of employment. Since no
act can be completely isolated from its surroundings, since every act
must have its penumbra of incident and attribute, it is essential that
some term shall be found which shall include, not merely the act it-
self, but this train of attendant circumstances. For the lack of a bet-
ter term it is said that in order to charge the master with the servant's
negligence, the servant must be acting "in the course of his undertak-
ing" or "within the course of his employment." This term "course
of his employment," like the corresponding term "the scope of the au-
thority" in cases of agency, and "the scope of the business" in cases of
partnership, is one not capable of precise definition although many at-
tempts have been made to define it. It is largely a question of fact
and its determination may vary in each case in view of the particular
circumstances. The utmost that can ordinarily be said is that a serv-
ant is acting within the course of his employment when he is engaged
in doing, for his master, either the act consciously and specifically di-
rected or any. act which can fairly and reasonably be deemed to be an
ordinary and natural incident or attribute of that act or a natural, di-
rect and logical result of it. If in doing such an act, the servant acts
negligently, that is negligence wihin the course of the employment.
1880. Not merely a question of time or place. As has already
been pointed out, the question of what acts can be deemed to be done
\vithin the course of the employment is not merely a question of time
or place. Not every act which an agent or servant may do while he
is in the place appointed for the service, or during the time in which
he is engaged in the performance, can be deemed to be within the
course of the employment, or within the scope of the authority. The
test lies deeper than that ; it inheres in the relation which the act done
1461
1881-1883] THE LAW OF AGENCY [BOOK iv
bears to the employment. The act cannot be deemed to be within the
course of the employment, unless, upon looking at it, it can fairly be
said to be a natural, not disconnected and not extraordinary part or in-
cident of the service contemplated. A servant who, while driving his
master's team upon the master's business and holding the reins in one
hand, amuses himself by striking people, within reach, with the whip
which he holds in the other hand, does so while he is acting generally
for his master and while he is in the place in which his service requires
him to be, but his act in striking people with the whip is not within the
course of his employment, and his master is not liable for it.
1 88 1. Master's prohibition or warning not conclusive. The
fact that the master may have anticipated the possibility of the partic-
ular act or omission now charged as negligence and expressly forbid-
den it or warned against it, while it may show whether the master
deemed it within the scope of the servant's employment, will, as has
been seen, not exonerate the master if the act be done in violation of
his precautions, provided it be in fact found to be within the scope of
the employment. In this respect the prohibitions stand upon the foot-
ing of mere instructions. The master directs the act but instructs the
servant as to the manner of doing it. He may be liable for the act di-
rected or for negligence in performing the act directed, even though the
instructions as to methods are ignored.
Where, however, the whole act or business the so-called main act
is forbidden so that the servant is not servant as to that, this distinc-
tion would not apply.
1882. Intention to benefit the master not the test. The fact
that the act in question was done by the servant with a view to promot-
ing the master's interest is often significant but by no means conclu-
sive. For while an act not done for the purpose of promoting the mas-
ter's interest can rarely be within the course of the employment, not
every act which is so done can be deemed, on that account alone, to be
within it. The relation of the means to the end, and the question of
the ordinary or extraordinary nature of the act would be more ma-
terial. It would be easier, for example, to deem the act of a servant
within the scope of his employment, who, for the purpose of furthering
his master's business, should obstruct the passage of a competitor's
vehicle or spaak disparagingly of his goods, than it would be if the
servant, with a like motive, should kidnap or assassinate the competitor
or set fire to his warehouse.
1883. Principal's ignorance or good faith will not exonerate
him. So, too, it is immaterial that the act was committed without
1462
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES [ 1884, 1885
the principal's knowledge, or that it was the result of the agent's mis-
apprehension or misapplication of his principal's instructions, and was
an act which the principal never intended should be done ; if in fact it
was done by the agent in the course of his employment, and not in the
willful departure from it, the principal is liable. 7 It is often imma-
terial also that the agent acted under a misapprehension as to the facts,
or that he misjudged, or came to an erroneous conclusion regarding,
the facts. If the principal puts the agent into a situation where his duty
requires him to determine the facts and act upon them, the principal
must be held responsible to those who may suffer injury from the er-
roneous judgment of the agent. 8
It is immaterial also that the principal took pains to employ only a
competent and careful agent. While such an agent is less likely to be
guilty of negligence, still if he is negligent in the course of his employ-
ment the principal must answer for it. 9
1884. Ordinary and natural attributes in the light of the event.
The question of what are ordinary and natural attributes or in-
cidents of an act is, like the others just considered, not always one
which can be determined by any hard and fast formula. The test of
what might have been foreseen, or what ought to have been expected,
is often helpful ; and yet events often seem natural enough after they
have happened which had not been anticipated before. It certainly
is not necessary that the precise act should have been foreseen. One
is responsible for the ordinary, natural and proximate consequences of
his acts even though he did not in fact anticipate them.
1885. The question of apparent powers, The doctrine of ap-
parent powers, which, as has been seen, plays so important a part in
determining an agent's authority in contractual cases, is much less im-
portant in this field. 10 Third persons may readily be induced by ap-
pearances of authority to enter into business dealings with an agent,
but the cases must be much fewer in which a person is induced by any
appearance of authority in a servant to become the victim of the serv-
ant's negligence or misconduct. There may be such cases, however,
as for example where persons are led by the appearance of authority to
7 Chicago City Ry. Co. v. McMahon, Tombari v. Connors, 85 Conn. 231,
103 111. 485, 42 Am. Rep. 29, and cases 39 L. R. A. (N. S.) 274, where a
in note 1, p. 564. druggist was held liable for the neg-
s Higgins v. Watervliet Turnpike ligence of his clerk who was a regis-
Co., 46 N. Y. 23, 7 Am. Rep. 293, and tered pharmacist,
cases in note 1, p. 564. 10 McGrath v. Michaels, 80 N. Y.
App. Div. 458.
1463
l886-l888] THE LAW OF AGENCY [BOOK IV
obey directions, follow instructions, omit precautions, and the like, and
as a consequence are subjected to danger and suffer injury. 11
1886. Illegal or unlawful acts. It is not infrequently said that
a principal is not liable for the unlawful or illegal acts of his agent;
but stated so broadly as this the proposition cannot be maintained. It
is, of course, true that the principal does not ordinarily contemplate or
authorize the doing of unlawful or illegal acts. But there are never-
theless many cases in which he will be responsible for them. Many
cases, for example, will be found in this chapter in which the principal
has been held liable for the trespass, conversion, assault, assault and
battery, false imprisonment, malicious prosecution, and the like, com-
mitted by his agent; for acts in violation of penal statutes; and even
for acts which, from the standpoint of the public, may be punished as
crimes. The crucial question here as elsewhere is not merely the nature
of the act, but the circumstances and conditions under which it was
committed.
1887. Application of rules. As has been pointed out in many
cases, it is much easier to agree upon a statement of the rules which are
to govern in cases of this sort than it is to agree upon the application
of them. Like many other similar questions in Agency, this is largely
a question of fact or of inferences to be drawn from facts, and about
such matters reasonable men attempting to apply the same rule may
often reasonably differ. So much depends upon the nature of the em-
ployment, the course of business, the habits of men, the conduct of the
parties, and the other circumstances of the case, that absolutely certain
and definite results, upon which everyone will agree, can often not be
expected.
Illustrations of results reached under varying circumstances may be
helpful, though it is constantly to be kept in mind that it is rarely the
fact that two cases will present precisely the same circumstances.
1888. Illustrations. To begin with very simple cases, if the
master confides to his servant the driving and management of his team,
his street car, his motor vehicle, and the like, the ordinary acts which'
the servant does, while he is engaged in using these things about the
master's business, respecting speed, direction, care in control, starting,
stopping, and the like, are clearly within the course of the employment,
and for the consequences of the servant's negligence in these matters
the master must ordinarily respond. Driving negligently, starting or
stopping too quickly, leaving his team unhitched or his vehicle un-
11 See Camp v. Hall, 39 Fla. 535.
1464
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES [ 1889
guarded, these and many other similar acts too numerous to be men-
tioned furnish a familiar and prolific source of liability. 12
So in a great variety of cases, also too numerous to detail, masters
have been held liable for the negligence of their servants, to whom has
been committed the use or control of water, 18 fire, and other similar
forces and agencies.
It must constantly be borne in mind, however, that the liability in
these cases is not based upon the mere fact that the master has con-
fided the use of the team, vehicle, etc., to the servant, except in cases
of dangerous instrumentalities, neglect in the selection of the servant,
and the like, but upon the fact that it is negligently used about the
master's business. 13a
1889. Further illustrations. So where an animal had been run
over by one of defendant's trains and thrown into a cattle guard from
whence it must be removed before other trains could pass, and defend-
ant's servants, whose duty it was to remove obstructions from the
track, hauled the body out of the cattle guard and left it lying, a short
distance away, in and at the side of a public highway where plaintiff's
horse took fright at it and ran away, causing injury, it was held that
'
12 Master liable for negligence of person in peril, and he is injured in
servant in leaving team unhitched. attempting to save himself there-
Karstendiek v. Jackson Brewing Co., from, though he is not struck by the
123 La. 346; Hayes v. Wilklns, 194 horses or wagon. Sandy v. Swift, 15&
Mass. 223, 120 Am. St. Rep. 549, 9 L. Fed. 271.
R. A. (N. S.) 1033; Riordan v. Gas "See Steele v. May, 135 Ala. 483
Consumers' Ass'n, 4 Cal. App. 639; (hotel proprietor held liable for neg-
Hull. v. Thomson Transfer Co., 135 ligence of bell-boy sent for by a
Mo. App. 119; Damonte v. Patton, guest to get a bath in readiness for
118 La. 530, 118 Am. St Rep. 384, 10 him and who went away leaving the
Ann. Gas. 862, 8 L. R. A. (N. S.) 209; water running); Simonton v. Lor-
Corona Coal & I. Co. v. White, 158 ing, 68 Me. 164, 28 Am. Rep. 29; Kil-
Ala. 627, 20 L. R. A. (N. S.) 958; lion v. Power, 51 Pa. 429, 91 Am. Dec.
Swift & Co. v. Murphy, 45 Tex. C. 127.
App. 497; Pierce v. Conners, 20 Colo. 13 a See Storey v. Ashton, L. R. 4
178, 46 Am. St. Rep. 279; Moulton v. Q. B. 476, disapproving of Sleath v.
Aldrich, 28 Kan. 300; Westerfleld v. Wilson, 9 C. & P. 607. For fuller
Levis Bros., 43 La. Ann. 63; Zambelli statements of these cases, see post,
v. Johnson & Son Co., 115 La. 483; note 40, 1899. See also, Slater v.
Manthey v. Rauenbuehler, 71 N. Y. Advance Thresher Co., 97 Minn. 305,
App. Div. 173; 'Morris v. Kohler, 41 5 L. R. A. (N. S.) 58; and the nu-
N. Y. 42; Turner v. Page, 186 Mass. merous cases cited in notes 45 and
600. 46, post, 1902, 1903. See also, post,
Master is liable where the reckless 1945-1950.
driving of his servant puts a third
1465
H !C>
1890]
THE LAW OF AGENCY
[COOK IV
this disposition of it, though it may have been an improper one, was
within the course of their employment, and the railroad company was
liable. 1 *
So where defendant had sold plaintiff a coal stove and agreed to
"set it up" in plaintiff's house and sent his servants to do so ; and the
servants, in connecting it with plaintiff's chimney, discovered that the
chimney was so full of debris that there could be no draft, and prom-
ised to clear out the debris but failed to do so ; and as a result, when the
stove was put to use, there was injury from escaping coal gas, it was
held that there was at least evidence from which the jury might find
the defendant responsible. 15
1890. Further illustrations. So where a farm laborer, at work
with others in his employer's corn-field, voluntarily undertook to drive
out some trespassing cattle, and, in so doing, carelessly struck one of
them on the head with a stone and killed it, it was held that driving out
the cattle was within the scope of his employment, and that the em-
ployer was liable ; 16 and where the keeper of a toll-gate, who had
i* Baxter v. Chicago, etc., R. Co.,
87 Iowa, 488. See also Tinker v. New
York, etc., R. Co., 71 Hun (N. Y.),
431; Hawks v. Locke, 139 Mass. 205,
52 Am. Rep. 702; Riegler v. Tribune
Ass'n, 40 N. Y. App. Div. 324, 167
N. Y. 542; Price v. Simon, 62 N. J.
L. 153; Ridge v. Transfer Co., 56 Mo.
App. 133; Holmes v. Tenn. Coal, etc.,
R. Co., 49 La. Ann. 1465; Hyman v.
Tilton, 208 Pa. 641; Brennan v. Mer-
chant & Co., 205 Pa. 258; Gross v.
Pa., etc., R. Co., 16 N. Y. Supp. 616.
is Crandall v. Boutell, 95 Minn. 114,
5 Ann. Gas. 122. The court in this
case certainly lays down a very
broad rule as to the master's liabil-
ity, seeming to qualify it only by the
requirement that the act shall have
been done by the servant "within the
line of his duty."
is Evans v. Davidson, 53 Md. 245,
36 Am. Rep. 400. It would seem that
the conclusion in this case, if it be
sound, must be put upon some such
reasoning as this: the servant was
authorized to drive out the trespass-
ing cattle; throwing sticks or small
missiles at such cattle is not an un-
usual method of expediting the ex-
pulsion; therefore the use of some
such missile may be within the
course of the employment. If then
the servant in his haste or his zeal
negligently picks up and throws a
little heavier missile than was appro-
priate or throws it with more force
than was appropriate, this is negli-
gence within the course of the em-
ployment, for which the master must
answer. On the other hand, in Cant-
rell v. Colwell, 40 Tenn. (3 Head)
471, where the circumstances were
much the same, except that the serv-
ant may have become angry because
the animal was not easily driven out,
the court held the master not liable.
In Swabey v. Palmer, Peters (Pr.
Edw. Isl.), 202, the court says: "Sup-
pose a master orders his servant to
drive stray cattle off his field, and in
doing so he maims or injures them
with a pitchfork, or other improper
instrument, it is laid down the mas-
ter would be liable," citing Reeves
Domes. Rel. 517 (though Reeves says
nothing about the pitchfork). In
Swabey v. Palmer, a master who had
instructed his servant "to shoot
every dog that comes to the barns,
1466
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES [ 1891
charge of the gate at all hours, but was not required to collect toll
after nine o'clock in the evening, negligently let the beam of the gate
down upon the plaintiff who was attempting to pass after that hour
and injured her, it was held that the keeper was still acting in the
course of his employment, and that his employer was liable; 17 so a
teamster engaged in delivering coal for his employer, a coal dealer, is
unquestionably acting within the scope of his employment in removing
an iron plate in a sidewalk covering the coal cellar into which he is to
put the coal, and if he negligently leaves the open hole unguarded, his
employer is liable for an injury to one who thereby falls into it; 18 so
where the pilot of a ferry-boat went out of his usual course to accom-
modate a passenger who was carried gratuitously, and in so doing neg-
ligently collided with a canal boat and killed the plaintiff's intestate,
it was held that he was acting within the course of his employment,
and that his principal was liable. 19
1891. Further illustrations. So where a teamster employed by
a flour merchant to deliver goods, having started out with a wagon load
for different customers, left by the road side several bags of bran,
while he went up a side road to deliver some flour, intending to take
up the bran on his return, his object being to lighten his load, and
thus finish the delivery sooner so as to get time to attend to some busi-
ness of his own, and the bran frightened a passing horse and caused
injury, it was held that the flour merchant was responsible. 20 The
court said : "He left the bags to expedite delivery. Did it make the
business his own because he dispatched it more speedily than it would
naturally have been done? He was sent by the defendant to deliver
the flour and bran. Did he do anything else than deliver them? His
whole object in leaving the bran by the side of the road was to gain
time. Suppose he had driven the horse with such speed as amounted
to carelessness in order to gain time, and had injured a person by so
doing; would he be transacting his own business while driving so
rapidly, so that the defendant would not be liable? Suppose he had
unattended by any person, at night L. Rep. 579. See also, King v. Herb,
or early morning" was held liable 18 Ohio Cir. Rep. 41.
though the servant shot the dog be- And the same was held where
tween 11 and 12 a. m. plumbers left a trap door in the bath-
17 Noblesville, etc., Co. v. Gause, 76 room open. Pomerene v. White, 70
Tnd. 142, 40 Am. Rep. 224. Neb. 171.
is Whiteley v. Pepper, 2 Q. B. Div. i Quinn v. Power. 87 N: Y. 535, 41
276; Todd v. Havlin, 72 Mo. App. Am. Rep. 392.
565; Ray v. Jones & Adams Co., 92 20 Phelon v. Stiles, 43 Conn. 426.
Minn. 101; Minns v. Omemee, 2 Ont.
1467
1892, 1893] THE LAW OF AGENCY [BOOK IV
left the bran out of consideration for his horse, and the same result
had followed ; would the defendant be excused ?"
1892. Forbidden acts. As has been pointed out, the
fact that the master had expressly forbidden the particular act, or not
to do it at a particular time, is not conclusive if it be an act which
would otherwise be within the scope of the employment.
Thus where a railway engineer, who was running his train at a time
when he had been expressly forbidden to do so, collided with a special
train containing the plaintiff and thereby caused him serious injury, it
was held that the disobedience of the engineer constituted no defense
to an action against the company ; 21 and where the agent of a lumber
dealer, in order to promote his convenience in handling it, caused lum-
ber to be piled in a place where his principal had instructed him not
to have it piled, and the lumber, being negligently piled, fell upon and
injured the plaintiff, the principal was held liable; 22 and where a sales-
man in a gun-store who had been expressly instructed not to load guns
in the store, loaded one for the purpose of demonstrating it to a cus-
tomer who refused to buy unless this was done, and in doing so the
gun was carelessly discharged and shot the plaintiff, it was held that
the principal was responsible ; 23 and where a master sent his servant to
take personal property from the dwelling house of another, under cir-
cumstances indicating that the attempt was not unlikely to be resisted,
and expressly charged the servant not to use violence or get into per-
sonal difficulty, it was held that the master was liable for an assault
committed by his servant in violation of these instructions while en-
deavoring to take the property from the house. 24 So although a street
car conductor may have been instructed not to carry passengers with-
out payment of fare, yet if he negligently injures one whom he invited
to ride free, the company has been held to be liable. 25
1893. Where the defendant sent his servants to make
repairs on a sewer with which a water-pipe connected, and one of the
servants called defendant's attention to the condition of the water-pipe
but was told not to meddle with it as it had no connection with the
work the servants were doing, and yet this servant during the absence
of the master, apparently believing, though erroneously, that the pipe
21 Philadelphia & Reading R. Co. 21 McClung v. Dearborne, 134 Pa.
v. Derby, 14 How. (55 U. S.) 468, 14 396, 19 Am. St. Rep. 708, 8 L. R. A.
L. Ed. 502. 204. To same effect: Barden v. Felch,
22 Cosgrove v. Ogden, 49 N. Y. 255, 109 Mass. 154.
10 Am. Rep. 361. 25 Wilton v. Middlesex R. Co., 107
23 Garretzen v. Duenckel, 50 Mo. Mass. 108, 9 Am. Rep. 11.
104, 11 Am. Rep. 405. But compare post, .
1468
'CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES [ 1894
had some connection with the difficulty, opened the pipe and thereby
flooded the plaintiff's premises with water, it was held that if the pipe
was opened, not as a mere matter of curiosity but for the purpose of
aiding in removing the difficulties in the sewer, and honestly believing
it was a proper thing to do to accomplish the end they were sent there
"to accomplish, the act would be within the scope of the employment
and the master would be liable, notwithstanding that he had forbid-
den the doing of the act. 26
Many other cases to the same effect will be found cited in the notes. 27
1894. Act of servant having large degree of discretion.
-The fact that the agent or servant is given quite large descretion or
control as to the means or methods to be employed, or that he. acts in
some degree for himself, does not of itself determine that his acts are
not within the scope of his employment. Thus where the defendant,
who was the owner of a horse and express wagon, entrusted them to
a driver with general authority to secure such business as he could,
make his own contracts and to drive, wherever it might be necessary
to go in order to receive or deliver articles which he might be employed
to transport, and the driver, after taking a trunk for a patron, on the
way back and while bringing a load for himself which he afterwards
sold, negligently injured the plaintiff, it was held that the fact that the
driver was carrying his own property was immaterial and that, while
the defendant might require the driver to account to him for the value
of the time occupied, he was none the less liable to the plaintiff: 28 so
28 Cox Shoe Mfg. Co. v. Gorsllne, 63 said: "It Is nearer the line of non-
N. Y. App. DiV. 517. liability and is perhaps difficult to
27 Postal Tel. Co. v. Brantley, 107 distinguish from the case of Morier
Ala. 683; Turner v. North Beach, etc., v. St. Paul, etc., Ry. Co., 31 Minn. 351,
H. Co., 34 Cal. 594; Toledo, etc., R. 47 Am. Rep. 793," referred to in a
o. v. Harmon, 47 111. 298, 95 Am. later section.
Dec. 489; Healy v. Johnson, 127 Iowa, Mulvehill v. Bates was followed in
221; Fitzsimmons v. Milwaukee, etc., Rudd v. P"ox, 112 Minn. 477, wherein
R. Co., 98 Mich. 257; French v. the agent of an automobile livery -
Cresswell, 13 Ore. 418; Harriman v. man, being placed in charge of a ma-
Pittsburg R. Co., 45 Ohio St. 11, 4 Am. chine to secure business for his mas-
St. Rep. 507; Houston & T. R. Co. v. ter, went to supper at a place forbid-
Bulger (Tex.), 80 S. W. 557; Harris den by the master, and in returning
v. Louisville, etc., R. Co., 35 Fed. 116; to the business section of the city, in-
Reid Auto Co. v. Gorsczya, Tex. jured the plaintiff. The court held
Civ. App. , 144 S. W. 688; Burnett that the master was liable because the
v. Oechener, 92 Tex. 588, 71 Am. St. servant's employment placed him in
Rep. 880. charge of the machine to seek cus-
28 Mulvehill v. Bates, 31 Minn. 364, torn on the business streets generally.
47 Am. Rep. 796. Mulvehill v. Bates must certainly
Of this case, the court in Slater v. be regarded as an extreme case; and
Advance Thresher Co., 97 Minn. 305, so far as Rudd v. Fox is based upon
1469
i89S]
THE LAW OF AGENCY
[BOOK jv
whore the defendant, the proprietor of a cab, entrusted it to a driver
with general authority to seek business at such places and in such man-
ner as he pleased, the driver guaranteeing the proprietor a fixed sum
per day, and the driver, while returning the cab one evening, went a
little out of his way for a purpose of his own, and while so doing neg-
ligently injured the plaintiff, it was held that the relation of master and
servant existed between the proprietor and the driver, that the driver
was acting within the scope of his employment, and that the proprietor
was liable ; 29 and so where a traveling salesman, who had no particular
instructions as to the route he should pursue or as to the mode of travel
he should adopt, while traveling under his employment, hired a team
and carriage to go from one town to another, and, while engaged in
the management of the team, negligently permitted it to run away and
cause injury, his employers were held liable. 30
1895. Servant combining his own business with that of
master. Neither does the fact that the servant is combining his
own business to some extent with that of the master necessarily re-
lieve the master. The question is still whether he was, at the time of
the injury, really engaged upon his master's business or his own. 31 The
cases upon the distinction between a mere detour and a departure fur-
nish many illustrations.
the mere fact disclosed in the state-
ment that "In any event, Barnett
[the driver] had possession of the
machine by virtue of his employ-
ment," it is opposed to the weight of
modern authority. See post, 1945
et seq.
2Venables v. Smith, 2 Q. B. Div.
279. The question of the relation ex-
isting between the parties was de-
cided in view of a special statute
making the proprietor liable, but the
question of the scope of the employ-
ment was decided upon common law
principles. See also King v. London
Improved Cab Co., 23 Q. B. Div. 281;
Keen v. Henry, [1894] 1 Q. B. 292;
Gates v. Bill, [1902] 2 K. B. 38.
In Singer Mfg. Co. v. Rahn, 132 U.
S. 518, 33 L. Ed. 440, the company had
entered into a written contract with
one C under which he was to sell its
sewing machines on commission. The
company agreed to furnish a wagon,
and he agreed to furnish a horse and
harness, "to be used exclusively in
canvassing for the sale of said ma-
chines and the general prosecution of
said business;" "to give his exclusive
time and best energies to said busi-
ness, and to pay all expenses attend-
ing same;" "to employ himself under
the direction" of the company and un-
der such rules and instructions as it
or its manager should prescribe.
Held, that he was a servant of the
company and the company was re-
sponsible to a third person injured
by his negligence in driving the
horse.
soPickens v. Diecker, 21 Ohio St
212, 8 Am. Rep. 55.
si In Patten y. Rea, 2 Com. B. (N.
S.) 606, the defendant was a horse
dealer. One Taylor was his manager,
and had a horse and gig, his own
property, which he was in the habit
of using while on the defendant's
business. On one occasion he started
in his conveyance to see his doctor
about personal business, and told de-
fendant he was going to see one
1470
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES
[ 1896
1896. Servant using master's vehicle, implement, etc.,
upon servant's business Facilitating master's business. Except
where some liability can be based upon the inherently dangerous char-
acter of the instrumentality used, so that the master can be charged as
a practical insurer, the master is not liable merely because the injury
was occasioned by the fact that the servant was using the master's
vehicle, implement, and the like. If it was used without the master's
permission, on the servant's business, the master clearly is not liable.
If it be used on the servant's business, with the master's consent, the
master is not ordinarily liable. To make the master liable, ordinarily,
it must be used on the master's business.
The mere fact that the master's business is to be remotely promoted
by the use, is not enough to make the master liable. Where, however,
his business is being so directly facilitated that the business can fairly
be called the master's, the rule may be different. In a recent case 32
in which the servant did injury by the careless management of his mas-
Smith about paying for a horse that
Smith had purchased of H^fpndant;
and he purposed to do both errands.
Before he arrived at the house of
the doctor, and before he had started
on his way to see Smith, he negli-
gently ran into and injured plain-
tiff. The court held he was suffi-
ciently within the scope of his em-
ployment to hold the master liable
for his negligent act.
In Corper Brewing Co. v. Hug-
gins, 96 111. App. 144, it appeared
that an employee of defendant brew-
ery, hired to solicit customers, and
using his own horse and buggy, was
not acting within the scope of his
authority, when he injured the plain-
tiff during a "day off," even although
he was driving home after perform-
ing an errand for defendant at the
request of defendant's bookkeeper,
namely the purchase of revenue
stamps, and had the stamps in his
pocket.
32 Sina v. Carlson, 120 Minn. 283,
139 N. W. 601. The court cited East
St. Louis, etc., R. Co. v. Reames, 173
111. 582; Reilly v. Hannibal, etc., Ry.
Co., 94 Mo. 600; Steffen v. McNaugh-
ton, 142 Wis. 49, 19 Ann. Cas. 1227,
26 L. R. A. (N. S.) 382; Gillshannon
v. Stony Brook, etc., R. Co., 10 Gush.
(Mass.) 228; Ewald v. Chicago, etc.,
Ry. Co., 70 Wis. 428, 5 Am. St. Rep.
178; Mulvehill v. Bates, 31 Minn.
364, 47 Am. Rep. 796; Morier v. St.
Paul, etc., R. Co., 31 Minn. 351, 47
Am. Rep. 793.
The only ones of these cases which
furnish the rule much support are
the first two, which were cases in
which railroad employees, with the
tacit consent of the railway officials,
used engines to ride upon in going
back and forth to their meals. In
the Illinois case the court said .that
"the evidence justified the inference
that this service of the engine was
furnished to the laborers by an un-
derstanding between them and de-
fendant." In the Missouri case the
court said there was evidence for the
jury whether the use was acquiesced
in by the company, and whether, in
so using it, the employees were en-
gaged in the business of the com
pany. Steffen v. McNaughton is onlj
indirectly applicable. Gillshannon v.
Stony Brook, etc., R. Co., involved
the question of the liability of the
master to the servant, not to third
persons.
1471
1897] THE LAW F AGENCY [BOOK iv
ter's team which he was driving upon an errand primarily of his own
while at the same time he was performing a service for the master,
the court said, "He was using his employer's team for a purpose con-
sented to by his employer, and in order to facilitate the performance
of an errand of his own which he was permitted to take time to per-
form. In so facilitating his own business, he was in fact facilitating
his employer's business as well, and the purpose was not a private one,
in which his employer had no interest. The rule is that, if within the
course of his employment, an employee is permitted to use his employ-
er's vehicle to facilitate the performance of necessary errands of his
own, he is still an employee while so doing, and the principle of re-
spondeat -superior applies." This, however, is believed to be somewhat
too widely stated. The servant must be upon the master's business, or
the use of the vehicle, implement, etc., must be in some way incident to
the service, or the liability must be based upon the dangerous character
of the thing used. The cases cited for the rule do not go further than
this.
1897. Servant under immediate direction of patron of
master. 'It is likewise immaterial, as has been already seen, 88 that
the agent or servant is acting temporarily for, or under the immediate
direction of, another person, if he be still employed in and about his
principal's business. Thus where the owners of a carriage were in the
habit of frequently hiring a team and driver for it from the same per-
son, and, upon one of these occasions, the driver by his negligence
caused injury to a third person, it was held that the driver, though sub-
ject to the general directions of the owners of the carriage as to the
course to be pursued, etc., was still engaged in the business of his mas-
ter, and that the latter was liable. And it was further held to make no
difference that the owners of the carriage had always been driven by
the same driver, he being the only regular coachman in the employ of
the owners of the horses ; or that the owners of the carriage had always
paid him a fixed sum for each drive : or that they provided him with
a livery which he left at their house at the end of each drive, and that
the injury in question was occasioned by his leaving the horses while
so depositing the livery where he was accustomed to leave it. 84 In
ss See ante, 1861. mzed and followed to be questioned
s* Quarman v. Burnett, 6 Meea. & now." Joslin v. Grand Rapids Ice
Wels. 499. Of this case Judge Cooley Co., 50 Mich. 516, 45 Am. Rep. 54. To
says that it is one which, "whether the same point: Fenton v. Dublin
correctly decided or not, has been Steam Packet Co., 8 Ad. & El. 853;
too often and too generally recog Dalyell v. Tyrer, El. Bl. & El. 899;
1472
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES [ 1898
this case Baron Parke said : "Upon the principle that qui facit per al~
ium facit per se, the master is responsible for the acts of his servant;
and that person is undoubtedly liable who stood in the relation of mas-
ter to the wrong-doer, he who selected him as his servant, from the
knowledge of, or belief in, his skill and care, and who could remove
him for misconduct, and whose orders he was bound to receive and
obey." That person was the owner of the horses, and not any one at
whose service the horses and driver were temporarily placed. And it
is immaterial to the application of the principle, that the hirer of the
team selected, or asked expressly for, a particular driver. 85 ' - ~ .*
1898. Master not liable for negligence not in course of employ-
ment. But as has been already pointed out, a principal or master
is not liable for the acts of his agent or servant not within the course
of his employment. If the agent or servant, therefore, steps outside of
his employment to do some act for himself, not connected with his prin-
cipal's business, the latter will not be liable for the agent's negligence
while so engaged. Beyond the scope of his employment, the agent or
servant is as much a stranger to his principal as though he were a third
person. 36
In determining whether a particular act was done in the course of
the agent's employment, it is proper to inquire whether the agent was
at the time serving his principal. If the act was done while the agent
or servant was at liberty from the service, and was pursuing his own
ends exclusively, the principal is not liable. 37 If the servant or agent
j oJ> ot .-fo:9VwJcjrrr> ton. ai -orf tfoiriv/ ^nifiJ
Rapson v. Cubitt, 9 Mees. & Wels. Many other cases are cited, ante,
709; Hobbit v. London, etc., Ry. Co., 1861.
4 Exch. 254. se Butler v. Basing, 2 C. & P. 613;
Weyant v. Railroad Co., 3 Duer Lamb v. Palk, 9 Id. 629; Joel v. Mor-
(N. Y.), 360; Blake v. Ferris, 5 N. Y. ison, 6 Id. 501; Storey v. Ashton, L.
48, 55 Am. Dec. 304. R. 4 Q. B. 479; Croft v. Alison, 4 B.
Many other cases are cited, ante, & Aid. 590; Marsh v. South Carolina
1861. R. Co., 56 Ga. 274; Richmond Turn-
SB Quarman v. Burnett, supra; pike Co. v. Vanderbilt, 1 Hill (N. Y.),
Holmes v. Union, 2 Com. Bench (N. 480; Isaacs v. Third Ave. R. Co., 47,
S.) 790; Joslin v. Grand Rapids Ice N. Y. 122, 7 Am. Rep. 418; Wilson v.
Co., supra. In this case S was in the Peverly, 2 N. H. 548; Chicago, etc.,
regular employ of the defendant. On Ry. Co. v. Bayfield, 37 Mich. 205;
the day the injury occurred C hired Maddox v. Brown, 71 Me. 432, 36 Am.
of defendant one of its teams to as- Rep. 336; Stone v. Hills, 45 Conn. 44,
sist him in his work, and requested 29 Am. Rep. 635; Morier v. St. Paul,
that S be sent as driver. While S etc., Ry. Co., 31 Minn. 351, 47 Am.
was driving the team in the business Rep. 793; Mott v. Consumers' Ice Co.,
of C the injury occurred, but it was 73 N. Y. 543.
held that defendant was liable. 37 Butler v. Basing, 2 C. & P. 613,
and cases, supra.
93 1473
1899] TIIK LAW OF AGENCY [BOOK rv
was at the time acting for himself and as his own master pro tempore,
the principal is not liable. 38 If the servant or agent step aside from the
principal's business, for however short a time, to do some act of his
own, not connected with the principal's business, "if," to use the
classic expression of Baron Parke, "he was going on a frolic of his
own, without being at all on his master's business" the relation of
principal and agent or of master and servant, is, as to that act, sus-
pended. 39
1899. Departure from service Detour. In an early case, much
cited, in which it appeared that the defendant's teamster, having finished
his day's work, had returned to the defendant's premises for the pur-
pose of putting up his horse as was his duty, but, instead of doing so,
drove off again on business of his own, and, in returning, injured the
plaintiff, Maule, J., said: "At the time of the accident the servant was
not going a roundabout way to the stable, and, as one of the cases ex-
presses it, making a detour. He was not engaged in the business of
his employer. But in violation of his duty, so far from doing what he
was employed to do, he did something totally inconsistent with his
duty, a thing having no connection whatever with his employer's serv-
ice. The servant only is liable and not the employer. All the cases are
reconcilable with that. The master is liable even though the servant,
in the performance of his duty, is guilty of a deviation or failure to
perform it in the strictest and most convenient manner. But where the
servant, instead of doing that which he is employed to do, does some-
thing which he is not employed to do at all, the master cannot be said
to do it by his servant, and therefore is not responsible for the negli-
gence of the servant in doing it." 40
.>
,V[(if;H- Y ;i ?
88 Bard v. Yohn, 26 Pa. St. 482, and Erskine, J., said in his charge to the
cases, supra. jury: "But whenever the master has
39 Joel v. Morison, 6 C. & P. 501, intrusted the servant with the con-
and cases, supra. trol of the carriage, it is no answer
40 Mitchell v. Crasweller, 13 Com. that the servant acted improperly in
Bench, 237. So in Storey v. Ashton, the management of it. ... The
L. R. 4 Q. B. 476, the defendant in- master in such a case will be liable,
trusted his servant with his horse and the ground is, that he has put it
and cart for the day, and when his in the servant's power to mismanage
work was ended and it was his duty the carriage ty intrusting Mm with
to drive home, the servant for a pur- it." But this reason of Erskine, J.,
pose of his own and without express was disapproved in Storey v. Ashton,
or implied authority from his mas- supra. In that case Cockburn, C. J.,
ter, drove in an entirely different di- said: "I think the judgment of Maule
rection and by his carelessness in- and Cresswell, JJ., in Mitchell v.
jured the plaintiff. The court held Crassweller, (supra) expresses the
the master not liable. true view of the law, and the one
In Sleath v. Wilson, 9 C. & P. 607, which we ought to abide by; and
1474
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES
[ 19
Distinction between a mere detour and a depar-
ture. It is, in many cases, difficult to determine whether what the
servant has done was an entire departure from his master's business or
only a roundabout way of doing it. For it is entirely settled that
where the servant, while pursuing his master's business, goes a longer
way round than he needed to go or than he was directed to go, the mas-
ter will be liable. This is clearly so, of course, if the deviation was a
merely negligent or heedless one. But it is also true although the devia-
tion was intentional and made to enable the servant to accomplish some
incidental purpose of his own, if, notwithstanding this, his main end
and purpose was still the performance of his master's business. If, for
example, the master directs his servant to drive his team from A to B,
to which place there are two direct roads, X and Y, expecting or even
expressly directing that the servant will go by the X road, and the
servant takes the Y road by mistake or inadvertence, that is merely
negligence in the course of the employment. But even though the serv-
ant goes by the Y road in order that, while on his way, he may, inci-
dentally, see a friend or do some small affair of his own, the choice of
the Y road is held to be a deviation from the master's directions but
not a departure from the master's business. 41
that we cannot adopt the view of
Erskine, J., in Sleath v. Wilson, that
it is because the master has intrusted
the servant with the control of the
horses and cart that the master is
responsible. The true rule is that
.the master is only responsible so
long as the servant can be said to be
doing the act, in the doing of which
he is guilty of negligence, in the
course of his employment as servant.
I am very far from saying, if the
servant when going on his master's
business took a somewhat longer
road, that owing to this deviation he
would cease to be in the employment
of the master so as to divest the lat-
ter of all liability; in such cases it
is a question of degree as to how far
the deviation could* be considered a
separate journey. Such a considera-
tion is not applicable to the present
case, because here the carman started
on an entirely new and independent
journey, which had nothing at all to
do with his employment. It is true
that in Mitchell v. Crassweller the
servant had got nearly, if not quite,
home, while in the present case, the
carman was a quarter of a mile from
home; but still he started on what
may be considered a new journey en-
tirely for his own business, as dis-
tinct from that of his master; and it
would be going too far to say that
under such circumstances the master
was liable."
A not dissimilar case is Reaume v.
Newcomb, 124 Mich. 137, where the
servant's duty was to return the
horse he used in delivering to a liv-
ery stable, and there his duty ended.
After so doing, at the instance of the
liveryman, he rode the horse for ex-
ercise and injured plaintiff. The
master was held not liable.
41 Ritchie v. Waller, 63 Conn. 155,
38 Am. St. Rep. 361, 27 L. R. A. 161;
Loomis v. Hollister, 75 Conn. 718;
Williams v. Koehler, 41 N. Y. App.
Div. 426; Lovejoy v. Campbell, 16 S.
Dak. 231; Krzikowsky v. Sperring,
107 111. App. 493; and other cases
cited in the following section.
1475
IpOl] THE LAW OF AGENCY [BOOK IV
On the other hand, if in such a case the servant does not take any
road to B, but starts off in an entirely different direction for some pur-
pose of his own, there is a clear departure. He is not performing the
master's business at all, though he may have an intention to resume it
later. 42 And even though he starts toward B, he may on the way make
such a departure from the journey for some purpose of his own as to
suspend the performance of the master's business during such depar-
ture. 4 *
1901. - Illustrations. The situation in the first class of
cases is well illustrated by a recent case in Connecticut. 4 * There the
defendant, a farmer, had employed a servant to make regular trips
with the defendant's team to a neighboring town in order to obtain
fertilizer for the farm. On the first trip, the defendant went with the
driver and showed him the most direct route, though he did not spe-
cifically instruct him to follow any particular route. On the occasion
in question, the driver, having obtained a load, started by a round
about route in order that on the way home he might stop at a shoe-
shop on an errand of his own. This shop was on the main road home,
but somewhat further away from the farm than the point at which
the driver would have entered the main road had he gone by the usual
route. Leaving his horses unhitched (and headed homeward) he went
into the shoe-shop, and while he was there the horses started forward
and injured the plaintiff. It is held that this was a case of mere de-
42 Mitchell Y. Crassweller, 13 Com. route two blocks to visit a friend,
B. 237; Fleischner v. Durgin, 207 and while so engaged, left the team,
Mass. 435, 20 Ann. Cas. 1291, 33 L. R. unattended and unhitched); in Love-
A. (N. S.) 79. joy v. Campbell, 16 S. D. 231 (where
43 McCarthy v. Timmins, 178 Mass. the defendant's servant employed in
378, 86 Am. St. Rep. 490. hauling water to a thresher engine,
44 Ritchie v. Waller, 63 Conn. 155, stopped at a store at the request of
38 Am. St. Rep. 361, 27 L. R. A. 161. another servant of defendant, and
A similar conclusion was reached hitched his team to an ornamental
In Loomis v. Hollister, 75 Conn. 718 tree which was ruined by the
(where the driver of defendant's ice- horses) ; in Weber v. Lockman, 66
wagon, In returning from the morn- Neb. 469, 60 L. R. A. 313 (where de-
ing delivery of ice, left the regular fendant's son, returning with defend-
route in order to go to the post-office ant's horses from an errand for de-
for his personal mail. He left his fendant, deviated a mile or so to visit
team unattended in front of the post a friend, which* delayed him until
office, and they ran away and injured after dark, when the horses became
plaintiff) ; in Williams v. Koehler, 41 unmanageable and did the injury
N. Y. App. Div. 426 (where the de- complained of). See also Chicago,
fendant's teamster, who had made a etc., Bottling Co. v. McGinnis, 86 111.
delivery of beer and was returning App. 38; Jones v. Weigand, 134 N. Y.
to the brewery with a wagon-load of App. Div. 644.
empty kegs, deviated from the direct
1476
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES [ IQO2, 1903
tour, and that the servant, when he left the horses untied was acting
within the course of his employment.
1902. The case of a clear departure may be illustrated
by a familiar English case. 45 There the defendant's teamster, having
delivered his load, had come to the master's shop to obtain the keys to
the stable and it was then his duty to drive from the shop to the stable
which was in a neighboring street not far distant. Instead of doing
so, at the request of a fellow servant who was ill, he started off in an-
other direction to carry the fellow-servant part of the way to his home.
Before doing so, the driver endeavored to obtain the defendant's per-
mission but, not finding him, declared "he would chance it." On his
way back to the stable, he negligently ran over the plaintiff and caused
the injury for which the action was brought. It was held that the
master was not liable. One of the judges said : "At the time of the ac-
cident he, [the servant] was not going a roundabout way to the stable
or, as one of the cases expresses it, making a detour. He was not en-
gaged in the business of his employers."
1903. A case in which the departure was not at the out-
set so radical was recently before the supreme judicial court of Mas-
sachusetts. 46 There the defendant's teamster was directed by the de-
is Mitchell v. Crassweller, 13 C. B.
237. A truck-driver, having finished
his master's business and being di-
rected to put up his team and while
on his way to the barn for that pur-
pose, was met by another of the de-
fendant's servants, at whose request
and for whose accommodation he
went to deliver a trunk. On the way
out he negligently ran over the
plaintiff. Held, that he was not then
engaged in the master's business and
the master was therefore not liable.
Cavanagh v. Dinsmore, 12 Hun (N.
Y.), 465. Same effect: Sheridan v.
Charlick, 4 Daly (N. Y.), 338.
46 McCarthy v. Timmins, 178 Mass.
378, 86 Am. St. Rep. 490. So where
a. servant was directed by his master
to drive an automobile to a certain
point, and on the road had turned
and retraced his course in order to
carry a friend, and later, while pro-
ceeding again toward his former
destination but before reaching the
point where he turned back, he negli-
gently injured the plaintiff, it was
held a complete departure from the
employment, and the master was held
not liable. Patterson v. Kates, 152
Fed. 481.
The same result was reached where
a chauffeur, sent with authority to
take his master's automobile to the
post-office, thence to the express of-
fice, and then back to the master's
house, started from the post-office on
an errand for a fellow servant, away
from the road to the express office,
or the master's home, without the
master's knowledge or consent, and
while so doing caused the injuries to
the plaintiff. Northrup v. Rpbinson,
33 R. I. 496; where the defendant's
chauffeur was employed to take his
master's car to the garage and leave
It for the night, but instead he took
it to the garage and then on beyond
for his own purposes, and the plain-
tiff was injured while the chauffeur
was bringing the car back again to
the garage. Colwell v. Aetna Bottle
& Stopper Co., 33 R. I. 531; where a
chauffeur, instructed to get his supper
1477
1903] THE LAW OF AGENCY [BOOK IV
fendant's foreman to take his team from the defendant's hack-stand
on Dartmouth street in the city of Boston to the defendant's stables
in Allston, distant about a mile and a half westerly. His team was
then facing north, and the shortest and most direct route was to go
north on Dartmouth street to Commonwealth avenue and then westerly
on Commonwealth avenue. Instead of doing so he turned his team
about, drove southerly on Dartmouth street to Boylston street and
then turned westerly on Boylston street. Boylston street runs parallel
to Commonwealth avenue and he could have gone to the stables by
following Boylston street into Massachusetts avenue and then going
northerly along that avenue. When he got to Massachusetts avenue,
however, instead of going northerly in the direction of the stable, he
turned southerly and went to Dundee street where he left his horses
unhitched and unattended and went into a saloon to get a drink. While
he was in the saloon the horses ran away and caused the injury for
which this action was brought. The driver testified in substance that
when he turned his horses about on Dartmouth street his purpose was
to go and get the drink before he took the horses to the stable. The
court held the defendant not liable. The driver, said the court, was
"directed to go to the stables, and there can be no doubt that so long
as he drove the team with that end in view, and for that purpose and
for no other purpose, he was engaged in his master's business, even if he
made a detour contrary to the direction of his master. We are not
disposed to lay much stress upon the fact that he went down Boylston
street rather than Commonwealth avenue, but when he reached Massa-
chusetts avenue it is plain that his only purpose in turning southward
instead of northward, and going 758 feet to Dundee street, was not
only to deviate from the regular way of reaching the stable but was
for a purpose of his own, namely, to get a drink. He was upon no
errand of his master, and this journey was not for the purpose of get-
ting to the stables even by a circuitous route."
."A) -cuH Sf .MOMialiiG .v ri;s,6ttBV,fiP
and be at a certain place with the au- mobile to go home to dinner and on
tomobile at a given time, upon eating the way injured the plaintiff. Steffen
supper, went in the automobile to see v. McNaughton, 142 Wis. 49, 19 Ann.
a friend in an opposite direction from Cas. 1227, 26 L. R. A. (N. S.) 382; and
the place appointed, and on his way where after completing his route, the
back to the place appointed he in- defendant's driver became intoxi-
jured the plaintiff. Danforth v. cated, and while driving out of his
Fisher, 75 N. H. Ill, 139 Am. St. Rep. homeward course negligently ran
670, 21 L. R. A. (N. S.) 93; where a down the plaintiff. Wills v. The Belle
chauffeur, without his master's Ewart Ice Co., 12 Ontario L. R. 526.
knowledge or consent, took the auto-
_
1470
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES [ IQO4, 1905
1904. In a case in Connecticut it appeared that the de-
fendants ordered their teamster to deliver a load of paper to T. On
reaching T's, he requested the teamster to carry the paper four and a
half miles further on to Hartford and, at the railway station there, to
get some freight for T and bring it to him. The teamster consented,
and while getting the freight his team, which he had left unhitched at
the station, ran away and injured plaintiff's property. The court held
that when the teamster accepted instructions from T and became a car-
rier of merchandise for him to and from a railway station in an ad-
joining town, he temporarily threw off his employers' authority, aban-
doned their business and left their service, and that the defendants
were therefore not -liable. 47
1905. Resumption of service after departure. Suppos-
ing that the servant has deviated or departed from his employment, but
that he ultimately takes it up again, the question arises, at what point
is the master's service resumed? In the case of Ritchie v. Waller, 48
above referred to, it was held that the servant by going a longer way
around, in order incidentally to visit a shop on business of his own, had
not so far departed from the service as to relieve the master from the
servant's negligence in leaving the team unhitched while he went into
the shop. The injury here resulted from the careless use of the mas-
ter's team which he was using upon the master's business. Suppose,
however, when the servant left the team to go into the shop on his own
business, he had negligently run against a person and injured him :
would the master be liable for that injury? It is assumed that he
would not be. But supposing that the servant, having finished his
business in the shop, starts to return to the team to continue his mas-
ter's business and on his way out and before he reaches the wagon,
negligently runs against a person and injures him, would the master
be liable for that injury? It might have been supposed that that ques-
*? Stone v. Hills, 45 Conn. 44, 29 hack owner, employed a person as
Am. Rep. 635. In Lamb v. Palk, 9 C. day driver. The driver used the
& P. 629, where a servant driving hack at night without the master's
his master's horse got off the car- knowledge or consent. It was held
riage and took hold of a horse stand- that the master could not be held re-
ing before a van and caused the van sponsible for an omission on the part
to move so as to make room for the of the driver to comply with the
carriage to pass, whereby a packing terms of a city ordinance during the
case fell from the van and broke the time of such unauthorized use of the
thills of plaintiff's gig, it was held hack.
that the master was not liable for the 63 Conn. 155, 38 Am. St. Rep. 361,
injury. In Campbell v. City of Provi- 27 L. R. A. 161. (See ante, 1901.)
dence, 9 R. I. 262, the defendant, a
'. ; ; ;.;. ui3
r 479
1906] THE LAW OF AGENCY
[BOOK iv
tion also would be answered in the negative, but it was in fact an-
swered in the affirmative in a substantially identical case before the
Court of Civil Appeals of Texas. 49
1906. In a recent case in Mississippi 50 it appeared that
a railway company had in its employment a man, whose duty it was
to operate a pumping station about a mile out of the village in which
he lived. To enable him to go back and forth to the pumping station,
40 Missouri, etc., R. Co. v. Edwards
(Tex. Civ. App.), 67 S. W. 891. The
facts were that a railroad brakeman
had left his place of duty and gone
across the tracks to a restaurant; in
returning to board his train, which
was just leaving, he carelessly ran
into plaintiff and knocked him under
the train. The court said: "Whether
or not the brakeman was in the dis-
charge of his duties when he knocked
appellee under the train was more a
question of law than one of fact. His
place of duty was on the opposite
side of the train, but the evidence of
appellee tended to show that he had
gone to a saloon or restaurant on the
side of the train where the accident
occurred, and was hurriedly return-
ing to board the train, then just mov-
ing away, when he ran against appel-
lee. While he may not have been on
his master's business in stepping
aside to the saloon or restaurant, we
think it must be held that he was
when he ran over appellee in the ef-
fort to resume his accustomed place
of service."
Chief Justice Whitfield, of the su-
preme court of Mississippi (though
in a dissenting opinion), says of this
case, in Barmore v. Vicksburg, etc.,
Tly. Co., 85 Miss. 426, 3 Ann. Cas. 594,
70 L. R. A. 627, at page 469 of the
official report: "The case is not rea-
soned out and not a single authority
is cited, and it is the judgment of an
inferior tribunal. It may be barely
possible to sustain the case on the
theory that the servant was in the
service of the master in attending to
his business about the car, and had
simply deviated from that service in
going into the saloon or restaurant to"
get, it may be, some necessary meal.
If this is not the true explanation of
the case, then I do not hesitate to
say that the decision is unsound."
In Moore v. Manchester Liners,
Ltd., [1910] App. Cas. 498, an action
under an employer's liability act, the
court was equally divided on the
question of whether or not the de-
ceased met his death while acting
within the course of his employment.
The facts were that deceased, who
was a sailor in defendant's employ,
had, with the master's knowledge,
gone ashore to buy articles for his
own personal use, and on his return,
while attempting to board the ship,
he slipped from the ladder and fell
into the sea.
Where defendant's chauffeur, hav-
ing taken his master to the theatre,
was instructed to be at the theatre
at a certain hour, and then, with the
knowledge and without the objection
of his master, went on an errand of
his own and on his way back to the
theatre negligently injured the
plaintiff, Held, that the master was
liable. McKiernan v. Lehmaier, 85
Conn. 111.
so Barmore v. Vicksburg, etc., Ry.
Co., 85 Miss. 426, 3 Ann. Cas. 594, 70
L. R. A. 627.
In Fleischner v. Durgin, 207 Mass.
435, 20 Ann. Cas. 1291, 33 L. R. A. (N.
S.) 79, a servant driving an automo-
bile had made a clear departure but
had turned about and was going back
to do the errand which he was orig-
inally directed to do. He had gone
but a little way on the backward
trip when he negligently injured the
plaintiff. It was held that the mas-
ter was not liable. There was no
1480
CHAP. Vj LIABILITY OF PRINCIPAL TO TfLIRD PARTIES
[ 1906
the company furnished him a railway tricycle. Part of his duty was to
maintain a fire in the engine which ran the pump, and he was author-
ized to use his tricycle in picking up chips along the track with which
to start a fire. On the day in question, he had left the village on his
tricycle and gone to the pumping station. He needed to start a fire,
and not finding any chips in the immediate vicinity, he mounted his
tricycle and rode on beyond the pumping station to a point where the
discussion of this particular point.
To the same effect: Colwell v. Aetna
Bottle Co., 33 R. I. 531; Danforth v.
Fisher, 75 N. H. Ill, 139 Am. St. Rep.
670, 21 L. R. A. (N. S.) 93; Reynolds
,v. Buck, 127 Iowa, 601; Riley v.
Roach, 168 Mich. 294, 37 L. R. A. (NT.
S.) 834.
The very recent case of Symington
v. Sipes, Md. , 88 Atl. 134, also
holds the master not liable, though
it is not quite clear from the facts
whether the servant, a chauffeur who
on his homeward journey from an au-
thorized trip had gone off on "a frolic
of his own" with his master's auto-
mobile, had, at the time of the in-
jury, finished his frolic or not. See
also, Northrup v. Robinson, 33 R. I.
496, held to be ruled by Colwell v.
Aetna Bottle Co., supra.
In Merritt v. Hepenstal, 25 Can.
Sup. Ct. 150, the servant of the de-
fendant was delivering parcels. Hav-
ing delivered all but one, he stopped
at his home for supper, and then pro-
ceeded to deliver the last parcel.
While driving on this errand, he neg-
ligently injured the plaintiff. The
court refused to yield to the conten-
tion that the servant, having left his
employment to eat his supper, could
not resume it without returning to
the point where he delivered the last
parcel before supper and starting
from that point to make his last de-
livery, and held that the servant had
resumed his employment when the
injury was done the plaintiff.
In Geraty v. Nat'l Ice Co., 16 N. Y.
App. Div. 174, the driver of defend-
ant's ice wagon had deviated slightly
from the direct route to get his
1481
breakfast. He then started to his
original destination, where the ice
was to be delivered, and while going
there, injured the plaintiff. The
court held that as soon as the driver
started, after having eaten his break-
fast, to deliver the ice, he resumed
the service of the defendant, without
regard to what effect the deviation
might have had before he resumed
the service of his master.
Geraty v. National Ice Co., supra,
was affirmed by the court of appeals,
160 N. Y. 658, but no opinion was
written.
In Jones v. Weigand, 134 N. Y. App.
Div. 644, the driver of a coach who,
while returning to the stable after
attendance at a funeral, had gone out
of his way to call upon a friend, was
said to have resumed his service as
soon as he returned to the coach and
started again for the stable. Will-
iams v. Koehler, 41 N. Y. App. Div.
426, was much relied upon, and Mc-
Carthy v. Timmins, 178 Mass. 378,
referred to In a preceding section,
was thought to be distinguishable.
The case of O'Reilly v. McCall, Irish
Rep. [1910] 2 K. B. 42, is interesting
but not very conclusive, owing to the
manner in which the questions arose
and were considered. The House of
Lords was evidently of the opinion
that the jury might find that the
driver was in the service, even
though he testified that he was on
an errand of his own. Here he was
driving a motor car back towards
home, but apparently had not. yet
reached the point from which he had
originally diverged.
1907] THE LAW OF AGENCY [BOOK IV
company had recently been building a bridge and where he knew chips
were to be found. On reaching the bridge, but before he had begun
to gather chips, and apparently before he had dismounted from his
tricycle, he was accosted by a person who said he was ill and who asked
the employee to take him upon his tricycle and carry him to a town
about three miles further on. The employee assented and carried him
to the town in question, going, as will be observed, in the direction
away from his home and beyond the pumping station and the bridge
where the chips lay. Having left the sick man at his destination, he
started back upon his tricycle toward the chips and the pumping sta-
tion and his home, apparently intending when he got back to the point
where the chips lay to gather some chips and then go back and start
his fire. Before reaching the point, however, at which the chips lay,
he carelessly ran with his tricycle against the plaintiff and caused the
injury for which an action was brought against the railway company.
If the injury had been caused while the servant was first on his way
to gather the chips or if, having gathered them, it had occurred while
he was on his way back to the pumping station, there probably would
have been no question that it had occurred while the servant was act-
ing in the scope of his employment. But suppose the injury had oc-
curred while the servant, having temporarily abandoned his purpose of
gathering the chips, and having passed the point where they lay, was
carrying the sick man on the tricycle to his destination. Would the
master have been liable as for an act done within the scope of his em-
ployment? It is assumed that he would not be. Is then, the servant
acting within the scope of his employment while, after leaving the sick
man, he is on his way back to the point at which the gathering of the
chips could be entered upon but before he had in fact reached that
point? The majority of the court in Mississippi held that he had re-
sumed his employment when, having left the sick man, he started upon
the return journey and that therefore the master was liable. Chief
Justice Whitfield dissented, holding that the service would not be re-
sumed until the servant returned to the point at which he intended to
,, ,, , .
gather the chips.
1907. Comments on these views. It will be noticed in
this case that the act of the servant, in undertaking to carry the sick
man to his destination, was a departure from the master's business.
The outward trip, from which the servant was returning when the in-
jury was caused, had no connection with the master's business and in
this respect the case is distinguishable from those in which the outward
trip was upon the master's business, and the deviation occurred while
1482
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES [ 1908,
he was returning. Where the outward trip is authorized, the return
trip also will usually be contemplated and authorized. The conclusion
reached by Chief Justice Whitfield seems to be sound. It seems un-
sound to say that, though the outward journey be a clear departure,
the servant immediately resumes, the service the moment he starts to
return. A servant is not in the service merely because he is going to-
ward the place of service any more than he is when going away from
it. If the master permits the servant to take, or the servant without
permission takes, the master's vehicle for use by the servant in going to
or from his work, the master is not thereby necessarily made liable for
the servant's negligence in its use while so employed. 51
1908. It has * been suggested in some cases that, if it
would be the servant's duty by virtue of the general nature of his em-
ployment to take back the horse or vehicle or other article if he had
found it at a place to which it had strayed or had been wrongfully
taken by another person, or even if it had gotten to that place by the
servant's own negligence, it is equally his duty and within the scope of
his employment where he himself has wrongfully and intentionally
taken it to that point. While there doubtless may be cases in which
such a rule would be applicable, as a general principle it must certainly
be deemed to be questionable. It amounts to saying that the servant
by his wrongful and intentional act, outside the course of his employ-
ment, can create an emergency, the escape or return from which im-
mediately becomes an act within the scope of the employment.
If it be said that the act of the servant in taking the horse, vehicle,
etc., was a conversion by him, or an assumption of possession by him,
as an individual, but that, when he starts to return, he restores the ar-
ticle to his master or resumes possession for him, it may be replied that
this seems to beg the question. By what authority does he here accept
back the article for his master? By what authority does he, here and
now, in these unusual and unexpected circumstances, resume posses-
sion for his master? No such authority can be presumed or implied
from any facts attending the original appointment.
1909. Other acts not within course of employment.
Where the section men employed upon a railroad, during the noon
hour when they had quit work built a fire by the side of the track to
warm their coffee, negligently leaving it unextinguished when they re-
sumed their work, and the fire spread to an adjoining field, it was held
that the railway company was not responsible. 52
5i See ante, 1896. St. Louis, etc., Ry. Co. v. Ford, 65
"Morier v. St. Paul, etc., Ry. Co., Ark. 96, the servants of the defend
31 Minn. 351, 47 Am. Rep. 793. In ant railroad kindled a fire to warm
1483
1909]
THE LAW OF AGENCY
I ROOK IV
It would be different, of course, if the use of fire were incident to the
employment. 158 And even though there might not be liability for the
starting of the fire, there might be where it was the duty of the same
servants to extinguish such a fire by whomsoever started. 5 *
their coffee during the noon hour.
The fire spread and damaged plain-
tiff. The defendant contended that
the kindling of the fire under such
circumstances was not within the
scope of the servant's employment.
The court said that even admitting
that contention, the defendant would
be liable for negligently permitting
the fire to spread, without regard to
who started it. In Williams v. Jones,
3 H. & C. 256, [swfe nom, Woodman
v. Joiner, 10 Jur. (N. S.) 852], 3 H.
& C. 602, 11 Jur. (N. S.) 843, the
plaintiff permitted the defendant to
use his shed temporarily as a carpen-
ter shop, and the defendant's work-
man in lighting his pipe while at
work set the shed on fire; held (Mel-
lor and Blackburn, JJ., dissenting),
that the defendant was not liable.
Blackburn, J., called it "a nice and
puzzling question." In the one case,
cooking dinners and in the other
lighting and smoking pipes, was no
part of the servant's duties. See also,
Wilson v. Peverly, 2 N. H. 548. In
Aycrigg v. New York, etc., R. Co., 30
N. J. L. 460, it appeared that the cap-
tain of a ferry boat which was lying
at the wharf, saw a barge on fire in
the river, and without any orders so
to do, went out into the river and at-
tempted to tow the burning barge up
stream. In doing this the barge was
brought against another boat to
which the fire was communicated and
it was injured. It was held that go-
ing to the aid of the burning barge
was outside of the scope of the duty
of the captain of the ferry boat, and
that his employers were not liable;
Much like the Morier case, supra,
is April v. Pretorius, [1906] Trans-
vaal L. R. 824 (herd-boy built a fire
to cook game he had caught). Much
like Williams v. Jones, supra, is
Heard v. Flannagan, 10 Viet. L. R.
(L.) 1 (servant put down his pipe
near a stack). Where the servant
was sent to cut and pile stalks but
then, without any authority or direc-
tion, set fire to them and the fire
spread, the master was held not lia-
ble. Marlowe v. Bland, 154 N. Car.
140
In Eaton v. Lancaster, 79 Me. 477,
It was held competent for the jury
to find a" stable keeper liable for the
consequences of a fire upon the prem-
ises apparently caused by the fact
that the night foreman permitted
three men, somewhat intoxicated and
known to be smokers, to go into the
hay loft to sleep in violation of the
defendant's regulations. Williams v.
Jones, supra, was thought to be dis-
tinguishable.
53 Johnson v. Barber, 10 111. 425, 50
Am. Dec. 416. Defendant was held
liable where he ordered a servant to
destroy rabbits, and the servant, as
was customary, set fires to burn
them out, which fires spread to plain-
tiff's land. MacKenzie v. The Trus-
tees, etc., Co., 22 Austr. L. T. 142.
Also, where defendant ordered his
janitor to burn waste paper in the
furnace, but the janitor burned the
paper in a vacant lot where the
plaintiff was injured. McDermott v.
Consolidated Ice Co., 44 Pa. Sup. Ct
445.
Where defendant's servants, who
were plowing a field, set fire to ac-
cumulated weeds in order to get
them out of the way, although the
master, after discussing it, had told
them not to do so. Held, a question
of fact for the jury whether the
servants acted within the course of
their employment Seybold v. Eisle,
154 Iowa, 128.
H St. Louis, etc., R. Co. v. Ford,
supra; Baldwin v. Alabama, etc., Ry.
Co., 96 Miss. 52. Compare Chapman
v. New York Cent. R. Co., 33 N.' Y.
369, 88 Am. Dec. 392.
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES [ IQIO
igio. . In an English case it appeared that defendants
were solicitors occupying offices over plaintiffs' store. The defendants
employed clerks whose duties were performed in the general office in
which there was a lavatory for their use. They had express orders
that no clerk was to go into the private offices after the members of
the firm had left them. On the day in question, one of the clerks, after
the solicitors had gone, went into one of the private offices to wash his
hands at the lavatory in that room. He negligently left the water tap
turned and the water flooded the plaintiffs' premises. The plaintiffs
brought their -action against, the solicitors, and it was urged that the
clerk was acting within the scope of his employment..!} at9rf-w
But Grove, J., said : "I. am of opinion that the verdict should be en-
tered for the defendants. No doubt this question is a very nice one,
and there may be cases close to the line between the liability and non-
liability of a master for the act of another person done in the 'course
of his employment' if he is a servant, or 'within the scope of his au-
thority' when he is an agent, for * * * such is the mode in which
those terms have been applied by the courts, although the words 'scope
of authority' may cover both cases. * * *
"Although a definition is difficult, I should say that the act, for which
the master is to be held liable, must be something incident to the em-
ployment for which the servant is hired, and which it is his duty to
perform. * * * I think I should have come to the same conclu-
sion as that I have arrived at, if there had been no express prohibition
in the case, and it had merely been shown that the clerks had a room
of their own and a lavatory where they could wash their hands. Then
what possible part of the clerk's employment could it be for him to go
into his master's room to use his master's lavatory, and not only the
water, but probably his soap and towels, solely for his, the clerk's, own
purposes ? What is there in any way incident to his employment as a
clerk? I see nothing. The case seems to me just the same as if he had
gone up two or three flights of stairs and washed his hands in his mas-
ter's bed-room. It is a voluntary trespass on the portion of the house
private to his master. I do not use the word trespass in the sense of
anything seriously wrong, but he had no business there at all. In do-
ing that which his employment did not in any way authorize him to do,
he negligently left the stop-cock open and the water escaped and did
damage. I think there was nothing in this within the scope of his au-
thority or incident to the ordinary duties of his employment." 55
>ii itini
86 Stevens v. Woodward, 6 Q. B. "The case is a little stronger by rea-
Div. 318. Grove, J., further said: son of the prohibition, but I quite
1485
TILE LAW OF AGENCY
[BOOK IV
In a recent case, it appeared that defendant was
the proprietor of a teaming business and his stables were in charge of
a foreman. The foreman brought his gun to the barn for his own pur-
poses, and while there the defendant borrowed it on a single occasion
for use about the stables in destroying trespassing animals. After its
return to the foreman, the latter, during the day, undertook to explain
the workings to another workman, and while this was being done, the
gun was accidentally discharged wounding the other workman. It
was held that there was nothing in these circumstances to show that
using or handling the gun was within the course of the foreman's serv-
ice. 56 So where the cook upon the boarding car of a construction train,
who had nothing to do with its load or management, but acting upon
the direction of the foreman of the bridge-building gang, threw from
the train while in motion an article belonging to the foreman, it was
held that the act was wholly without the course of employment of either
the cook or the foreman. 57
1912. Further illustrations. In a case in Maine, it ap-
peared that the defendant's son, a minor of the age of seventeen years,
took his father's horse and carriage, which he had been allowed to use
agree . . . that there are cases
where a prohibition would have no
effect, and I cannot put a nearer one
than that I suggested during the ar-
gument; suppose this were not a
clerk, but a housemaid whose duty
it was to clean up the room and at-
tend to the lavatory and wipe out
the basin, then I think, that although
she was expressly prohibited from
using the basin, and was told not to
leave the tap open, yet, notwith-
standing the prohibition, her act of
using the basin and omitting to turn
off the water would be so incident
to her employment that the master
would be liable." Liudley, J., con-
curred, saying: "I am of the same
opinion and I agree for much the
same reasons. I do not see on what
principle the defendants are to be
held liable for the negligent acts of
a man who trespasses in their room
and leaves their tap running. The
facts show that the clerk was a tres-
passer after his master had left."
In Ruddiman & Co. v. Smith, 60 L.
T. R. 708, the defendant provided a
lavatory for the use of his clerks.
One of them undertook to use it one
night after the completion of his
day's work but before leaving the de-
fendant's place of business, and
found he could get no water by turn-
ing on the tap. He negligently left
the tap open and later the water was
turned on and flooded the premises of
the plaintiff below. The court held
the defendant liable, one of the
judges holding that the use of the
tap was in the course of the servant's
employment, while the Chief Justice
preferred to rest his decision on the
ground that the act of the servant
was "an incident to his employment."
59 Smith v. Peach, 200 Mass. 504.
57 St. Louis, etc., Ry. Co. v. Bryant,
81 Ark. 368. But where it was within
the course of duty of the superintend-
ent of bridge work to direct as to the
disposal of pieces of bridge work
after they left the blacksmith shop
where they had been worked upon,
and he directed that they be thrown
into the highway, it was held that
the company was liable to a person
injured thereby. Denny v. Virginia
Bridge Co., 150 Mo. App. 72.
1486
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES
without restriction, and drove to a store for the purpose of .depositing
money which, as treasurer of a Sunday school, he had received the
day before. Upon entering the store to make the deposit, he left the
horse unfastened and unattended, and the horse ran away, colliding
with plaintiff's team, and caused the injury for which the action was
brought against the father. The horse and carriage were taken in the
father's absence, and without his knowledge. The court held that, un-
der these circumstances, the son could not be considered as engaged
in the business of his father, or as acting for him, and that the father
was therefore not liable. 58
Many other cases involving the unauthorized use of teams, automo-
biles, and the like, are cited in the notes. 58
arc hours or dry? of In-oMii-'xuta wh.-n >:h<?
ss Maddox v. Brown, 71 Me. 432, 36
Am. Rep. 336. A master who gives
his servant a day off and permits him
to take a horse and wagon for his
own pleasure is not liable for in-
juries caused by the servant's care-
less use of the horse. Bard v. Yohn,
26 Pa. St. 482; same, where master
permits servant to use master's au-
tomobile on servant's business. Cun-
without permission and on his own
account. Campbell v. Providence, 9
R. I. 262. Same, where the vehicle
was a railway engine taken out under
similar conditions. Cousins v. Han-
nibal, etc., R. Co., 66 Mo. 572.
Master not liable where servant, on
a day when he is off duty, uses mas-
ter's automobile without his consent
to take a friend upon a pleasure ride.
ningham v. Castle, 127 N. Y. App. Reynolds v. Buck, 127 Iowa, 601.
Div. 580.
Master not liable for negligent
driving by servant to whom he lends
or leases a horse to use on servant's
own business. Herlihy v. Smith, 116
Mass. 265; Thorp v. Minor, 109 N.
Car. 152.
68 Master not liable where servant,
without authority or consent, takes
master's horses to drive for his own
pleasure, even though he be author-
ized to drive them upon the master's
business. Fiske v. Enders, 73 Conn.
338; Fish v. Coolidge, 47 N. Y. App.
Div. 159. Same, where servant
drives upon a personal errand of his
own. Way v. Powers, 57 Vt. 135.
Where the servant of a stable
keeper killed a horse by immoderate
driving at a time when he was driv-
ing without authority and for pur-
poses of his own, his master was held
not liable. Adams v. Cost, 62 Md.
264, 50 Am. Rep. 211.
So where servant of a hack owner
took the hack and team out at night
To the same effect, though un-
der slightly different circumstances.
Slater v. Advance Thresher Co., 97
Minn. 305, 5 L. R. A. (N. S.) 598;
Clark v. Buckmobile Co., 107 N. Y.
App. Div. 120.
Same, where a salesman without
authority and against instructions,
took his employer's automobile to go
to dinner and on the way injured the
plaintiff. Mclntire v. Hartfelder
Co., 9 Ga. App. 327; where defend-
ant's officers took the company's au-
tomobile for a pleasure ride. Power
v. Arnold Engineering Co., 142 N. Y.
App. Div. 401; where defendant's
brother took defendant's automobile
for his own purposes. Freibaum v.
Brady, 143 N. Y. App. Div. 220;
where defendant's chauffeur took his
automobile to go on a pleasure ride
of his own, without authority and
contrary to express commands. Sar-
ver v. Mitchell, 35 Pa. Super. 69; Dur-
ham v. Strauss, 38 Pa. Super. 620;
Stewart v. Baruch, 103 N. Y. App.
1487
THE LAW OF AGENCY
[BOOK IV
1913. Injuries to servant's invitees. As has already
been seen, it is not ordinarily within the scope of a servant's authority
to employ or obtain assistants to himself, 60 neither is it usually within
his implied authority to invite his friends or others to accompany him,
visit him, or cooperate with him in or during 1 the performance of his
service, or to visit, enter upon or make use of his master's premises or
/property. For injuries to such third persons, therefore, which result
^merely from their being- so associated with the servant, or from being
permitted by him to be upon or in the master's premises or property,
or which result from the servant's negligence to them while there, for
which the master would not be liable if there had been no such invita-
tion or permission, the master is not ordinarily responsible. 81 So far
Div. 577; Lotz v. Hanlon, 217 Pa. 339,
118 Am. St. Rep. 922, 10 Ann. Cas.
731, 10 L. R. A. (N. S.) 202.
Same, where defendant's chauffeur,
without any authority, took the ma-
chine, on request by telephone, to
carry supplies to a stranded automo-
bile. Riley v. Roach, 168 Mich. 294,
:37 L. R. A. (N. S.) 834.
Where defendant's son, ordinarily
permitted to use the automobile,
takes it out at the request of his
another, it may be found to be within
the course of his employment. Smith
v. Jordan, 211 Mass. 269.
It is a question for the jury, where
he takes it out at the request of his
sister to entertain family friends.
Moon v. Matthews, 227 Pa. 488, 136
Am. St. Rep. 902, 29 L. R. A. (N. S.)
856. The father was held in Stowe
v. Morris, 147 Ky. 386, 39 L. R. A.
(N. S.) 224; but not in Doran v.
Thomsen, 76 N. J. L. 754, 19 L. R. A.
335. See also Winfrey v. Lazarus,
148 Mo. App. 388; Kneff v. Sanford,
63 Wash. 503.
Where there was evidence that de-
fendant's salesman, although appar-
ently taking persons for a pleasure
ride, was thereby promoting possible
sales, it was held that he might be
found to be acting within the course
of his employment. Boyle v ; Fergu-
son, [1911] 2 Irish Rep. 489.
Where the driver of a taxi-cab, at
the direction of the general manager,
whose directions he was required to
obey and whose direction upon the
particular occasion he did not know
to be unauthorized, drove the cab on
what was really the manager's pri-
vate business and while so doing
negligently injured the plaintiff, the
proprietors were held liable. Irwin
v. Waterloo Taxi-cab Co., [1912] 3 K.
B. 588.
eo See ante, 1866.
ei Master not liable when his serv-
ant leading a colt to water invited a
boy to ride upon the colt, in attempt-
ing which he was injured by a kick.
Bowler v. O'Connell, 162 Mass. 319,
44 Am. St. Rep. 359, 27 L. R. A. 173.
Same: Corrigan v. Hunter, 139 Ky.
315; Raible v. Ice Co., 134 N. Y. App.
Div. 705.
Same effect: (riding upon wagons
or carts at request or invitation of
driver), Schulwitz v. Delta Lumber
Co., 126 Mich. 559; Driscoll v. Scan-
Ion, 165 Mass. 348, 52 Am. St. Rep.
523; Dover v. Mayes Mfg. Co., 157 N.
Car. 324; Foster-Herbert Stone Co.'v.
Pugh, 115 Tenn. 688, 112 Am. St. Rep.
881, 4 L. R. A. (N. S.) 804; Scott V.
Peabody Coal Co., 153 111. App. 103;
(riding on hand car), Houston, etc.,
R. Co. v. Boiling, 59 Ark. 395, 43 Am.
St. Rep. 38, 27 L. R. A. 190; Hoar v.
Maine C. R. Co., 70 Me. 65, 35 Am.
Rep. 299; (riding in elevator),
Sweeden v. Atkinson Improvement
Co., 93 1-rk. 397, 27 L. R. A. (N. S.)
1488
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES [ 1914
as they became volunteer servants, also, the fellow-servant rule would
ordinarily apply to them. 62
Where, however, a servant in charge of dangerous premises invites
or permits very young children or others not capable of appreciating
the dangers to come or be upon the premises, it is held in several cases
that the master may be liabk for negligent inj-uries to them, in the
same way that he would be if they had come there without such invita-
tion or permission. 63
1914. Negligence when servant off duty. In order that an act
of alleged negligence shall be committed within the course of the em-
ployment, it is, in general, true that the servant must have been in the
service at the time. Few kinds of service are entirely continuous and
unbroken. There are hours or days of intermission when the servant
is not on duty. He comes to his work at a given time and leaves it
again at another time. During such intervals the service is ordinarily
suspended, and what the servant does in such an interval, even
though it may be the same sort of act as that which belongs to the
service, if done on the servant's own account and not as an act in the
service, would ordinarily not be imputed to the master. Many illustra-
tions of this have already appeared in the cases in which servants when
off duty and without consent have taken the master's team or automo-
bile and driven it for purposes of their own. 6 *
-
124; (riding in dump car), Morris teen year old boy to help him about
v. Brown, 111 N. Y. 318, 7 Am. St. Rep. dangerous work whose perils the boy
751; (riding on engines), Flower v. did not appreciate. Kentucky Cent.
Penn. R. Co., 69 Pa. 210, 8 Am. Rep. R. Co. v. Gastineau, 83 Ky. 119, fol-
251; Files v. Boston, etc., R. Co., 149 lowed) ; Poteet v. Blosson Oil Co., 53
Mass. 204; (riding on freight or Tex. Civ. App. 187, reversed on
gravel trains), Keating v. Michigan ground that the servant was the
C. R. Co., 97 Mich. 154, 37 Am. St. Rep. father, Tex. , 136 S. W. 432;
328; Smith v. Louisville, etc., R. Co., (where this doctrine and that of at-
124 Ind. 394; Powers v. Boston, etc., tractive dangers were applied); Mis-
R. Co., 153 Mass. 188. souri, etc., Ry. Co. v. Rodgers, 89
A servant in charge of an ice Tex. 675, (boy too young to appre-
wagon has no authority to invite ciate danger allowed to ride on hand
boys to ride thereon or to take ice 'car) ; Gunderson v. Northwestern
therefrom- and where he first invites Elev. Co., 47 Minn. 161, (boy six
a boy to get ice and then assaults years old allowed to ride on horse
him for so doing the master is not power).
liable. Kiernan v. New Jersey Ice * See Bard v. Yohn, 26 Pa. 482;
Co., 74 N. J. L. 175. Adams v. Cost, 62 Md. 264, 50 Am.
62 See ante, 1658. Rep. 211; Fiske v. Enders, 73 Conn.
es See Wells v. Kentucky Distill. 338; Cousins v. Hannibal, etc., R. Co.,
Co., 144 Ky. 447; (where master was 66 Mo. 572, and the many other cases
held liable because servant in charge cited, ante, 1912.
of work requested or permitted thir-
94 H89
I9I5J THE LAW OF AGENCY [BOOK IV
But, on the other hand, it may be the fact that the service or duty is
continuous; and such cases present different aspects. Thus where a
servant had charge of his master's team "all of the time" whether he
was at work with it or not, and as much before or after regular hours
of work as during such hours, and he left the team unattended upon
the street in order to do a service for a friend, it was held that it was
at least open. to the jury to find that this was negligence within the
course of the employment. 65 It may also be the case that, though
the servant was entitled to a period of rest or intermission, he had not
taken it, but remained at work, or had resumed work before the period
had expired, and the like; and in such cases ordinarily, there being
nothing to show that this was contrary to his duty, the service would
be in progress. 66
It may also be found to be the duty of the servant to do or undo in
the service what even he himself had wrongfully done or left undone
while off duty ; and thus impose liability for the former even if there
would have been none for the latter only ; 8T though these cases must be
unusual and rest upon peculiar ground.
1915. Where the section men of a railroad company,
having finished their day's work and returned to their homes, without
permission took out and used the hand-car belonging to the company
on their own private errands, and while so doing negligently injured
the plaintiff, the company was held not liable. 68 And so where a sec-
tion foreman, without the knowledge or permission of the company
used the car on Sunday to convey himself to the river where he wished
to fish, the company was held not liable for his negligence in the use
of the car and tracks. 69
65 Corona Coal Co. v. White, 158 writer speaks of this case as "rather
Ala. 627, 20 L. R. A. (N. S.) 958. obscure" because it is inserted in the
66 See Tijan v. Illinois Steel Co., report in an unusual manner, i. e.,
250 111. 554, where defendant was held without headnotes or the names of
liable for the negligence of a servant counsel or briefs.]
in doing what was in general within However sound this case may be on
his service, though he did it during its special facts, it certainly cannot
an interval of thirty minutes al- be true as a general rule that, what a
lowed as a rest period. servant does in departure from his
6 ? Thus in the rather obscure case duty, it immediately becomes his
of Chapman v. New York Central R. duty within the course of his em-
Co., 33 N. Y. 369, 88 Am. Dec. 392, ployment to undo,
the defendant was held liable because Harrell v. Cleveland, etc., R. R.
a servant, whose duties were of a Co., 27 Ind. App. 29. To same effect:
rather continuing sort, including Branch v. International, etc., Ry. Co.,
work after hours if he saw "anything 92 Tex. 288.
amiss," did not put up certain bars Sammis v. Chicago, etc., R. Co.,
in a fence, even though he took them 97 111. App. 28.
down himself when off duty. [The
( '" pv
1490
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES [ IQl6,
Where the conductor of a street-car, having been relieved by another
conductor, and his work for that day having ended, went inside the car
to ride to his home, and while therein, and while the car was under the
control of the second conductor, signalled for the car to start and
thereby injured the plaintiff, it was held that the company was not
liable. 70
1916. How question determined. The question whether
the act complained of was within the course of the employment,
the question whether the servant did the act on his own account
or on his master's, the question whether the servant has simply made
a detour or has entirely departed from the master's service these are
questions which, when the facts are in dispute, or, though the facts are
not in dispute, when more than one inference can reasonably be drawn
from them, are questions for the jury under proper instructions from
the court. 71
The court, however, here as in other similar cases, should carefully
instruct the jury as to the principles which are involved, and the con-
siderations which may properly be taken into account in arriving at a
conclusion.
1917. Master's liability for acts of independent contractor. Al-
though a full discussion of the law relating to independent contractors
is not within the scope of this work, one matter may well be mentioned
in this connection. The master's liability for the acts of his servant,
within the scope of his employment, depends, as has been seen, upon
the fact that the relation of master and servant exists. It is the mas-
TO Lima Ry. Co. v. Little, 67 Ohio Ave., etc., R. Co. v. Robinson, 125
St. 91. Ala. 483; Lewis v. Schultz, 98 Iowa,
In Dells v. Stollenwerk, 78 Wis. 341; Deck v. B. & O. Ry. Co., 100 Md.
339, the defendants were house 168, 108 Am. St. Rep. 399; (same
movers, who were moving a house in case, 102 Md. 669; Waters v. Pioneer
which plaintiff resided as a tenant. Fuel Co., 52 Minn. 474, 38 Am. St.
The house was moved but was left Rep. 564; Girvin v. N. Y. Central R.
in its new position without steps. Co., 166 N. Y. 289; Magar v. Ham-
The plaintiff requested two of the mond, 183 N. Y. 387, 3 L. R. A. (N.
servants of the defendant to erect S.) 1038; Jackson v. American Tel.
some steps, which the servants did Co., 139 N. C. 347, 70 L. R. A. 738;
after their day's work for defendant Brennan v. Merchant, 205 Pa. 258;
was done. It was no part of the de- Love joy v. Campbell, 16 S. D. 231;
fendant's duty to erect steps. The Bergman v. Hendrickson, 106 Wis.
plaintiff was injured because of the 434, 80 Am. St. Rep. 47; St. Louis,
faulty construction of the steps, but etc., Ry. Co. v. Van Zant, 101 Ark.
the defendant was held not liable 586.
therefor. See also, O'Reilly v. McCall, Irish
71 Limpus v. London General Om- Rep. [1910] 2 K. B. 42.
nibus Co., 1 H. & C. 526; Highland
1491
I9 1 ?]
THE LAW OF AGENCY
[BOOK iv
ter's will that is to be exercised ; his purpose that is to be accomplished ;
his are the benefits and advantages which ensue. He selects his own
servant, puts him in motion, and has the right to direct and control his
actions. It is, therefore, held that he should be responsible for what
the servant does while so employed.
Where, however, the master has not this right of control a different
rule prevails. Neither reason nor justice requires . that he should be
held responsible for the manner of doing an act when he had no power
or right to direct or control that manner. If, therefore, the master r
using due care in the selection of the person, enters into a contract with
a person exercising an independent employment, by virtue of which the
latter undertakes to accomplish a given result, being at liberty to select
and employ his own means and methods, and the master retains no
right or power to control or direct the manner in which the work shall
be done, such a contract does not create the relation of master and serv-
ant, 72 and the person contracting for the work is not liable for the neg-
ligence of the contractor, or of his servants or agents, in the perform-
ance of the work.
72 who is to be regarded as an In-
dependent contractor has been con-
sidered, ante, 1870.
73 See Myer v. Hobbs, 57 Ala. 175,
29 Am. Rep. 719; Bennett v. True-
body, 66 Cal. 509, 56 Am. Rep. 117;
Boswell v. Laird, 8 Cal. 469, 68 Am.
Dec. 345; Atlanta R. R. Co. v. Kim-
berly, 87 Ga. 161, 27 Am. St. Rep.
231; Ryan v. Curran, 64 Ind. 345, 31
Am. Rep. 123; Kellogg v. Payne, 21
Iowa, 575; James v. McMinimy, 93
Ky. 471, 40 Am. St. Rep. 200; Rumans
v. Kelly & Brady Co., 141 Ky. 827;
Leavitt v. Bangor, etc., R. R. Co., 89
Me. 509, 36 L. R. A. 382; McCarty v.
Second Parish, 71 Me. 318, 36 Am.
Rep. 320; City, etc., Ry. Co. v.
Moores, 80 Md. 348, 45 Am. St. Rep.
345; Boomer v. Wilbur, 176 Mass.
482, 53 L. R. A. 172; Wood v. Cobb,
13 Allen (Mass.), 58; Linton v.
Smith, 8 Gray (Mass.), 147; Hilliard
v. Richardson, 3 Gray (Mass.), 349,
63 Am. Dec. 743; Carey v. Baxter,
201 Mass. 522; Corliss v. Keown, 207
Mass. 149; Wright v. Big Rapids,
etc., Co., 124 Mich. 91, 50 L. R. A.
495; De Forrest v. Wright, 2 Mich.
368; Kilts v. Board of Supervisors,
162 Mich. 646; Rogers v. Parker, 15&
Mich. 278, 18 Ann. Cas. 753, 34 L. R.
A. (N. S.) 955; City of St. Paul v.
Seitz, 3 Minn. 297, 74 Am. Dec. 753;
Cuff v. Newark, etc., R. R. Co., 35 N.
J. L. 17, 10 Am. Rep. 205; Engell v.
Eureka. Club, 137 N. Y. 100, 33 Am.
St. Rep. 692; Hexamer v. Webb, 101
N. Y. 377, 54 Am. Rep. 703; King v.
New York, etc., R. R. Co., 66 N. Y.
181, 23 Am. Rep. 37; McCafferty v.
Spuyten Duyvil, etc., R. R. Co., 61 N.
Y. 178, 19 Am. Rep. 267; Gay v.
Roanoke Ry., 148 N. C. 336; Clark v.
Fry, 8 Ohio St. 358, 72 Am. Dec. 590;
Missouri K. & 0. Ry. v. Ferguson, 21
Okl. 266; Harrison v. Collins, 86 Pa.
153, 27 Am. Rep. 699; Hass v. Phila.,
etc., Steamship Co., 88 Pa. 269, 32
Am. Rep. 462; Sanford v. Pawtucket,
etc., R. R. Co., 19 R. I. 537, 33 L. R.
A. 564; Powell v. Construction Co.,
88 Tenn. 692, 17 Am. St. Rep. 925;
Bailey v. Troy & Boston R. R. Co., 57
Vt. 252, 52 Am. Rep. 129; Bibbs
Admr. v. N. & W. R. R. Co., 87 Vav
711; Richmond v. Sitterding, 101 Va.
354, 99 Am. St. Rep. 879, 65 L. R. A.
149*
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES
[ 1918
This rule of immunity from liability is, however,
subject to certain exceptions. No one can lawfully delegate to an-
other the authority to do an unlawful act, nor can one, upon whom the
law imposes the performance of a duty, relieve himself from respon-
sibility for its non-performance, by committing its performance to a
substitute. 7 * So if the thing to be done is in itself unlawful, or if it is
per se a nuisance, or if it cannot be done without doing damage, he
who causes it to be done by another, be the latter servant, agent, or in-
dependent contractor, is as much liable for injuries which may happen
to third persons from the act done, as though he had done the act in
person. 75
So, though the act be not one necessarily resulting in injury but is
one which, from its nature, will probably, unless precautions are taken,
do injury to others, it is, by the weight of authority, the duty of every
person who does it in person or causes it to be done by another to see
^f!l
445; Seattle Lighting Co. v. Haw- Palmer v. Lincoln, 5 Neb. 136, 25 Am.
ley, 54 Wash. 137; Gary v. Sparkman
Co., 62 Wash. 363; Milligan v. Wedge,
12 Ad. & El. 737.
T* See Luce v. Holloway, 156 Cal.
162; Kuh v. Santa Barbara Ice Co.,
157 Cal. 591; Cabot v. Kingman, 166
* ass. 403, 33 L. R. A. 45; Sebeck v.
Plattdeutsche Volkfest Verein, 64 N.
J. L. 624, 81 Am. St. Rep. 512, 50 L.
R. A. 199; Paltey v. Egan, 200 N. Y.
83; Choctaw, etc., R. Co. v. Wilker,
16 Okla. 384, 3 L. R. A. (N. S.) 595.
" See Southern Ry. v. Lewis, 165
Ala. 555, 138 Am. St. Rep. 77; Will-
iams v. Fresno Canal, etc., Co., 96
Cal. 14, 31 Am. St. Rep. 172; Nor-
walk Gaslight Co. v. Norwalk, 63
Conn. 495; Atlanta, etc., R. Co. v.
Kimberly, 87 Ga. 161, 27 Am. St. Rep.
231; Florsheim v. Dullaghan, 58 111.
App. 593; Chicago, etc., R. Co. v. Wat-
kins, 43 Kan. 50; Baumeister v.
Markham, 101 Ky. 122, 72 Am. St.
Hep. 397; American Car & Foundry
Co. v. Spears, 146 Ky. 736; Kershi-
shian v. Johnson, 210 Mass. 135, 36
L. R. A. (N. S.) 402; McDonnell v.
Rifle Boom Co., 71 Mich. 61; Missis-
sippi Central Ry. v. Holden, 99 Miss.
124; Crisler v. Ott, 72 Miss. 166;
Crenshaw v. Ullman, 113 Mo. 633;
Brannock v. Elmore, 114 Mo. 55;
Rep. 470; Cuff v. Newark, etc., R. R.
Co., 35 N. J. L. 17, 10 Am. Rep. 205;
McCafferty v. Spuyten Duyvil, etc., R.
Co., 61 N. Y. 178, 19 Am. Rep. 267;
Deming v. Terminal Ry., 169 N. Y. 1,
88 Am. St. Rep. 521; Coleman v.
State, 134 N. Y. 564; Mullins v. Sie-
gel-Cooper Co., 95 N. Y. App. Div.
234, (affirmed in 183 N. Y. 129);
Braisted v. Brooklyn, etc., R. Co., 46
N. Y. App. Div. 204; Carman v. Steu-
benville, etc., R. R. Co., 4 Ohio St.
399; Cameron Mill & Elevator Co. v.
Anderson, 98 Tex. 156, 1 L. R. A. (N.
S.) 198; Whitney v. Clifford, 46 Wis.
138, 32 Am. Rep. 703; St. Paul Water
Co. v. Ware, 16 Wall. (U. S.) 566.
21 L. Ed. 485; Ellis v. Sheffield Gas,
etc., 00.7 2 El. & B. 767 ; Hardaker v.
District Council, [1896] 1 Q. B. 335;
Hill v. District Council, 79 L. T. Rep.
495.
Compare Kendal v. Johnson, 51
Wash. 477; Seattle Lighting Co. v.
Hawley, 54 Wash. 107; Richmond v.
Sitterding. 101 Va. 354, 99 Am. St. Rep.
&79, 65 L. R. A. 445; Norfolk W. R.
Co. v. Stevens, 97 Va. 631, 46 L. R. A.
367; Rogers v. Parker, 159 Mich. 278,
18 Ann. Gas. 753, 34 L. R. A. (N. S.)
955; Laffery v. United States Gyp-
sum Co., 83 Kan. 349.
1493
I9I9- I 9 21 ] THE LAW OF AGENCY
[BOOK iv
to it that those precautions are taken, and he cannot escape this duty
by turning the whole performance over to a contractor. 76
1919. The fact that the contractor expressly agrees to
assume responsibility for injuries cannot, of course, relieve the em-
ployer if otherwise liable. 77
1920. Even though the employer might not be liable for
injuries happening during the progress of the work, liability may at-
tach to him where he has resumed possession and control of the prem-
ises and the injury results from the condition in which they are main-
tained. 78
1921. Effect of ratification. It has been seen in an earlier por-
tion of the work that a principal may with a full knowledge of the facts,
render himself liable by his ratification not only of his agent's unau-
thorized contract, but also of his unauthorized tort. 79
The same rules also apply in general where the relation is that of
master and servant, as has been seen in the same place.
This question has been so fully treated there, that there is no occasion
for a further discussion of it here.
78 See Norwalk Gaslight Co. v.
Norwalk, 63 Conn. 495; Wilson v.
White, 71 Ga. 506, 51 Am. Rep. 269;
Joliet v. Harwood, 86 111. 110, 29 Am.
Rep. 17; Jefferson v. Chapman, 127
111. 438, 11 Am. St. Rep. 136; James v.
McMinimy, 93 Ky. 471, 40 Am. St. Rep.
200; Philadelphia, etc., Ry. Co. v.
Mitchell, 107 Md. 600, 17 L. R. A. (N.
S.) 974; Curtis v. Riley, 153 Mass.
123; Thompson v. Lowell, etc., R. Co.,
170 Mass. 577, 64 Am. St. Rep. 323, 40
L. R. A. 345; Weatherbee v. Par-
tridge, 175 Mass. 185, 78 Am. St. Rep.
486; Carleton Co. Ins. Co. v. Foley,
117 Minn. 59, 38 L. R. A. (N. S.) 175;
Omaha v. Jensen, 35 Neb. 68, 37 Am.
St. R. 432; Thomas v. Harrington, 72
N. H. 45, 65 L. R. A. 742; Hunter v.
Southern Ry. Co., 152 N. Car. 682,
136 Am. St. Rep. 854, 29 L. R. A. (N.
S.) 851; Hawver v. Whalen, 49 Ohio
St. 69, 14 L. R. A. 828; Southern O.
R. Co. v. Morey, 47 Ohio St. 207, 7 L.
R. A. 701; McCarrier v. Hollister, 15
S. Dak. 366, 91 Am. St. Rep. 695; Mc-
Harg v. Newcomer, 117 Tenn. 595, 9
L. R. A. (N. S.) 298; Cameron Mill
-4 .LA.gr
Co. v. Anderson, 98 Tex. 156, 1 L. R.
A. (N. S.) 198; Walton v. Cherokee
Colliery Co., 70 W. Va. 48.
Compare Berg v. Parsons, 156 N.
Y. 107, 66 Am. St. Rep. 542, 41 L. R.
A. 391; Deming v. Terminal Ry. Co.,
169 N. Y. 1, 88 Am. St. Rep. 521.
77 Storrs v. City of Utica, 17 N. Y.
104, 72 Am. Dec. 437.
78 See Sturgis v. Society, 130 Mass.
414, 39 Am. Rep. 463; Young v.
Smith, 124 Ga. 475, 4 Ann. Cas. 226;
Sipe v. Pennsylvania R. R., 222 Pa.
400; McCrorey v. Thomas, 109 Va.
373, 17 Ann. Cas. 373.
.See also, Taylor v. Winsor, 30 R. I.
44. After an acceptance of the work
by the proprietor the independent
contractor ceases to be liable to third
persons for results of its condition.
Curtin v. Somerset, 140 Pa. 70, 23
Am. St. Rep. 220, 12 L. R. A. 322
(building negligently constructed);
Daugherty v. Herzog, 145 Ind. 255
(idem), 57 Am. St. Rep. 204, 32 L.
L. A. 837.
79 See ante, 357.
1494
.v ifc>...
CHAP. VJ LIABILITY OF PRINCIPAL TO THIRD PARTY [ 1922-1924
4. Liability for Trespass or Conversion.
T J I f
1922. Liable for trespass or conversion in course of employ-
ment. Even though the agent or servant may not have been guilty
of anything which may technically be termed negligence he may yet
without any wilful or malicious purpose of his own and solely in the ef-
fort to perform the principal's or master's business, have trespassed
upon the person or property of another or converted the latter's prop-
erty to the master's use. Where this is the direct and immediate result
of the master's directions the liability would be plain. So it would where
it is the result of the master's failure to give reasonably specific direc-
tions or instructions, or of his other similarly misleading conduct. But
even in other cases, if what the servant or agent did is fairly to be re-
garded as a natural and proximate consequence of what he was set to
do, and was done during and as a part of that act for the master's bene-
fitit will be an act within the course of the employment for which the
master will be liable.
1923. Special cases. Where the principal or master
owed to the person injured a special duty of protection, as in the case
of a carrier of passengers, an innkeeper, and the like, and the servant
or agent to whom the performance of that duty has been confided has
failed to perform it ; or where the principal or master has expressly or
by implication authorized the use of force and the agent or servant has
used excessive force ; or where the principal or master has confided to
the care of the agent or servant some specially dangerous instrumen-
tality, and he has- used or permitted it to be used to the injury of third
persons ; special cases which are more fully considered in the sub-
division relating to wilful or malicious acts a liability for trespass to
person or property may attach based upon those special circumstances,
even though the act was not wilful or malicious, but simply an inten-
tional though mistaken act done for the principal's or master's bene-
fit. If there would be liability where the act was wilful or malicious, a
fortiori would there usually be where the motive was to benefit the
employer. The question has been so fully considered in the other sub-
division, that it seems to be unnecessary to repeat the discussion here.
1924. Illustrations. Illustrations of the application of
these general rules are numerous. A small selection from them is all
that can be attempted. The majority belong rather in the field of Mas-
ter and Servant than of Principal and Agent. Thus where the prin-
cipal instmcted his agent to get a certain team of horses, intending
that the agent should get the owner's consent before taking the team,
but the agent, misunderstanding the instructions, took the horses with-
1495
i9 2 5]
THE LAW OF AGENCY
[BOOK iv
out getting the owner's consent, and in using them in the principal's
business killed one of them, it was held the principal was liable in tres-
pass. 80 The same ruling was made where a father sent his son to get
six heifers from a certain pasture, and the son, not finding them all
there, searched for them in the vicinity and having found part of them
in the plaintiff's pasture, drove off with them, by mistake, two heifers
belonging to the plaintiff ; 81 where a master sent his servant to get some
lumber belonging to him at a saw-mill, telling him to inquire of the saw-
yer, who would inform him which was the lumber, and the servant in-
quired. but was given such indefinite directions that by mistake he took
the plaintiff's lumber; 82 and where a servant being sent to cut trees in
a certain direction, inadvertently cut some on plaintiff's land. 83
1925. Not liable if act were not within course of employment.
Equally clear here as in other cases, of course, is the conclusion that
the master is not liable if, in the act in question, the servant was not
the servant of the defendant or, if he were, if the act was not one done
within the course of the employment. 8 *
soMoir v. Hopkins, 16 111. 313, 63
Am. Dec. 312. So where a mortgagee
sent an agent to take the mortgaged
goods for the purpose of foreclosure,
intending and directing that they
should be taken without the use of
force, but the agent broke doors and
locks to get the goods, the principal
was held liable. Williams v. Tolbert,
76 S. Car. 211.
si Andrus v. Howard, 36 Vt. 248, 84
Am. Dec. 680. Much 'to same effect.
McAlary v. Stafford, 2 S. R. (N. S.
Wales) 386.
82 May v. Bliss, 22 Vt. 477. Where
the master sent his servant to kill a
beef at a certain place, and the serv-
ant went to the place and in good
faith killed the only animal he
found there, although the animal, un-
known to the servant, was the plain-
tiff's, defendant was held liable.
Maier v. Randolph, 33 Kan. 340.
as Luttrell v. Hazen, 3 Sneed
(Tenn.), 20. The defendant in-
structed his servant to keep the
plaintiff's hogs out of the corn, and
incidentally remarked that if he (the
defendant) had to run after the hogs,
he would kill them. The servant
seized the hogs and took them to an-
other farm of the defendant twenty-
five miles away and in an adjoining
state. Held, the defendant was lia-
ble for the conversion. Burnett v.
Oechsner, 92 Tex. 588, 71 Am. St.
Rep. 880.
s* A master is not liable for a con-
version because his servant, without
the master's knowledge and for no
purpose connected with his business,
receives goods from a sheriff who
has wrongfully levied upon, and re-
fuses upon demand to deliver them
to the rightful owner. Vandeymark
v. Corbett, 131 N. Y. App. Div. 391.
See also, McCarthy v. McCabe, 131
N. Y. App. Div. 396.
A master who is a professional
photographer is not liable where his
servant, without the master's knowl-
edge or consent, and for a price paid
to the servant, "pirates" or duplicates
a copyrighted photograph in the mas-
ter's possession. Shaw v. Tomlinson,
25 N. Zeal. L. R. 612. A master is
not responsible where his servant
wrongfully loans property of a third
person in the master's possession and
it is consequently injured. Hart v.
I 49 6
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES [ 1926
5. Liability for Wilful or Malicious Acts of Servant,
D C. T 1 1HM "I -4. 11 4-i.l J -ul. 4. ^ ' 1
1926. In general. While it is well settled that the principal or
master is responsible to third persons for the negligent act of his serv-
ant or agent, committed within the scope of his authority, it has been
held in many cases that he is not liable for the agent's wilful or ma-
licious act. In the language of Judge Cowen, 85 which fairly states the
doctrine of these cases, "the dividing line is the wilfulness of the act."
The statement is not infrequently made that the distinction between
the liability of the master for negligent acts and his liability for wilful
or malicious acts is merely one of pleading, or at least that it originated
in a mere question of pleading. If, however, the following considera-
tions have any weight, it will be seen to be something more than that,
though it is true that in some of the early cases its significance seemed
largely formal.
It is perhaps not strange that a distinction in the master's respon-
sibility for negligent acts and for wilful acts should constantly present
itself. The very idea of negligence in the servant suggests the case
wherein the servant is performing the master's business, but doing it
heedlessly, inattentively, without definite purpose, without sufficient
mental attention to it to do it properly. When, however, it is suggested
that the servant was acting wilfully a different situation presents it-
self. Instead of mental inaction, mental activity is the situation at once
presented. Instead of purposeless inattention, a definite purpose, a dis-
tinct motive is now suggested, and whose motive is it? At this
point a further distinction must be observed. What is meant by "wil-
fully"? It may mean no more than a conscious purpose and intent to
perform the master's business, and in this view is wholly commenda-
ble and in furtherance of the master's interests. It may mean simply
a dogged, obstinate determination to perform the master's business, be-
cause he was directed to perform it. It may mean. a reckless or wan-
ton determination to perform the master's business, because it is such,
but regardless of the consequences of doing it then or there. On the
other hand, the expression may be used, in the language of the Century
dictionary, "with an implication of evil intent or legal malice, or with
absence of reasonable ground for believing the act in question to be
lawful." It is undoubtedly in this latter sense that the expression is
Maney, 12 Wash. 266; or where a doing so kills one of them. Oxford
servant who has been directed to v. Peter, 28 111. 434.
drive a trespassing steer out of a s in Wright v. Wilcox, 19 Wend,
field, does so and then also pursues (N. Y.J 343, 32 Am. Dec. 507.
other cattle found near by and in
1497
1927, 1928] THE LAW OF AGENCY [OOK IV
ordinarily used in this connection. Inasmuch as it can rarely be sup-
posed that the master has authorized or directed a wilful or malicious
act, the conclusion seems now natural and reasonable that the servant
is effectuating his own purpose and motive, and that for the time be-
ing, at least, he has ceased to represent his master. What he does, then,
while so acting, is, it is said, his own act and not the act of his master.
1927. Before accepting these conclusions, however, a
number of considerations must be taken into account. If the servant
or agent, even though for a short period, goes outside of his employ-
ment, if abandoning his service, though even for a moment, he steps
aside to commit an act which has no relation to his master's business,
which is in no way incident to it, which has no tendency to further or
promote it, and which was done merely to accomplish some wilful or
malicious purpose of the servant only, it may well be that the master
should not be held responsible. But if, on the other hand, the act be
one which the servant might, as such, perform with a proper motive ;
if the act be incident to the employment; if it be done to further the
master's interests and not the servant's ; if the master's business was
thereby done or attempted to be done, although the motive which
prompted the doing of it at that time or place or in that manner, was
a wanton or wilful or malicious one, a different conclusion might be
justified. Is it anything else than doing the master's business with a
different and perhaps a wrong motive it may be, but still a performance
of the master's business ?
1928. These considerations would seem to lead to a
variety of conclusions. If the act be one which is not at all within the
scope of the agent's authority or within the course of the servant's em-
ployment, the question of the motive is usually not material. Such an
act, even if done with a good motive and with an intent to benefit the
principal or master, does not bind him. No more can it bind him if it
were done with a wrong motive. It is simply an unauthorized act, and,
unless ratified, binds the servant or agent only.
On the other hand, if the act were within the scope of the authority
or within the course of the employment, the question of the motive may
become material. If the act were done negligently merely, the princi-
pal or master would be liable, as has been seen. If the act be one within
the scope of the authority or within the course of the employment, but
the servant or agent did it at an improper time or under improper cir-
cumstances in order to perform his service, even though he saw or
might have seen that by performing it at that time or under those cir-
cumstances he would injure some one, this would ordinarily be merely
1498
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES [ 1929, 1930
recklessness or wantonness in the performance of the service, and the
principal or master would ordinarily be liable. If, however, the agent
or servant, while purporting to act for his principal or master, or while
acting generally for him, takes advantage of the occasion or the oppor-
tunity to do some act which might under other circumstances bind the
principal or master, but which he does on the given occasion, not for
the master's purposes or with a design to perform the service as such,
but solely for some purpose or malice or spitefulness of his own, the
principal or master is not bound. As to that act, so done, the agency
or service does not exist.
1929. It is obvious, therefore, that the question of the
principal's or master's liability cannot always be determined merely by
putting a label upon the motive. The motive is important, but it is
important not so much for the purpose of determining how the act was
done as to aid in deciding whose act it was. Certain it is, at any rate,
that the tendency of the modern cases is to attach less importance to
the motive with which the act was done, and to give more attention to
the question as to whose business was being done and whose general
purposes were being promoted. Some investigation of these cases i?
now essential, though most of them lie rather in the field of Master and
Servant than in that of Principal and Agent. It is obviously imprac-
ticable here to attempt to cite or otherwise deal with all of the many
cases which now exist : a discussion of their general conclusions with
a sufficient citation to furnish illustrations, is all that can be here at
tempted.
1930. Special classes of cases. While the general lia-
bility of the master in these cases was still more or less in doubt, there
were developed several .groups of cases in which it is sometimes said
that, by reason of the peculiar nature of the master's duty, the essential
ground of complaint is simply that the duty was not performed, and
if in such cases the master confides its performance to his servant, the
question of the motive from which the servant failed to perform the
duty can have no effect except, perhaps, to aggravate the consequences
of the nonperformance. Before taking up the question of the mas-
ter's general liability for his servant's wilful or malicious acts it may be
well to consider these cases which are supposed to stand upon some pe-
culiar ground.
The cases of this sort have largely grouped themselves together into
three classes : i. Where the principal or master owes some specific and
positive duty to the person injured ; 2. Where he confides to the serv-
ant or agent the care of some specially dangerous instrumentality ; and
1499
I 93 I ~ 1 933] THE LAW OF AGENCY [BOOK IV
3. Where the master confides to the servant or agent the performance
of duties involving the exercise of force toward third persons.
1931. I. Where the master owed the plaintiff a special duty.
It is not infrequently said that where the principal or master owes to
the plaintiff the performance of some specific and positive duty, and
confides the performance of this duty to a servant or agent, he will be
responsible to the plaintiff if the duty be not performed by such serv-
ant or agent ; and in such a case, the fact that the servant or agent acted
wantonly, wilfully or maliciously, will, instead of tending to exonerate
the principal or master, only serve to aggravate the injury. The gist
of the complaint is that the duty has not been performed, and this is
the fact, while to this wrong of nonperformance, there is added the ag-
gravating circumstance that the nonperformance was wanton, wilful
or malicious.
1932. Non-delegable duties. There are some cases in
which one person owes to another what is sometimes termed an abso-
lute or non-delegable duty. Of this sort, as has been seen, is often said
to be the duty of a master to his servants with reference to furnishing
a reasonably safe place in which to work, reasonably safe tools and
equipment, and the like. Where the duty is of this sort, the master is,
as has been seen, liable if the servant or agent, to whom he confides the
performance of it, does not perform it, 86 and the fact that the servant's
own bad motive caused the non-performance would furnish no excuse.
I 933- " Rule applied to carriers of passengers. This the-
ory has often been advanced, for example, in the case of carriers of pas-
sengers who owe a special duty of care to the passengers who commit
the safety of their persons to the keeping of the carrier. While car-
riers of persons are not insurers of the safety of their passengers while
in transit, they are bound to exercise the highest degree of care for
their safety and protection. 87 Their duty extends not only to the ex-
ercise of such care to protect against the inanimate agencies employed,
but also against attacks by persons within and without the conveyance ;
not only this, but there is also an implied stipulation on their part, says
Judge Story, "not for protection merely, but for respectful treatment,
se See ante, 1639 et seq. proval, the statement in Taylor on
ST In Chesapeake, etc., Ry. Co. v. Private Corporations ( 347, 2d ed.) :
Francisco, 149 Ky. 307, the court "While a carrier does not insure his
speaks of the duty of the carrier as passengers against every conceivable
one independent of any degree of danger, he is held absolutely to agree
care. In New Orleans, etc., R. Co. v. that his own servants engaged in
Jopes, 142 U. S. 18, the court, per transporting the passenger shall corn-
Brewer, J., quotes, with apparent ap- mit no wrongful act against him."
1500
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES [ 1934
for that decency of demeanor which constitutes the charm of social life,
for that attention which mitigates evils without reluctance, and that
promptitude which administers aid to distress. In respect to females,
it proceeds yet further ; it includes an implied stipulation against gen-
eral obscenity, that immodesty of approach which borders on lascivious
ness and against that wanton disregard of the feelings which aggra-
vates every evil." If the master commits the performance of this duty
to his servant, he must answer for the servant's nonperformance of it.
If he would be answerable for a failure to protect the passenger as
against strangers, a fortiori is he liable where the assailant is not a
stranger but his own servant.
As has been often pointed out, the liability in these cases does not
rest so much upon the doctrine of respondeat superior, as upon the non-
performance of a. special duty.
1934. Illustrations of the carrier cases. This principle
has been applied in a great variety of cases. Thus where a railway
brakeman assaulted and grossly insulted a passenger, upon the false
pretense that the passenger had not surrendered his ticket, the company
was held liable. 88 And the same result ensued where the conductor of
a passenger train had wilfully and wrongfully caused passengers to be
ejected from the train ; RO where the steward and some of the table wait-
ers upon a passenger-boat wrongfully and without provocation as-
saulted a passenger ; 90 where the conductor of a passenger train kissed
a female passenger against her will ; 91 where a brakeman struck a pas-
senger in the face with a lantern because the passenger, who had lost his
watch, said he thought the brakeman had it; 92 where the driver of a
street railroad car maliciously assaulted a passenger because the pas-
senger expostulated with the driver about an assault made by the driver
upon another person outside the car ; 9S and where a railway brakeman
made a malicious assault upon a passenger who had attempted to enter
the wrong car. 9 *
ss Goddard v. Grand Trunk Ry., 57 2 Chicago & Eastern R. R. Co. v.
Me. 202, 2 Am. Rep. 39. Flexman, 103 111. 546, 42 Am. Rep. 33.
so Passenger R. R. Co. v. Young, s Stewart v. Brooklyn, etc., R. R.
21 Ohio St. 518, 8 Am. Rep. 78. Co., 90 N. Y. 588, 43 Am. Rep. 185.
o Bryant v. Rich, 106 Mass. 180, 8 * McKinley v. Chicago & N. W. Ry.
Am. Rep. 311; same point, Sherley v. Co., 44 Iowa, 314, 24 Am. Rep. 748.
Billings, 8 Bush (Ky.) 147, 8 Am. The same rule is applied where the
Rep. 451. conductor struck a passenger, his
91 Craker v. Chicago & N. W. Ry. anger aroused by an insulting epithet
Co., 36 Wis. 657, 17 Am. Rep. 504. used by the passenger. Baltimore,
See also Strother v. Railroad Co., 123 etc., R. Co. v. Barger, 80 Md. 23, 45
N. Car. 197; Pick v. Chicago, etc., R. Am. St. Rep. 319, 26 L. R. A. 220;
Co., 68 Wis. 469, 60 Am. Rep. 878. Williams v. Gill, 122 N. Car. 967.
1935] THE LAW OF AGENCY
[BOOK iv
I 935- Plaintiff provoking assault. But where a pro-
spective passenger, while seeking to get his trunk checked, provoked
a personal quarrel with the baggage-master and was struck by the lat-
ter as an act of personal resentment, it was held that the company was
not liable. 05 Whether the same court, however, would now decide this
case in the same way, may perhaps be questionable, 86 though the court
And where a street-car conductor, in-
censed at a passenger for pulling the
bell cord, struck him. Birmingham,
etc., Co. v. Baird, 130 Ala. 334, 89 Am.
St. Rep. 43, 54 L. R. A. 752. A street
car company was held where its
motorman grossly insulted a woman'
passenger, although he did not at-
tempt to touch her. Knoxville Trac-
tion Co. v. Lane, 103 Tenn. 376, 46
L. R. A. 549. And where a Pullman
porter refused to redeliver a ticket
to a passenger, and, upon remon-
strance knocked him down, there was
held to be evidence on which a jury
should pass as to whether he was
acting in the scope of his employ-
ment. Dwinelle v. N. Y. Cent., etc.,
R. R. Co., 120 N. Y. 117, 17 Am. St.
Rep. 611, 8 L. R. A. 224. Also where
a baggageman made an unprovoked
assault on a passenger. Haver v.
Central R. R. Co., 62 N. J. L. 282, 72
Am. St. Rep. 647, 43 L. R. A. 84 (but
see s. c. 64 N. J. L. 312). Likewise
where excessive and unnecessary
force was used in compelling a sec-
ond-class passenger to keep on the
second-class deck. New Jersey Steam-
boat Co. v. Brockett, 121 U. S. 637, 30
L, Ed. 1049. So a carrier was held
liable for the unauthorized act of its
conductor in causing the arrest of
the plaintiff in order to detain him
as a witness. New York, etc., R. Cp.
v. Waldron, 116 Md. 441, 39 L. R. A.
(N. S.) 502. Again, where an audi-
tor in charge of a train falsely ac-
cused a passenger of having stolen
his fob and procured his arrest, the
carrier was held liable. Moore v.
La. & Ark. Ry. Co., 99 Ark. 233, 34
L. R. A. (N. S.) 299. See also Berry
v. Carolina, etc., R., 155 N. C. 287;
Hull v. Boston & M. R. R., 210 Mass.
159, 36 L. R. A. (N. S.) 406; Atchi-
son, etc., R. Co. v. Henry, 55 Kan.
715, 29 L. R. A. 465; Western, etc.,
R. Co. v. Turner, 72 Ga. 292, 53
Am. Rep. 842 (assault upon one seek-
ing to be taken as a passenger).
In Penny v. Atlantic, etc., R. R.
Co., 133 N. C. 221, 63 L. R. A. 497, a
passenger was shot by a person who
was trying to shoot one of the de-
fendant's train crew. Held, the de-
fendant owed the same duty to use
due care to warn the passenger, as
It would to protect him from direct
assaults.
In Gooch v. Birmingham Ry., etc.,
Co., -- Ala. , 58 South. 196, it was
held that the act of the defendant's
motorman in renewing a quarrel
with a passenger who had alighted
and causing the latter to shoot at the
motorman and hit the plaintiff, a pas-
senger, was in violation of the duty
the defendant owed to protect its
passengers.
In May v. Shreveport Traction Co.,
127 La. 420, 32 L. R. A. (N. S.) 206,
where a white passenger on a street
car was insulted by the conductor,
telling her that she belonged in the
colored section, the company was
held liable.
5 Little Miami R. R. Co. v. Wet-
more, 19 Ohio St. 110, 2 Am. Rep. 373.
There was evidence of abusive lan-
guage by the passenger, and some
evidence of assault, but the court
does not put the case upon the ground
of self-defense. See also, Peavy v.
Georgia R. Co., 81 Ga. 485, 12 Am. St.
Rep. 334; Harrison v. Fink, 42 Fed.
787.
so Passenger R. R. Co. v. Young, 21
Ohio St. 518, 8 Am. Rep. 78; Strana-
han Co. v. Coit, 55 Ohio St. 398, 4 L.
1502
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES
[ 1935
has recently spoken of it with apparent approval, 07 and, unless it could
be said that the baggage-master was not a servant upon whom any duty
of protection rested a conclusion which in view of the cases is cer-
tainly questionable, 98 or that the provocation was so great as to disenti-
tle the plaintiff to recover, it seems impossible to reconcile the case with
others already cited. It has moreover been held in several recent cases,
at least where the servant, like the conductor of a passenger vehicle, is
charged with the duty of protection, that aggravating conduct or abu-
sive language, on the part of the passenger, furnishes no justification
for an assault by the conductor, though it may possibly be used by way
of mitigation of damages. It is the duty of the conductor, in such a
case, to eject the disorderly passenger and not to beat him." Justifiable
resistance, however, made by the servant to an assault by the passenger
would not impose liability upon the carrier, 1 unless the resistance went
beyond the bounds of a reasonable defence. 2
R. A. (N. S.) 506; Nelson Business
College v. Lloyd, 60 Ohio St. 448, 71
Am. St. Rep. 729, 46 L. R. A. 314.
97 See Nelson Business College Co.
v. Lloyd, supra.
98 That a passenger is entitled to
protection from assaults by a bag-
gage-master while lawfully doing
business with him, see Georgia R. R.
Co. v. Richmond, 98 Ga. 495; Gasway
v. Atlanta, etc., R. Co., 58 Ga. 216;
Haver v. Central R. R. Co., supra;
Daniel v. Petersburg R. R. Co., 117
N. C. 592, 4 L. R. A. (N. S.) 485;
(but see comments on this case in
Bowen v. 111. Cent. R. R. Co., 69 C. C.
A. 444, 136 Fed. 306, 70 L. R. A. 915).
In the case of a freight agent, see Co-
lumbus Ry. Co. v. Christian, 97 Ga.
56; Redd v. Missouri Pac. Ry. Co., 161
Mo. App. 522.
99 in Baltimore & O. R. R. Co. v.
Barger, 80 Md. 23, 45 Am. St. Rep.
319, 26 L. R. A. 220, it was said: "If
the plaintiff persisted in misbehaving
on the train either by the use of foul
and abusive language toward the con-
ductor, or in any other way calcu-
lated to frighten or materially inter-
fere with the comfort and safety of
the other passengers, after being ad-
monished by the conductor, the latter
would have been justified in ejecting
him from the train. The remedy in
such case would be to eject the un-
ruly passenger not to assault him
and then let his employer escape all
liability, because he, the conductor,
was carrying out a 'personal purpose
and feeling.' "
i In Birmingham, etc., Co. v. Baird,
130 Ala. 334, 89 Am. St. Rep. 43, 54
L. R. A. 752, the court said: "Of
course a conductor has the right of
self-defense against the assault of a
passenger; but the right is the same
in this connection as in criminal law.
He must be imperiled and he must be
without fault. To be sure he need
not retreat from his car. And he may
assault a passenger when necessary
to protect other passengers from as-
sault, using no more than necessary
force and this may become a duty
2 Where a servant of the carrier
uses more force that is necessary for
self-defense in resisting an attack by
a passenger, the carrier is liable foJ
the excess. Layne v. Chesapeake,
etc., Ry. Co., 66 W. Va., 607; Haver
v. Central R. Co., 64 N. J. L. 312;
Chicago, etc., R. Co. v. Barrett, 16
111. App. 17.
So, where the servant pursues and
continues his violence after the as
sault has been repelled. Hanson v.
European, etc., R. Co., 62 Me. 84, 16
Am. Rep. 404.
1936]
i THE LAW OF' AGENCY [BOOK IV
1936. Limitations of doctrine. It is clear that the doc-
trine is to be confined to one who is at least a passenger 3 and also to a
passenger who is entitled to this extraordinary protection at the time
and place at which the injury occurs* (both of which are rather ques-
rh;
indeed it is a duty whenever it is a Wise v. South Covington, etc., R. R.
right. But he cannoj; assault a pas- Co., 17 Ky. Law Rep. 1359, 34 S. W.
senger in retaliation for an assault
committed upon himself or upon an-
other passenger, and a fortiori, he
cannot assault a passenger for abu-
sive words, or in revenge or punish-
ment under any circumstances. And
if he does assault a passenger other-
wise than under a necessity to defend
himself or a passenger from battery
or in rightfully ejecting a passenger
who by his conduct toward other pas-
sengers has forfeited his right of car-
riage, the carrier is liable. The fault
of the passenger short of producing a
necessity to strike in self-defense will
neither justify the conductor in strik-
ing, nor relieve the carrier from lia-
bility for his act. Possibly such fault
could be considered in mitigation of
damages."
To same effect: Weber v. Brook-
lyn, etc., R. R. Co., 47 N. Y. App. Div.
306 (dissenting from Scott v. Central
Park, etc., R. R. Co., 53 Hun (N. Y.),
414); Williams v. Gill, 122 N. C. 967;
Birmingham, etc., Co. v. Mullen, 138
Ala. 614; Coggins v. Chicago, etc., R.
Co., 18 111. App. 620; East Tenn., etc.,
Ry. Co. v. Fleet wood, 90 Ga. 23; Jack-
son v. Old Colony, etc., Ry. Co., 206
Mass. 477, 19 Ann. Gas. 615, 30 L. R.
A. (N. S.) 1046; New Orleans, etc.,
R. Co. v. Jopes, 142 U. S. 18, 35 L. Ed.
919.
A number of cases distinguish be-
tween abusive language or sneering
and contemptuous conduct, on the
one hand, and an actual physical as-
sault upon the servant, which incites
him to violence. See East Tenn., etc.,
R. R. Co. v. Fleetwood, 90 Ga. 23; Co-
lumbus & Rome Ry. Co. v. Christian,
97 Ga. 56; Georgia R. R., etc., Co. v.
Richmond, 98 Ga. 495; City Elec.
Ry. Co. v. Shropshire, 101 Ga. 33;
894; Coggins v. Chicago, etc., R. R.
Co., 18 111. App. 620; Williams v. Gill,
122 N. C. 967; New Orleans, etc., R.
Co. v. Jopes, supra; N. J. Steamboat
Co. v. Brockett, 121 U. S. 637, 30 L.
Ed. 1049; Jackson v. Old Colony, etc.,
Ry. Co., supra.
s Barry v. Union Ry. Co., 105 N. Y.
App. Div. 520. Thus in Andrews v.
Yazoo, etc., R. Co., 86 Miss. 129, a per-
son who went to a railway station
two hours before train time in order
to get the facilities of the agent's of-
fice to do some writing of his own.
until train time, when he intended
to take the train, was held not to be,
in this interval, a passenger to whom
a special duty of care was owing to
protect him from assaults by the
agent
A person who goes to a railway
station, not to take a train but to up-
braid the baggage master for not
checking his trunk on an earlier oc-
casion, is not a passenger within this
rule. Georgia R. Co. v. Richmond, 98
Ga. 495. Neither is a person who
has voluntarily left the car because
of the motorman's misconduct and is
walking along the street toward the
offices of the company to report, and
who is pursued and assaulted by the
motorman. Central Ry. Co. v. Pea-
cock, 69 Md. 257, 9 Am. St. Rep. 425.
But a street car company was held
responsible for a battery by the con-
ductor upon a passenger committed
within the car, and also for one com-
mitted by the same conductor in the
offices of the company where the pas-
senger had gone to complain. Savan-
nah, etc., R. Co. v. Bryan, 86 Ga. 312.
* In Zeccardi v. Yonkers R. Co., 190
N. Y. 389, 17 L. R. A. (N. S.) 770, it
is held that a passenger who gets out
1504
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES
l
tions for the law of Carriers than of Agency) ; and also to the case in
which such passenger is injured by a servant to whose protection the
passenger has, to some degree, been confided by the master. 6 Injury
by any other servant of the master, wholly outside the course of his
employment, would subject the master to liability only if he would be
liable for a simliar injury by a stranger.
The doctrine seems to have originated and to find its reason in the
cases in which the passenger was injured while upon or in the vehicle
for transportation. Such a passenger who has confided the safety of
:rt ,bvon vino Jon" at ,->?.BD tfttle-O 9ift ni noie
of the car in order to intervene in a carrying the passenger injured, if he
fight between the conductor and an-
other passenger and who was then
assaulted by the motorman, thereby
so breaks his status as a passenger
as not to be entitled to this protec-
tion.
s In a late case in Arkansas, Moore
v. Louisiana, etc., Ry. Co., 99 Ark.
233, 34 L. R. A. (N. S.) 299, the doc-
trine is said to apply to "any servant,
whether in charge of the train or not,
the performance of whose duties re-
lates to the comfort or safety of the
3 assengers, and furnishes opportun-
ity or requires him to come in per-
sonal contact with them." Applied
there to ticket auditor on train. Ap-
plied to brakeman on train. St.
Louis, etc., Ry. Co. v. Dowgiallo, 82
Ark. 289; Williams v. Gill, 122 N. C.
967; Atchison, etc., R. Co. v. Henry,
55 Kan. 715, 29 L. R. A. 465; McKin-
ley v. Chicago, etc., R. Co., 44 Iowa,
314, 24 Am. Rep. 748; Lampkin v.
Louisville & N. R. Co., 106 Ala. 287.
In Hayne v. Union St. Ry. Co., 189
Mass. 551, 109 Am. St. Rep. 655, 3 L.
R. A. (N. 6.) 605, where a conductor
belonging to one street car, in jest
threw a missile (a dead hen) at the
motorman on a passing car, which
missile struck a passenger, the court
said: "The great diligence and learn-
ing of the defendant's counsel have
discovered for our enlightenment no
case in which it has been held that
the carrier was not liable, because
the servant, at the time of his wrong-
ful act, was not directly employed in
was engaged in the general business
of which the transportation of the
passenger was a part. . . . The
mere fact that he was on one car and
his wrongful act was directed to a
passenger on another car, should
make no difference with the master's
liability."
c In Greb v. Pennsylvania R. Co., 41
Pa. Super. 61, there is an excellent
discussion of the question, though not
by the court of last resort. There
three brothers were passengers on de-
fendant's train. One of them was
ejected at an intermediate station for
not having a proper ticket. All three
were involved in the controversy,
but the other two brothers went on
to their destination. After they had
left the train but while they were
still on the station platform, the case
was that the brakeman followed them
with some threatening remarks, and
finally assaulted one of them. The
other brother came to the rescue
when he was attacked by the conduc-
tor. For these assaults each brother
sued. Held, that they could not re-
cover. The court distinguished be-
tween the passenger in transit and
the passenger at the end of the
transit though still upon the prem-
ises; it was also held that the assault
was made by servants who at the
time and place were not the servants
of the company to protect the plain-
tiffs but were merely servants mak-
ing an assault not within the course
of their employment.
95
1505
1937]
Till-: LAW OF AGENCY
[BOOK iv
his person in this particular manner to the carrier would seem to be
entitled to a higher degree of protection than one who is merely com-
ing to, waiting at, or going from the place of embarkment, 7 but the
cases have actually carried the doctrine, whether rightly or wrongly,
to a much further point. 8 In some of them, it seems to have been done
without much consideration of the theory upon which the doctrine rests.
The learned author of Beven on Negligence, the leading English
text book on that subject, expresses the opinion, in the preface to his
third edition, that this whole doctrine, at least so far as it finds expres-
sion in the Craker case, is "not only novel, but fundamentally unsound."
1937. Servant a public officer. The fact that the serv-
ant or agent, who commits the wrong, is also a public peace or police
7 In Dodge v. Boston, etc., Steam-
ship Co., 148 Mass. 207, 12 Am. St.
Rep. 541, 2 L. R. A. 83, this distinc-
tion is made: "When one has made a
contract for passage upon a vehicle
of a common carrier, and has pre-
sented himself at the proper place to
be transported, his right to care and
protection begins and ordinarily it
continues until he has arrived at his
destination, and reached the point
where the carrier is accustomed to
receive and discharge passengers.
So long as he stands strictly in this
relation of a passenger, the carrier is
held to the highest degree of care for
his safety. While he is upon the
premises of the carrier, before he has
reached the place designed for use by
passengers waiting to be carried, or
put himself in readiness for the per-
formance of the contract, the carrier
owes him the duty of ordinary care,
as he is a person rightfully there by
invitation. It has sometimes been
said that a passenger at the end of
his journey retains the same relation
to the carrier until he has left the
carrier's premises. But there are
other cases which indicate that the
contract of carriage is performed
when the passenger at the end of his
journey has reached a safe and
proper place, where persons seeking
to become passengers are regularly
received, and passengers are regu-
larly discharged, and that the degree
of care to which he is then entitled
is less than during the continuance
of his contract, as a carrier of goods
is held to a liability less strict after
they have reached their destination
and been put in a freight house, than
while they are in transit."
See also Jackson v. Old Colony St.
Ry. Co., 206 Mass. 477, 19 Ann. Cas.
615, 30 L. R. A. (N. S.) 1046.
s Thus, as has been seen above, it
has been applied to baggage masters
in their dealings with persons check-
ing or obtaining baggage. Haver v.
Central R. Co., 62 N. J. L. 282, 72
Am. St. Rep. 647, 43 L. R. A. 84;
Georgia R. Co. v. Richmond, 98 Ga.
495; Daniel v. Petersburg R. Co., 117
N, Car. 592, 4 L. R. A. (N. S.) 485
(but see comments on this case in
Bowen v. Illinois Cent. R. Co., 69 C.
C. A. 444, 136 Fed. 306, 70 L. R. A.
915).
Ticket agent. Neville v. Southern
Ry. Co., Tenn. , 146 S. W. 846,
40 L. R. A. (N. S.) 995.
Freight agent. Columbus Ry. Co.
v. Christian, 97 Ga. 56; Gassenheimer
v. Western Ry., Ala. , 57 So.
718, 40 L. R. A. (N. S.) 998; Nesbit
v. Ry. Co. (Iowa), 143 N. W. 1114.
It has been applied in the case of
insulting remarks made by a negro
woman, in charge of a passenger
waiting room, to a woman waiting to
take a train. Gulf, etc., Ry. Co. v.
Luther, 40 Tex. Civ. App. 517.
506
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES [ 1938,
officer, does not relieve the master, if what he did he did in his capacity
as servant or agent. 9 If on the other hand he was acting in his capacity
as a public officer, the master is not liable even though the officer was
also his servant. 10 The question seems to be one of fact, in each par-
ticular case, as to the capacity in which the person in question acted
upon the occasion in controversy.
1938. Servant insane. It has also been held that the
fact that the servant was insane, without the knowledge of the mas-
ter, was no defence to the latter for not performing his duty of protec-
tion. 11
I939 . Application to other cases Difficulty of deter-
mining classes. The difficulty in the application of this principle
is in determining what are the cases in which there is such a specific
and positive duty as that upon which the rule is based, and it will be ob-
vious from a consideration of the cases that no general agreement has
yet been reached concerning it. It has been suggested that the doc-
trine should be confined to cases in which the duty is a contractual one,
but the courts have long since gone far beyond this point. Thus it has
been applied in the case of an express company to make the company
liable for abusive language applied by its agent in charge of its office
to one coming there on business with the company. The court said that
the case was analogous to the case of carriers of passengers, and that
the company "is bound," in Judge Story's language, "for respectful
treatment and for decency of demeanor." 12 It has been applied to the
proprietor of a theater to make him liable for the malicious assault of
a ticket-seller and a special policeman upon a patron of the theater.
Rand v. Butte Electric Ry. Co., 40 v. Railway Co., 72 N. H. 413; Taylor
Mont. 398; Layne v. Chesapeake, etc., v. New York, etc., R. Co., 80 N. J. L.
R. Co., 66 W. Va. 607; Baltimore, etc., 282, 39 L. R. A. (N. S.) 122; McKain
R. Co. v. Twilley, 106 Md. 445; Tol- v. Baltimore & O. R. Co., 65 W. Va.
Chester Beach Imp. Co. v. Scharnagl, 233, 131 Am. St. Rep. 964, 17 Ann.
105 Md. 199; Norfolk, etc., R. Co. v. Cas. 634, 23 L. R. A. (N. S.) 289.
Galliher, 89 Va. 639; Foster v. Grand Many other cases are cited, post,
Rapids Ry. Co., 140 Mich. 689. See 1973.
also, Dickson v. Waldron, 135 Ind. 507, n Chesapeake, etc., Ry. Co. v. Fran-
41 Am. St. Rep. 440, 24 L. R. A. 483, cisco, 149 Ky. 307, 42 L. R. A. (N. S.)
488, where a theatre manager was 83.
held liable in an action by a ticket- 12 Richberger v. Am. Express Co.,
holder, for the acts of a police officer 73 Miss. 161, 55 Am. St. Rep. 522, 31
employed by the manager. L. R. A. 390. (But see Bowen v. 111.
Many other cases are cited, post, Cent. R. R. Co., 69 C. C. A. 444, 136
1973. Fed. 306, 70 L. R. A. 915; Lynch v.
10 Chicago, etc., Ry. Co. v. Nelson, Florida, etc., Ry. Co., 113 Ga. 1105, 54
87 Ark. 524; Buman v. Michigan L.. R. A. 810; Hudson v. Missouri,
Cent. R. Co., 168 Mich. 651; Cordner etc., Ry. Co., 16 Kan. 470).
1507
I940J
THE LAW OF AGENCV
[TOOK iv
The court said : "Common carriers, inn-keepers, merchants, managers
of theaters, and others, who invite the public to become their patrons
and guests, and thus submit personal safety and comfort to their keep-
ing, owe a more special duty to those who may accept such invitation.
Such patrons and guests have a right to ask that they shall be protected
from injury while present on such invitation, and particularly that they
shall not suffer wrong from the agents and servants of those who have
invited them." 13 Opinions to the contrary have, however, been ex-
pressed. 14
1940. It has been applied to a county fair association to
make it liable for an attack upon a patron, made by a watchman, guard
or special policeman, employed by it. Said the court : "Those who visit
public places in response to invitation made generally or otherwise
have a right to personal protection while there, especially so as against
assault from the agents and servants of the person or corporation ex-
tending such invitation." 15 This is certainly a very sweeping rule.
It has been applied, although not without dissent, to inn-keepers,
whose servants have maliciously assaulted guests. 18 It has been ap-
plied to a saloon-keeper, to impose liability for a malicious assault made
by his cook and his bartender upon a person, who had for some days
is Dickson v. Waldron, 135 Ind. 507,
41 Am. St. Rep. 440, 24 L. R. A. 483.
In Interstate Amusement Co. v.
Martin, Ala. App. , 62 So. 404,
the doctrine was applied to make the
proprietor of a theater liable for
abusive language applied by an actor
employed there to a patron.
i* Thus in Williams v. Palace Car
Co., 40 La. Ann. 87, 8 Am. St. Rep.
538, the court said arguendo: "A per-
son has a right to enter a bank for
the purpose of collecting a check, and
to present it to the paying teller for
payment; but, if, on such presenta-
tion, the teller should leap over the
counter and knock him down, surely
such an act would not subject the
bank to liability. So one may law-
fully enter a store and deal with any
clerk with reference to the purchase
of goods, but, if, on some dispute, the
clerk should commit assault and bat-
tery upon him, the merchant would
not be responsible therefor. Or if
one, on lawful business, should knock
at the door of any private house, and
> OJ
on asking the servant who answered
the call for permission to see the
master, the servant should assault
and beat him, would the master be
responsible?"
15 Brooks v. Jennings County, etc.,
Ass'n, 35 Ind. App. 221. To same ef-
fect, Oakland, etc., Society v. Bing-
ham, 4 Ind. App. 545; Indianapolis
St. R. Co. v. Dawson, 31 Ind. App.
605.
isLehnen v. Hines, 88 Kan. 58,
127 Pac. 612, 42 L. R. A. (N. S.) 830;
Overstreet v. Moser, 88 Mo. App. 72;
Clancy v. Barker, 71 Neb. 83, 115 Am.
St. Rep. 559, 8 Ann. Gas. 682, 69 L. R.
A. 642; DeWolf v. Ford, 193 N. Y.
397, 127 Am. St. Rep. 969, 21 L. R. A.
(N. S.) 860.
But see dictum in Evansville &
Crawfordsville R. R. Co. v. Baum, 26
Ind. 70, to the effect that he is not
liable. (There is, however, a con-
trary dictum in Dickson v. Waldron,
supra.) See also, Curtis v. Dinneen,
4 Dak. 245; Clancy v. Barker, 66 C.
C. A. 469, 131 Fed. 161, 69 L. R. A.
1508
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES
"been a guest and a patron of the defendant's saloon," and who, hav-
ing spent all his money there, had gone there to sleep. 17 Liability how-
ever was denied in an almost precisely similar case. 18
1941. It has been applied to the proprietors of shops
and stores to make them liable for wanton and wilful injuries committed
by their employees there to persons properly coming there as patrons. 19
But its applicability to such cases has been most vigorously denied,
and the principle declared applicable only to carriers as to their pas-
sengers, and to hotels, theaters, steam-boats and like places as to their
guests.
It has also been applied to telegraph companies to make them re-
sponsible for injuries caused to third persons by false and fraudulent
messages sent over their wires by an agent to whom they had confided
the performance of the duty which the court declared they owed to
653, (where the majority reach an
opposite conclusion to that of 71 Neb.
83, supra) ; Rahmel v. Lehnddorff, 142
Gal. 681, 100 Am. St. Rep. 154, 65 L.
R. A. 88 (compare Wade v. Thayer,
40 Cal. 578).
"Cumin v. Olson, 88 Minn. 307,
97 Am. St. Rep. 517, 60 L. R. A. 733.
Followed in Beilke v. Carroll, 51
Wash. 395, 130 Am. St. Rep. 1103, 22
L. R. A. (N. S.) 527. See also, Mas-
tad v. Swedish Brethren, 83 Minn. 40,
85 Am. St. Rep. 446. 53 L. R. A. 803;
Rommel v. Schambacher, 120 Pa. 579,
6 Am. St. Rep. 732.
is Anderson v. Diaz, 77 Ark. 606,
113 Am. St. Rep. 180, 4 L. R. A. (N.
S.) 649.
See also, Bergman v. Hendrickson,
106 Wis. 434, 80 Am. St. Rep. 47.
19 Swinarton v. Le Boutillier, 7 Misc.
(N. Y.) 639 (affirmed without opin-
ion in 148 N. Y. 752), where a cus-
tomer was struck in the eye by a pin
"snapped" by a mischievous cash-boy.
Mallach v. Ridley, 24 Abbott's New
Cases (N. Y.), 172, 9 N. Y. Supp. 922,
where a customer was wrongfully ac-
cused of shoplifting and was sub-
jected to search and other humilia-
tions.
20 Bowen v. 111. Cent. R. R. Co., 69
C. C. A. 444, 136 Fed. 306, 70 L. R. A.
915. In this case the sole and gen-
eral agent of the railroad company
1509
oiac:
at a small station who had charge of
the sale of tickets and the receipt
and delivery of freight, while at his
ticket window was approached by a
patron of the company who made an
inquiry respecting demurrage on a
car-load of freight. He answered the
question and as the questioner
started to go away, called him back,
saying he had received a package for
him. While the patron was standing
at the desk and signing or about to
sign a receipt for the alleged pack-
age, and without any controversy or
altercation taking place, the agent
suddenly seized a revolver and shot
and killed the patron. In an action
by his widow, it was held that the
railroad company was not liable. See
also, Lynch v. Florida, etc., Ry. Co..
113 Ga. 1105, 54 L. R. A. 810; Chris-
tian v. Columbus & Rome Ry. Co., 79
Ga. 460; Hudson v. Missouri, etc., Ry.
Co., 16 Kan. 470; Ducre v. Sparrow-
Kroll Lumber Co, 168 Mich. 49.
In Fairbanks v.- Boston Storage
Warehouse Co., 189 Mass. 419, 109
Am. St. Rep. 646, 13 L. R. A. (N. S.)
422, it was held that the doctrine
does not apply to the case in which
the elevator man, in a storage ware-
house, assaults a customer in the
warehouse as he was about to take
the elevator.
.:<' 't
C li}42, 1943] THE LAW OF AGENCY [BOOK IV
the public not to knowingly send false or forged messages. The case
of the carrier of passengers was thought to furnish an analogy. 21
It has been applied on the theory of the existence of a specific duty
with respect of premises, where a master knew that his servants were
in the habit of wantonly throwing missiles from his premises upon ad-
joining premises and took no steps to prevent it. 22
1942. In a case in Wisconsin, 23 in which state the doc-
trine as applied to carriers, has found very striking illustration, the
court extended it to the. case of the driver of a vehicle passing another
upon the highway. Calling to mind the theory as one applying to the
case of a principal who owes a specific and positive duty to third per-
sons and confides its performance to an agent, the court said : "It is
claimed that no such duty here existed. The mere fact that the con-
ductor's duty to the passenger in the case [Craker v. C. & N. W. R.
Co. 24 ] arose out of the passenger's contract with the master does not
confine the principle involved to the breaches of duty created by con-
tract. * * * A duty may and often does exist without any con-
tract. Two teams upon a public highway, each with a sleigh or ve-
hicle, coming in close proximity to each other, the driver of each most
certainly owes a duty to those riding with the other. That duty is
created by law, and requires each driver to proceed with care and cir-
cumspection and with reference to the shifting situation of the other.
When such driver is a servant acting within the course and scope of
his employment, then such duty rests upon the master as well as the
servant. The employer in such case, being responsible for the per-
formance of such duty by his delegated agency, can no more escape
liability for such failure when it occurs through his agent's gross neg-
ligence or wilful misconduct, than he can when it is by reason of his
agent's want of ordinary care."
1943. The duty which the court here refers to was not
one imposed by any special statute, 25 but apparently the general duty
i
21 McCord v. Western Union Tel. radt v. Clauve, 93 Ind. 476, 47 Am.
Co., 39 Minn. 181, 12 Am. St. Rep. Rep. 388; Fletcher v. Baltimore,
636, 1 L. R. A. 143. See also, Bank of etc., R. Co., 168 U. S. 135, 42 L. Ed.
Palo Alto v. Pacific Postal Tel. Cable 411). Affirmed, though not upon this
Co., 103 Fed. 841; Dougherty v. Wells, precise ground, in 199 N. Y. 388, 32
Fargo & Co., 7 Nev. 368. L. R. A. (N. S.) 1038.
22 Hogle v. Franklin Mfg. Co., 128 23 Schaefer v. Osterbrink, 67 Wis.
N. Y. App. Div. 403, (relying upon 495, 58 Am. Rep. 875.
Clifford v. New York, etc., R. Co., Ill 24 36 Wis. 657, 17 Am. Rep. 504.
N. Y. App. Div. 809; Carpenter v. 25 The common statute prescribing
Boston & Albany R. Co., 97 N. Y. 494, the conduct to be pursued by teams
49 Am. Rep. 540; Swinarton v. Le- meeting upon the highway, which is
Boutillier, 7 N. Y. Misc. 639; Con- to be found in Wisconsin as else-
1510
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES [ IQ44, IQ45
which the law imposes to exercise due care under the circumstances.
It is obvious that if this conclusion be sound, there are very few cases
of negligence in which the rule may not be applied, and the liability
for malicious acts, under the doctrine now being considered, instead
of being an exceptional one, becomes the ordinary case.
1944. The same court, in a recent case, very elaborately
considered, refused by a small majority (four judges against three) to
extend this doctrine of special duty to a case in which the servant of
a garage keeper wilfully, and for his own purposes, took out a patron's
car in the night time, and while so using it injured it. 28
1945. II. Where master confides to servant the care of a dan-
gerous instrumentality. In an early English case, at nisi prius, it
was held as a ground for imposing liability upon the master for his
where, did not apply to the case, as
here both teams were going in the
same direction.
26 Firemen's Fund Ins. Co. v.
Schreiber, 150 Wis. 42, Ann. Gas.
1913, E. 823, 45 L. R. A. (N. S.) 314.
It was urged by the dissenting judges
that the case stood upon the same
footing as the cases involving car-
riers of passengers. The master owed
a special duty as bailee respecting the
care of the car, which duty he con-
fided to the servant to perform. The
facts of the case were these: The de-
fendant, in whose garage the machine
was housed, employed Flynn to wash
automobiles, starting at 6 o'clock p.
m., and working until the job was
completed. During this time he also
let patrons in and out with their ma-
chines. He was the only attendant
during the night and upon leaving it
was his duty to lock the door. Upon
the occasion in question, having com-
pleted his work, he stepped out to a
lunch counter, intending to return
for his coat and permanently close
the place. While there, he and a
friend conceived the idea of taking
the machine out for a ride, which
they did, the injury complained of
resulting during the trip. Flynn had
no authority to take the machine.
In Cheshire v. Bailey, 21 Times L.
R. 130, it was held that where defend-
ant used reasonable care in selecting
a coachman to drive for plaintiff's
salesman and to watch the samples in
the absence of the salesman, the de-
fendant was not liable for the theft
of the goods committed with the con-
nivance of the coachman.
In lerzino v. Toronto General Hos-
pital, 5 Ontario W. R. 76, the plain-
tiff sued to recover money which he
contended was stolen by a ward-
keeper in the hospital, after it had
been removed from his person when
he was brought in injured. Held,
that the defendants were not within
the cases relating to innkeepers, nor
were they bailees for hire, the plain-
tiff paying nothing for their services,
and that the defendants were not lia-
ble.
Where defendant's coachman, with-
out authority, took out a carriage
which the plaintiff had loaned to the
defendant while he was repairing de-
fendant's carriage, the defendant was
held not liable for injury to the car-
riage due to the servant's negli-
gence. Sanderson v. Collins, [1904]
1 K. B. 628; (distinguishing, if not
throwing doubt upon, Coupe Co. v.
Maddick, [1891] 2 Q. B. 413).
In Taylor v. Carnell, 2 Alberta L.
R. 237, it was held that the employ-
ment of a certified engineer did not
relieve a bailee for hire of a steam
boiler from liability for the negli-
gence of the engineer in using the
boiler.
I946J THE LAW OF AGENCY [BOOK IV
servant's negligence in mis-managing the master's carriage, that
"whenever the master has entrusted the servant with the control of
the carriage, it is no answer that the servant acted improperly in the
management of it. * * * The master in such a case will be lia-
ble and the ground is that he has put it in the servant's power to mis-
manage the carriage, by entrusting him with it." 2T This reasoning,
as a ground for imposing liability in the ordinary case, is wholly un-
sound and has long since been generally abandoned. 28 As a ground,
however, for holding the master liable for his servant's malicious acts
in cases which otherwise might not be brought within the scope of the
authority, a doctrine somewhat similar to the ones discussed in the pre-
ceding sections, has lately been advanced. It is that wherever the mas-
ter, having under his control some specially dangerous agency or in-
strumentality, and which he is therefore under special obligation to
keep with care, confides this duty to his servant or agent, he will be
responsible if the duty be not performed, whether through the negli-
gence or the wantonness or the malice of his servant or agent. "The
inability of the master," it is said in one case, 29 "to shift the responsi-
bility connected with the custody of dangerous instruments, employed
in his business, from himself to his servants entrusted with their use,
is analogous to, and may be said to rest upon the same principle, as
that which disenables him from shifting to an independent contractor,
liability for negligence in the performance of work that necessarily
tends to expose others to danger, unless the work is carefully guarded."
1946. This doctrine has been applied in a great many
cases where servants in charge of locomotive engines have, though
wantonly and intentionally, blown the whistle or let off steam so as to
frighten the plaintiff's horses. 30 It has been applied where a railway
27 Sleath v. Wilson, 9 C. & P. 607. 47 Ohio St. 387, 21 Am. St. Rep. 840,
as See, for example, Storey v. Ash- 8 L. R. A. 464; see also, Harriman v.
ton, L. R. 4 Q. B. 476; Slater v. Ad- Ry. Co., 45 Ohio St. 11, 4 Am. St
vance Thresher Co., 97 Minn. 305, 5 Rep. 507.
L. R. A. (N. S.) 598; St. Louis, etc., so Toledo, etc., R. Co. v. Harmon,
Ry. Co. v. Harvey, 75 C. C. A. 536, 144 47 111. 298, 95 Am. Dec. 489; Chicago,
Fed. 806. etc., R. Co. v. Dickson, 63 111. 151, 14
Sleath v. Wilson was, however, ap- Am. Rep. 114; Nashville, etc., R. Co.
proved, in 1852, in Philadelphia, etc., v. Starnes, 9 Heisk. (Tenn.) 52, 24
R. Co. v. Derby, 55 U. S. (14 How.) Am. Rep. 296; Regan v. Reed, 96 111.
468, 14 L. Ed. 502, and in 1901, it was App. 460; Texas, etc., R. Co. v. Sco-
cited with apparent approval and ap- vill, 10 C. C. A. 479, 62 Fed. 730, 27
parently without question as to its L. R. A. 179; Ga. R. R. Co. v. New-
soundness, in Salisbury v. Erie R. some, 60 Ga. 492; Billman v. R. Co.,
Co., 66 N. J. L. 233, 88 Am. St. Rep. 76 Ind. 166, 40 Am. Rep. 230; Alsever
480, 55 L. R. A. 578. v. Minneapolis, etc., R. Co., 115 Iowa,
2 Pittsburg, etc., Ry. Co. v. Shields, 338, 56 L. R. A. 748; Bittle v. Cam-
?> i ,',
1512
CHAP. Vj LIABILITY OF PRINCIPAL TO THIRD PARTIES
conductor, though wantonly and capriciously, employed railway tor-
pedoes, confided to his charge for proper use, to frighten passengers
in a car. "He was not, it is true," said the court, "within his employ-
ment as to the use of them, but, in so doing, he violated the duties co-n-
nected with his employment as the custodian of them and thereby
made his master liable." 31
1947. In order to impose liability in these cases it is,
however, held to be essential that the servant whose act is complained
of shall be the one to whose custody the article was confided and that
it was permitted to do the injury while in his custody as such servant. 32
den, etc., R. Co., 55 N. J. L. 615;
Stewart v. Lumber Co., 146 N. Car.
47; Cobb v. Columbia R. Co., 37 S. C.
194; Skipper v. Clifton Mfg. Co., 58
S. C. 143.
Contra: Stephenson v. So. Pac. Ry.
Co., 93 Cal. 558, 27 Am. St. Rep. 223,
15 L. R. A. 475. See also, Halm v.
So. Pac. Ry. Co., 51 Cal. 605.
si Pittsburg, etc., Ry. Co. v. Shields,
47 Ohio St. 387, 21 Am. St. Rep. 840,
8 L. R. A. 464. In this case, a freight
conductor had been entrusted with
signal torpedoes. The conductor
placed some of them on the track for
the purpose of frightening some
women in the caboose. One failed to
explode, and the plaintiff, a boy,
picked it up, carried it a short dis-
tance, exploded it by hitting it with
a rock, and was badly injured. The
court allowed him to recover from
the railroad.
In Sullivan v. Louisville, etc., R.
Co., 115 Ky. 447, 103 Am. St. Rep. 330,
the foreman of the switching crew, as
a prank took a torpedo from the en-
gine box and placed it on the track,
to frighten the engineer. It exploded
and a flying piece of it struck and in-
jured the plaintiff. The court held
the company not liable, on the ground
that the switchman had entirely de-
parted from his employment.
In Merschel v. Louisville, etc., R.
Co., 121 Ky. 620, the petition alleged
that a servant of defendant was en-
trusted with the care and custody of
torpedoes, and negligently left one of
them exposed where children were ac-
customed to be; that the plaintiff
picked it up, and impelled by curios-
ity struck it with a hammer, and was
injured. The defendant demurred,
partly because the petition did not
allege the servant to have been acting
within the scope of his employment.
The court overruled the demurrer,
saying that if the care of a danger-
ous machine was entrusted by a mas-
ter to a servant, he is liable for any
injuries proceeding from negligence
in the care of same. The court dis-
tinguished the case of Sullivan v.
Louisville, etc., R. Co., supra, on the
ground that in that case the servant
who was at fault was not the one en-
trusted with the care of the instru-
ment.
si* Sullivan v. Louisville, etc., R.
Co., supra. Obertoni v. Boston &
Maine R. R., 186 Mass. 481, 67 L. R.
A. 422, is probably to be placed upon
this ground. There the plaintiff, a
small boy, picked up a railroad tor-
pedo upon a railroad crossing, took it
home, attempted to crack it with a
rock and was seriously injured. In
attempting to account for its presence
on the crossing, there was testimony
tending to show that the brakeman
and the flagman at the crossing had
been tossing the torpedo back and
forth between themselves, that fin-
ally the brakeman tossed it to the
flagman, that he did not catch it, that
it fell to the ground, and that both
brakeman and flagman resumed their
1513
1948]
THE LAW OF AGENCY
[BOOK iv
It would seem to be a necessary qualification of this doctrine that lia-
bility would attach if the injury was done because the servant negli-
gently permitted the article to get beyond his control in the course of
his employment.
1948. It is also held in several cases (though there are
cases apparently contrary) that it must further appear that the use to
which the servant puts the dangerous instrumentality is one which
might be justified by his employment, and that the master will not be
liable where the servant, even though temporarily, diverts it from the
master's business and uses it as the instrument of his own malice or
amusement. 33 The obvious tendency of this rule is greatly to limit the
duties without picking it up. It did
not appear where the torpedo came
from, or that it had ever been con-
fided to the care or custody of either
of these servants. The court held
that from these facts there was no
evidence of negligence on the part of
the railroad company. The court re-
ferred to the Ohio cases above cited,
and declared that while they were
entitled to great consideration they
were not in accordance with the law
of Massachusetts.
33 In Galveston, etc., Ry. Co. v. Cur-
rie, 100 Tex. 136, 10 L. R. A. (N. S.)
367, an employee in a round house
where a compressed air apparatus of
great power was used to clean en-
gines, diverted it to play a prank
upon a fellow workman, and in a
wholly unexpected manner, caused
his death, held, that the railway
company was not liable. [Almost
identical in facts and holding is Bal-
lard v. Louisville, etc., R. Co., 128 Ky.
826, 16 L. R. A. (N. S.) 1052.] With
reference to the particular ground of
liability now being considered,
namely, the confiding of dangerous
instrumentalities to the agent's care,
the court contended that that doc-
trine could not be extended so far as
to make the master liable for every
use to which the dangerous instru-
ment might be put by the servant. It
must be a use which would be within
the scope of the employment. If a
butcher, said the court, should put
into the hands of his servant a knife
with which to slaughter animals in
the master's business, and the serv-
ant while standing with the knife
raised for that purpose should, upon
seeing an enemy standing near, sud-
denly plunge it into the breast of the
enemy, would any one contend that
the master would be responsible? Or,
if the engineer of a locomotive en-
gine should take fire from the fire-
box of the engine and burn a build-
ing to gratify his malice or light a
bonfire for his amusement from
which fire should spread and do in-
jury, would the master be liable?
The court dissented from certain of
the language used in Pittsburgh, etc.,
R. R. Co. v. Shields, 47 Ohio St. 387,
21 Am. St. Rep. 840, 8 L. R. A. 464,
cited supra, and Euting v. Chicago,
etc., R. R. Co., 116 Wis. 13, 96 Am.
St. Rep. 936, 60 L. R. A. 158, cited
supra, though it thought the actual
conclusions in those cases not incon-
sistent with its own. See also, Can-
ton Cotton Warehouse Co. v. Poole,
78 Miss. 147, 84 Am. St. Rep. 620,
where the master was held not liable
because a night-watchman left in
charge of the masters' machinery
let off steam from the master's boiler
as a practical joke upon some boys
who were on the premises, whereby
one of them was injured.
See also, Evers v. Krouse, 70 N. J.
L. 653, 66 L. R. A. 592, where de-
fendant's minor son, while sprink-
1514
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES [ 1948
master's liability. The master is not liable wherever a servant to whom
he has committed the custody of a dangerous instrumentality has al-
lowed it to escape, (unless indeed he be the general custodian) but
only when it was permitted to escape while being used by a servant
authorized to use it and while being used within the general scope of
the employment.
ling the defendant's lawn by means
of garden hose, turned the hose in a
spirit of mischief upon the plaintiff's
horse standing on the opposite side
of the street, causing it to run away
and do injury. The defendant was
held not responsible. The act, said
the court, though accomplished by
defendant's tool, was prompted solely
by the servant's malice or mischiev-
ousness and had no connection with
defendant's business. So in Chicago,
etc., Ry. Co. v. Epperson, 26 111. App.
72, the fireman upon defendant's en-
gine while the train was standing at
a station, went to the caboose and
took from the drawer in which they
were kept a number of signal torpe-
does which he placed upon the track
where they were later exploded,
causing injury to the plaintiff. The
torpedoes were under charge of the
conductor and he alone had power to
direct their use. The fireman had
no authority to obtain or use them,
and his act was prompted solely by
his own spirit of mischief. The con-
ductor did not know that they had
been taken until after their explo-
sion. It was held that the defendant
was not liable.
In International, etc., R. R. Co. v.
Cooper, 88 Tex. 607, the engineer and
fireman on one of defendant's loco-
motives permitted the plaintiff to ride
upon the locomotive. In order to
play a practical joke upon him, the
fireman slipped an end of a hose,
connected with the engine, into
Cooper's pocket, and the engineer
opened a valve to which the hose was
attached, intending to turn on cold
water but by mistake turning on boil-
1515
ing water and steam whereby Cooper
was severely burned. The defendant
was held not liable. "The injury did
not occur from anything done in the
performance of such duty but by the
independent act of the servants, in
nowise connected with the duties
thus being performed. It is true that
circumstances might have required
the discharge of hot water from the
boiler by means of the appliances
used in this instance, but upon this
occasion the evidence shows that the
act done was not for the purpose of
discharging a duty, but simply as
one of sport and mischief on their
part towards the injured party."
See also, Cobb v. Columbia, etc.,
R. R. Co., 37 S. C. 194.
Contra: The case of Merschel v.
Louisville, etc., R. Co., 121 Ky. 620,
seems to be contra. The court seems
to hold that it is immaterial whether
the torpedo which caused the injury
was negligently left by its custodian
upon the railroad track [where he
might have occasion to put it in the
course of his employment] or upon
the street [where, so far as appears,
he could never have any occasion to
put it at all].
The implications of Pittsburgh,
etc., R. Co. v. Shields, 47 Ohio St.
387, 21 Am. St. Rep. 840, 8 L. R. A.
464, are also contra, although possi-
bly the particular case might be
brought within the rule stated. Tho
employee put the torpedo where he
might lawfully and properly put it
under many circumstances: he did
not put it there at this particular
time for any purpose connected with
the service.
. j . .' - ' . . ' .' '
/ '! ..i ...>t<
!949> ^S ] THE LAW OF AGENCY [BOOK iv
1949. The doctrine here involved, like the one consid-
ered in the preceding sections, is ordinarily deemed to rest upon some
exceptional element in the situation; there a special duty, here a spe-
cially dangerous instrumentality, giving rise to a specific and positive
duty. In this case as in that one, it is not always easy to determine
what are to be deemed dangerous instrumentalities within the mean-
ing of the rule, and there is undoubtedly a tendency in many places, in
this case as in that, to push the rule beyond its original limits. If the
doctrine has any justification at all, it lies in the fact that according to
the ordinary experience of men, certain agencies and instrumentalities
are so inherently and essentially dangerous, even when used in the
ordinary 7 manner and for the purpose or purposes for which they are
designed, as to be in themselves a menace to safety unless they are
guarded with special care. It is not that the thing in question may be
made the means of doing injury, because the most inherently harmless
thing may be so used, but that it is dangerous in itself. A hammer or
a billet of wood as ordinarily used is not in itself a dangerous object,
though in the hands of an angry and excited man, it may be made the
means of severe injury. "Poison," it was said in one case, 8 .* "is a dan-
gerous substance. Gunpowder is the same. A torpedo is a dangerous
instrument, as is a spring gun, a loaded rifle, or the like. They are in-
struments and articles in their nature calculated to do injury to man-
kind, and generally intended to accomplish that purpose. They are es-
sentially and in their elements instruments of danger." 35 Even this
enumeration, however, is doubtless open to qualification.
1950. - Within the meaning of this rule, it has been held
that locomotive engines, with steam up and out upon the track, are,
at least with respect of the steam employed, dangerous instrumentali-
ties. 36 Signal torpedoes have been held to fall within the same cate-
3* Loop v. Litchfield, 42 N. Y. 351, Am. Rep. 114; Nashville, etc., R. Co.
1 Am. Rep. 543. v. Starnes, 9 Heisk. (Tenn.) 52, 24
35 it is true that in Barmore v. Am. Rep. 296; Regan v. Reed, 96 111.
Vicksburg, etc., Ry. Co., 85 Miss. 426, App. 460; Texas, etc., R. Co. v. Seo-
3 Ann. Cas. 594, 70 L. R. A. 627, this vill, 62 Fed. 730, 10 C. C. A. 479, 27
distinction seems to be repudiated by L. R. A. 179; Georgia R. Co. v. New-
the majority of the court; but the some, 60 Ga. 492; Billman v. Indian-
present writer cannot concur in this apolis, etc., R. Co., 76 Ind. 166, 40
repudiation. The rule quoted from Am. Rep. 230; Alsever v. Minneap-
1 Thompson on Negligence, 589, is olis, etc., R. Co., 115 Iowa, 338, 56 L.
believed to be misapplied here; other- R. A. 748; Cobb v. Columbia R. Co.,
wise it is believed to be unsound. 37 S. C. 194; Skipper v. Clifton Mfg.
so Toledo, etc., R. Co. v. Harmon, Co., 58 S. C. 143; Stewart v. Cary
47 111. 298, 95 Am. Dec. 489; Chicago, Lumber Co., 146 N. Car. 47.
etc., R. Co. v. Dickson, 63 111. 151, 14 Whether a locomotive on a track
1516
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES
[ 1951
gory ; 37 and cases involving poisons, fire-arms, explosives and the like
are referred to in preceding sections. It has also been said that a "rail-
way tricycle" is also within the rule, 38 though this seems certainly to
be questionable. On the other hand, an automobile, 39 a railway hand-
car, 40 a hatchet, 41 a horse and cart, 42 a wagon and a team of mules * 3
and many similar articles of common use 44 have been held not to be
dangerous instrumentalities within this rule.
1951. III. Where the master entrusts to servant performance
of duties involving the use of force. Another class of cases in which
it is sometimes said that the master may be under a special responsi-
bility for his servant's wilful, wanton or malicious act, are the cases
wherein the master has confided to the servant the performance of du-
in charge of an engineer is more in-
trinsically dangerous than an auto-
mobile in the hands of the ordinary
driver, is well open to question.
37 Pittsburgh, etc., R. Co. v.
Shields, 47 Ohio St. 387, 21 Am. St.
Rep. 840, 8 L. R. A. 464; Sullivan
v. L. & N. R. Co., 115 Ky. 447, 103
Am. St. Rep. 330; Merschel v. L. &
N. R. Co., 121 Ky. 620.
ss Barmore v. Vicksburg, etc., Ry.
Co., 85 Miss. 426, 3 Ann. Gas. 594, 70
L. R. A. 627. In Salisbury v. Erie
R. Co., 66 N. J. L. 233, 88 Am. St.
Rep. 480, 55 L. R. A. 578, a railway
"push-car" was the means of inflict-
ing thn injury but the case is put
rather upon the now generally repu-
diated doctrine of Sleath v. Wilson,
(9 C. & P. 607), than upon the ground
of a dangerous instrumentality.
3 See Slater v. Advance Thresher
Co., 97 Minn. 305, 5 L. R. A. (N.
S.) 598; Lotz v. Hanlon, 217 Pa.
339, 10 Ann. Gas. 731, 118 Am.
St. Rep. 922, 10 L. R. A. (N.
S.) 202; Cunningham v. Castle, 127
N. Y. App. Div. 580; Jones v. Hoge,
47 Wash. 663, 125 Am. St. Rep. 915,
14 L. R. A. (N. S.) 216; Lewis v.
Amorous, 3 Ga. App. 50; Danforth v.
Fisher, 75 N. H. Ill, 139 Am. St. Rep.
670, 21 L. R. A. (N. S.) 93; Vincent
v. Crandall, etc., Co., 131 N. Y. App.
Div. 280; Steffen v. McNaughton, 142
Wis. 49, 19 Ann. Gas. 1227, 26 L. R.
A. (N. S.) 382; Mclntyre v. Orner
166 Ind. 57, 117 Am. St. Rep. 359, 8
Ann. Gas. 1087, 4 L. R. A. (N. S.)
1130; Colwell v. Aetna Bottle Co., 33
R. I. 531.
Contra: Ingraham v. Slockamore,
63 N. Y. Misc. 114.
40 Branch v. International, etc., R.
Co. 92 Tex. 288, 71 Am. St. Rep. 844.
See also, Dougherty v. Chicago, etc.,
R. Co., 137 Iowa, 257, 126 Am. St
Rep. 282, 14 L. R. A. (N. S.) 590.
41 Little Miami Ry. Co. v. Wet-
more, 19 Ohio St. 110, 2 Am. Rep.
373.
42 Storey v. Ashton, L. R., 4 Q. B.
476.
43 Dover v. Mayes Mfg. Co., 157 N.
C. 324.
44 "The ordinary appliances in use
in an ice factory cannot be so classed,
certainly not a coal scoop and elec-
tric lights." Canton Cotton Ware-
house Co. v. Pool, 78 Miss. 147, 84 Am.
St. Rep. 620. Neither can a com-
pressed-air hose. Ballard v. Louis-
ville, etc., R. Co., 128 Ky. 826, 16 L.
R. A. (N. S.) 1052. See also, Galves-
ton, etc., Ry. Co. v. Currie, 100 Tex.
136, 10 L. R. A. (N. S.) 367, a case
almost identical in its facts. Nor a
passenger elevator in an office build-
ing. Sweeden v. Atkinson Improve-
ment Co., 93 Ark. 397, 27 L. R. A.
(N. S.) 124. Nor a garden hose.
Evers v. Krouse, 70 N. J. L. 653, 66
L. R. A. 592.
1952, 1953] THE LAW OF AGENCY [BOOK IV
ties which in the ordinary and natural course may involve the use of
force upon third persons, and has expressly or impliedly committed
to the servant the determination of the occasion when force is to be
used and the degree of force which is to be exercised. "If the master
give an order to a servant," it is said in one case, 45 "which implies the
use of force and violence to others, leaving to the discretion of the
servant to decide when the occasion arises to which the order applies,
and the extent and kind of force to be used, he is liable, if the servant
in executing the order makes use of force in a manner or to a degree
which is unjustifiable." In such a case "if the act be done in execu-
tion of the authority given him by his master, and for the purpose of
performing what the master has directed, the master will be responsi-
ble whether the wrong done be occasioned by negligence or by a wan-
ton or reckless purpose to accomplish the master's business in an un-
lawful manner."
1952. Breach of instructions no defense. It is no de-
fense to the liability of the master in such a case (if the act be one
within the scope of the authority), that the master in conferring the
authority to use force had specifically pointed out the extent to which
the servant might go or had expressly forbidden the use of excessive
force. 416 The rule is of frequent application to the case of the agents
or servants of carriers who undertake, with unnecessary or unreason-
able force and violence or at improper times and places, to eject from
their conveyances persons whom they would be authorized to remove
under proper circumstances. But it is by no means confined to such
cases. It applies wherever the circumstances bring the case within
the operation of the rule regardless of the nature of the occupation. 47
1953. Master not liable for servant's personal malice.
Even under this rule, however, the master would not be responsible
for a wanton or malicious act of the servant not committed in the
execution of the authority. As stated in one case which has been often
cited : ** "If he is authorized to use force against another when nec-
Howe v. Newmarch, 12 Allen 154; Williams v. Tolbert, 76 S. Car.
(Mass.), 49. 211.
To same effect: Ploof v. Putnam, 83 *? Applied in Tillar v. Reynolds, 96
Vt. 252, 138 Am. St. Rep. 1085; New Ark. 358, 30 L. R. A. (N. S.) 1043,
Ellerslie Fishing Club v. Stewart, 123 where the defendant's overseer of a
Ky. 8; Burke v. Burke, 1 Ont. L. Rep. convict farm excessively punished a
127, 419. convict.
* West Jersey, etc., R. Co. v. Welsh, 4S Rounds v. Delaware, etc., R. R.
62 N. J. L. 655, 72 Am. St. Rep. 659; Co., 64 N. Y. 129, 21 Am. Rep. 597.
Letts v. Hoboken, etc., Co., 70 N. J. To same effect: Rogahn v. The
L. 358; Barden v. Felch, 109 Mass. Moore Mfg., etc., Co., 79 Wis. 573;
I 5 l8
CHAP. V] LIABILITY OF. PRINCIPAL TO THIRD PARTIES [ IQ54,
essary in executing his master's orders, the master commits it to him
to decide what degree of force he shall use; and if, through mis judg-
ment or violence of temper, he goes beyond the necessity of the occa-
sion, and gives a right of action to another, he cannot, as to third per-
sons, be said to have been acting without the line of his duty, or to
have departed from his master's business. If, however, the servant,
under guise and cover of executing his master's orders, and exercising
the authority conferred upon him, wilfully and designedly, for the
purpose of accomplishing his own independent, malicious or wicked
purposes, does an injury to another, then the master is not liable. The
relation of master and servant, as to that transaction, does not exist be-
tween them. It is a wilful and wanton wrong and trespass, for which
the master cannot be held responsible."
1954. Act must have been within course of employment.
It is indispensable to the operation of this rule that the force shall
have been used while the servant was acting in the course of his em-
ployment and as part of it. For if he were then not so acting, if his
service had not yet begun, or if it had ended, or if he were acting upon
some matter not connected with the service and constituting part of
it, his exercise of force must be regarded as his own unlawful act for
which the master is not responsible. 49
1955. > Use of force must have been authorized. It is
also essential to the operation of this rule that the case shall be one in
which the exercise of some degree of force will be permissible. If the
master has not authorized the use of force under any circumstances,
he can not be liable under this rule for excessive force. Thus where a
brakeman who might under proper circumstances have used force to
expel a trespasser or to eject a passenger for the non-payment of fare,
forcibly expelled a person from the train because he would not give a
gratuity to the servant, it was held that the master was not liable within
Gray v. B. & M. Ry., 168 Mass. 20; 200; Jackson v. Second Ave. R. Co.,
Aiken v. Holyoke St. Ry. Co., 184 47 N. Y. 274, 7 Am. Rep. 448; Bren-
Mass. 269; Barabasz v. Kabat, 86 Md. nan v. Merchant & Co., 205 Pa. 258;
23; Hoffman v. N. Y. Cent. R. Co., 87 Southern Ry. Co. v. James, 118 Ga.
N. Y. 25, 41 Am. Rep. 337; Alton Ry., 340, 63 L. R. A. 257.
etc., Co. v. Cox, 84 111. App. 202; West 49 Thus where a train crew pursued
Jersey, etc., R. Co. v. Welsh, 62 N. a boy who had been a trespasser on
J. L. 655, 72 Am. St. Rep. 659; Letts the train and assaulted him the com-
v. Hoboken R. Warehouse, etc., Co., pany was held not liable. The crew
70 N. J. L. 358; Chicago, etc., R. Co. only had authority to remove tres-
v. Kerr, 74 Neb. 1; Rowell v. B. & M. passers. Cincinnati, etc., Ry. Co. v.
Ry., 68 N. H. 358; Collins v. Butler, Rue, 142 Ky. 694, 34 L. R. A. (N. S.)
83 N. Y. App. Div. 12; Ramsden v. B. 200.
& A. R., 104 Mass. 117, 6 Am. Rep.
T5I9
THE LAW OF AGENCY. [BOOK IV
this rule. It was clear that what he did was done for his own purposes,
and that he was "using his authority to eject trespassers, if any there
were, as a mere cover under which to extort money, not as a fare but
for his own pocket." 50
1956. Other limitations. Still further limitations upon
this doctrine are clearly suggested. The master would certainly not
be liable for the use of force upon a person not belonging to the class
of persons contemplated and upon whom the use of force could not be
regarded as a natural and proximate result of the authority given. So
also it must be true, though the lines of distinction are not easy to draw
abstractly, that the master would not be liable for the use of force of
a sort or a degree not naturally and proximately resulting from the
authority but extraordinary, unnatural and unprecedented.
1957. IV. Master's liability for malicious acts in other cases.
Returning now to the general question of the master's liability for ma-
licious acts in cases not affected by any such special considerations as
those which have just been considered, it may be premised, as has been
already stated, that the tendency of the modern cases is undeniably to
attach less importance to the motive with which the act was done and
to give more attention to the question whether or not it can be deemed
to fall within the course of the servant's employment.
1958. Illustrations. The scope of the rulings upon this
subject can be best illustrated by some selections from the adjudicated
cases. Thus in a leading case in New York, 51 in which the older and
more rigid rule was adhered to, it appeared that a son while driving
his father's horses and wagon about his father's business, seeing some
boys attempting to get into the wagon, whipped up his horses and the
wagon ran over one of the boys who was seen to be between the wheels
when the horses were started. An action was brought against the fa-
ther and the son jointly to recover damages, and a verdict rendered
against them both. But Cowen, J., said: "It is impossible to sustain
this verdict against the father. It is difficult to infer from the evidence,
anything short of a design in Stephen (the son), to throw the plain-
tiff's boy from the wagon ; and the judge, as I understand the charge,
told the jury that the defendants were jointly liable in that view. If
Stephen, in whipping the horses, acted with the wilful intention to
throw the plaintiff's boy off, it was a plain trespass, and nothing but a
trespass, for which the master of Stephen is no more liable than if his
: ; i: ' . . /. {; .ri'vi .
so Illinois Central R. R. Co. v. BI Wright v. Wilcox, 19 Wend. (N.
Latham, 72 Miss. 32. Y.) 343, 32 Am.*Dec. 507.
1520
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES [ 1959
servant had committed any other assault and battery. All the cases
agree that a master is not liable for the wilful mischief of his servant,
though he be at the time, in other respects, engaged in the service of
the former. 62 Why is the master chargeable for the act of his serv-
ant? Because what a man does by another he does by himself. The
act is within the scope of the agency. 'A master is not answerable,'
says Mr. Hammond, 'for every act of his servant's life, but only for
those done in his relative capacity. To charge the master, it must
always be shown or presumed, that the relation of master and servant
subsisted between them in the particular affair. If the master is liable
under other circumstances, he is so, not quatenus master, but as any
one would be who instigates an injury.' The dividing line is the zvil-
f ulness of the act. If the servant make a careless mistake of commis-
sion or omission the law holds it to be the master's business negligently
done. It is of the very nature of business that it may be well or ill
done. We frequently speak of a cautious or careless driver in anoth-
er's employment. Either may be in the pursuit of his master's busi-
ness, and negligence in servants is so common, that the law will hold
the master to the consequences as a thing that he is bound to foresee
and provide against. But it is different with a wilful act of mischief.
To subject the master in such a case, it must be proved that he actually
assented, for the law will not imply assent. In the particular affair,
there is, then, no longer the presumed relation of master and servant,
The distinction seems to resolve itself into a question of evidence."
1959. The rule here announced by Judge Cowen is un-
doubtedly that laid down by the older cases. 53 But the more modern
rule clearly is that the mere nature of the act is not the only criterion,
but that the most important test is whether the act was done in the
course of the employment. Thus Ryan, C. J., says : "We cannot help
52 Citing 1 Chit. PI. 69; McManus v. boat Co. v. Housatonic R. Co., 24
Crickett, 1 East, 106; Hammond on Conn. 40, 63 Am. Dec. 154; Bard v.
Parties, 83; Croft v. Alison, 4 Barn. Yohn, 26 Pa. 482; Mali v. Lord, 39
& Aid. 590; 1 Chit. Gen. Pr. 80; N. Y. 381, 100 Am. Dec. 448; State v.
Bowcher v. Noidstrom, 1 Taunt. 568. Morris, etc., Ry. Co., 3 Zab. (N. J.)
ss McManus v. Crickett, 1 East, 360; Illinois Cent. R. R. Co. v. Dow-
106; Ellis v. Turner, 8 T. R. 531; ney, 18 111. 259; Evansville, etc., Ry.
Middleton v. Fowler, 1 Salk. 282; Co. v. Baum, 26 Ind. 70; New Orleans,
Croft v. Alison, 4 B. & Aid. 590; Bow- etc., Ry. Co. v. Harrison, 48 Miss. 112,
cher v. Noidstrom, 1 Taunt. 568. See 12 Am. Rep. 356; Wesson v. Seaboard,
also, Tuller v. Voght, 13 111. 278; etc., R. Co., 49 N. C. 379.
Brown v. Purviance, 2 H. & G. (Md.) A very recent case in Michigan also
316; Foster v. Essex Bank, 17 Mass. seems to commit that court to the
479, 9 Am. Dec. 168; Church v. Mans- older view. Ducre v. Sparrow-Kroll
field, 20 Conn. 284; Thames Steam- Lumber Co., 168 Mich. 49.
06 1521
1960] THE LAW OF AGENCY [BOOK IV
i
thinking that there has been some useless subtlety in the books in the
application of the rule respondcat superior, and some unnessary con-
fusion in the liability of principals for wilful and malicious acts of
agents. This has probably arisen from too broad an application of the
dictum of Lord Holt, that 'no master is chargeable with the acts of
his servant but when he acts in the execution of the authority given to
him, and the act of the servant is the act of the master.' 5 * For this
would seem to go to excuse the master for the negligence as well as
for the malice of his servant. One employing another in good faith to
do his lawful work would be as little likely to authorize negligence as
malice ; and either would be equally dchors the employment. Strictly,
the act of the servant would not, in either case, be the act of the mas-
ter. It is true that so great an authority as Lord Kenyon denies this,
in the leading case of McManus v. Crickett, which has been so ex-
tensively followed ; and again, in Ellis v. Turner distinguishes be-
tween the negligence and the wilfulness of the one act of the agent,
holding the principal for the negligence but not for the wilfulness. It
is a singular comment on these subtleties, that McManus v. Crickett
appears to rest on Middle ton v. Fozvler, the only adjudged case cited
to support it ; and that Middleton v. Fowler was not a case of malice,
but of negligence, Lord Holt holding the master in that case not liable
for the negligence of his servant, in such circumstances as no court
could now doubt the master's liability. In spite of all the learned sub-
tleties of so many cases, the true distinction ought to rest, it appears to
us, on the condition whether or not the act of the servant be in the
course of his employment." 57
1960. In accordance with the rule laid down in the case
last above referred to, it has been held in a great variety of cases that
the master is liable for the wanton or malicious acts of his servant if
they were committed while the servant was acting in the execution of
his authority and within the course of his employment. 58 When this
" Middleton v. Fowler, 1 Salk. 282. 89 Md. 495, 45 L. R. A. 527; Aiken v
ool East, 106, supra. Holyoke St. Ry. Co., 184 Mass. 269,
e 8 Term Rep. 52.1. Chicago, etc., Ry. Co. v. Kerr, 74 Neb.
67 Craker v. Chicago & Northwest- 1; Mott v. Consumers' Ice Co., 73 N.
ern Ry. Co., 36 Wis. 657, 17 Am. Rep. Y. 543; Magar v. Hammond. 183 N. Y.
504. See also, Redding v. South Caro- 387, 3 L. R. A. 1038; Jackson v. Tele-
lina R. R. Co., 3 S. C. 1, 16 Am. Rep. graph Co., 139 N. C. 347, 70 L. R. A.
681. 738; Stranahan Co. v. Coit, 55 Ohio
ss St. Louis, etc., Ry. Co. v. Hack- St. 398, 4 L. R. A. (N. S.) 506; Nel-
ett, 58 Ark. 381, 41 Am, St. Rep. 105; son Business College Co. v. Lloyd, 60
Baltimore Consol. Ry. Co. v. Pierce, Ohio St. 448, 71 Am. St. Rep. 729, 46
1522
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES [ 1961, 1962
has been said, however, the problem is by no means solved, for the dif-
ficult question always remains as to what acts may be deemed to be
within the course of his employment within the meaning of this rule.
As in the case already considered of the master's liability for the negli-
gent acts of his servant, it is impossible to lay down any hard and fast
rule by which this question can be determined. In many cases no bet-
ter definition can be given than the words themselves suggest. But, in
general terms, it may be said that an act is within the course of the
employment if (i.) it be something fairly and naturally incident to the
business, and if (2.) it be done while the servant was engaged upon the
master's business and be done, although mistakenly or ill-advisedly,
with a view to further the master's interests, or from some impulse or
emotion which naturally grew out of or was incident to the attempt
to perform the master's business, and did not arise wholly from some
external, independent and personal motive on the part of the servant
to do the act upon his own account.
1961. In dealing with this question of motive, the time
and circumstances of its origin may often be significant. Thus if the
alleged wilfulness or malice arose out of the aggravations, annoyances
or conflicts of the attempted performance of the master's service, it is
vastly easier to see that the act resulting from it was still an act within
the course of the employment, than it is where the motive arose at a
time when the servant was not engaged in the employment, and did not
owe its origin to any attempt at performance, but .was the personal and
private malice or ill-will of the servant which the exigencies of the serv-
ice did not create but merely furnished an opportunity to express or
satisfy.
1962. i It does not by any means follow, from this rule,
that the master is liable for any wilful or malicious act of his servant,
even though it be committed during the time in which the servant is
generally engaged upon the execution of his employment. As has al-
ready been pointed out when dealing with the matter of negligence, it
is not merely a question of time or place but is a matter of incident and
relation. It is not enough merely that the act was done during trleT
time, or at the place, in which the servant is acting within the exercise \
of his authority, but it must also be within the course of the employ- \
ment as already explained. At the same time, it is not to be inferred
that the master's liability depends upon whether he has or has not in-
tentionally authorized the doing of the particular wrongful act. If
L. R. A. 314; Ploof v. Putnam, 83 Vt. (N. S.) 251; Western Un. Tel. Co. v
252, 138 Am. St. Rep. 1085, 26 L. R. A. Cattell, 100 C. C. A. 489, 177 Fed. 71.
I 5 2 3
1963, 1964] THE LAW OF AGENCY
[BOOK iv
he has done so, he is of course liable. The question is rather, as has
been explained, whether the act can fairly be regarded as a natural
incident to, a direct outgrowth of, a natural ingredient in, the execu-
tion of the service which the master confided to the servant. If that
be the character of the act, the master is liable though the act were
done wilfully or maliciously. If, on the other hand, the servant step-
ped aside from his employment to do some act having no connection
with his master's business, and to which he was inspired by his own
private malice or ill-will, the master is not liable. 59
1963. Many attempts have been made to press the rule
still further, and it is not to be denied that some very sweeping and
extreme statements are to be met with in the cases. But the over-
whelming weight of authority and reason in fact the very necessities
of a law of Agency, if that is to be the basis of liability requires that
the rule shall be limited as has been indicated. Rules based upon new
theories of law or society will doubtless require legislation to make
them operative.
1964. An excellent illustration of the principles here in-
volved is furnished by the English case of Limpus v. London General
Omnibus Company, whereki the question was very carefully con-
BO Louisville, etc., R. Co. v. Routt,
25 Ky. L. Rep. 887, 76 S. W. 513.
In Greb v. Pennsylvania Ry. Co., 41
Pa. Super. Ct. 61, a passenger after
he had gotten off the train on which
he had been a passenger and stepped
onto the platform, was assaulted,
without provocation, by the conductor
of the train. Held, that an instruc-
tion that defendant was liable was
erroneous. Also that there was no
liability under the general duty to
protect.
In Collins v. Butler, 179 N. Y. 156,
the plaintiff alleged that a clerk in
defendant's store became unreason-
ably enraged at her while she was
seeking to buy some apples that had
been placarded in the store-windows,
swore at her, threatened to "kick her
out" of the store, and did violently
push and thrust her into the street.
Held, that the employer was not, as a
matter of law, liable for the act of
the clerk; reversing 83 App. Div. 12.
It is true that statements are not
infrequently found denying this dis-
tinction. Thus in Central Ry. Co. v.
Brown, 113 Ga. 414, 84 Am. St. Rep.
250, the court refers to the general
doctrine as "too refined," "fine spun,"
etc., but the case was one involving
passengers, which, as has been seen,
are put on different ground.
so 1 H. & C. 526. In the course of
his opinion in this case, Willes, J.,
said:
"But there is another construction
to be put upon the act of the servant
in driving across the other omnibus;
he wanted to get before it. That was
an act done in the course of his em-
ployment. He was employed not only
to drive the omnibus, which alone
would not support this summing up,
but also to get as much money as he
could for his master, and to do it in
rivalry with other omnibuses on the
road. The act of driving as he did
is not consistent with his employ-
ment, when explained by his desire
to get before the other omnibus. ' I
do not speak without authority when
I treat that as the proper test Take
1524
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES [ 1965
sidered and in which there was some difference of opinion. The facts
as stated by one of the judges who held the defendants not liable, and
whose statement presents the facts in the strongest light against the
plaintiff, were as follows : "It appears by the evidence in this case that
the defendants were the proprietors of an omnibus plying between the
Bank and Hounslow, which at the time in question was driven by a
coachman in their service ; that whilst upon the road, in the course of
his employment to drive defendants' omnibus from Piccadilly to Ken-
sington, he wilfully and on purpose, and contrary to the express orders
of the defendants, wrongfully endeavored to hinder and obstruct the
passage along the road of another omnibus belonging to the plaintiff;
and for that purpose, he, who was ahead of the plaintiff's omnibus 80
or loo yards, slackened his pace, until the plaintiff's omnibus came up
to him and was ( about to pass, and he then purposely pulled across the
road in order to prevent and obstruct his progress, and in so doing ran
against one of the plaintiff's horses with his (the defendants') omni-
bus, thereby causing considerable damage. The reason assigned by the
defendants' coachman for this wrongful proceeding was that he pulled
across the plaintiff's coachman to keep him from passing, in order to
serve him (the plaintiff's coachman) as he had served him (the defend-
ants' coachman)."
1965. > A verdict for the plaintiff having been rendered,
judgment was affirmed by a majority of the judges in the Exchequer
Chamber, one judge dissenting. The position of the majority is shown
by the following extract from the opinion of Blackburn, J. : "The de-
fendants' servant was the driver of an omnibus, and as such it was his
duty, not only to conduct it from one terminus to another, but to use it
for the purpose of picking up traffic during the course of the journey.
He drove across another omnibus under circumstances from which the
jury might have thought that it was done for the purpose of wreaking
his spite against the driver of that omnibus. The learned judge, hav-
B r.K ftaCStf ; >!rf&J 5rtl :
the ordinary case of a master of a tiff's cab-driver moved into a line
vessel, who it must be assumed is in- drawn up at a cab-stand ahead of his
structed not to do what is unlawful regular "turn." The defendant's
but what is lawful, if he has distinct driver, who probably was entitled to
instructions not to sell a cargo under the desirable location pre-empted by
any circumstances, but he does so the plaintiff's driver, after asking
under circumstances consistent with plaintiff's driver to yield the position,
his duty to his master, the master is cut in ahead of plaintiff's cab with an
liable in damages to the person whose electric cab and backed into plain-
goods are sold." tiff's horse and injured him. The de-
See also, Curley v. Electric Vehicle fendant company was held liable for
Co., 68 App. Div. 18, where the plain- the injury.
1525
1966] THE LAW OF AGENCY [BOOK IV
ing to tell the jury what was the test by which they were to determine
whether the act was done in the course of the service or not, used lan-
guage in which he tells them, perfectly rightly, that if the act was done
in the course of the service the defendants were responsible ; and he
goes on to say, 'that if the jury believed that the real truth of the mat-
ter was that the defendants' driver, being dissatisfied and irritated with
the plaintiff's driver, whether justly or unjustly, by reason of what
had occurred, and in that state of mind acted recklessly, wantonly, and
improperly, but in the course of his service and employment, and in
doing that which he believed to be for the interest of the defendants,
then the defendants were responsible for the act of their servant.' No
doubt what Mr. Mellish said is correct: it is not universally true that
every act done for the interest of the master is done in the course of
the employment. A footman might think it for the interest of his mas-
ter to drive the coach, but no one could say that it was within the scope
of the footman's employment, and that the master would be liable for
damages resulting from the wilful act of the footman in taking charge
of the horses. But, in this case, I think the direction given to the jury
was a sufficient guide to enable them to say whether the particular act
was done in the course of the employment."
1966. Many other illustrations of these principles are
furnished by recent cases. Thus where the master was the proprietor
of a business college and had in his employment a servant whose duty
it was to clean the rooms at the close of the day, and this involved the
moving of the tables for that purpose, it appeared that on a certain day
the plaintiff had been called in to repair an electric light in one of the
rooms. In order to reach the light he had placed a ladder upon one of
the tables in the room. It was at the close of the day and the janitor
was engaged in cleaning the room. This involved the moving of the
table on which the ladder stood. He sought to move the table in order
to go on with his work. The plaintiff remonstrated and urged that
the table be left as a support to the ladder until the plaintiff had com-
pleted the repairs. An altercation followed and the janitor, becoming
impatient, went on with his work of cleaning, pushed the table aside
and thereby threw the plaintiff to the floor, causing the injuries for
which he sought damages from the master. The defendant contended
"that the janitor by reason of his ill-will toward the plaintiff, was ac-
tuated wholly by malice, and violently shoved the table, not in the per-
formance of any duty within his employment but with the wilful pur-
pose only of injuring the plaintiff." The court, however, held that it
was a fair inference from the evidence that the moving of the table,
1526
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES [ 1967, 1968
under the circumstances was an act within the scope of the employ-
ment, and that it was error for the trial court to direct a verdict for
the defendant. 61
1967. In another case in the same court, it appeared that
the defendant was under contract to supply and deliver milk to the
plaintiff's creamery ; that the defendant had in his employment a serv-
ant who assisted in preparing the milk and delivering it to the plain-
tiff, and that this servant, as was contended, maliciously and to gratify
ill-will which he had toward the defendant (although the defendant
was ignorant of it) fouled and adulterated the milk which he delivered
to the plaintiff, thereby causing plaintiff the injury for which recovery
was sought. The trial court instructed the jury that if this was the
case, the defendant was not liable. A verdict and judgment for the
defendant under this instruction was reversed by the Supreme Court
upon several grounds, one of which, pertinent here, was that the jury
might fairly find that the servant's act in adulterating the milk, which
it was his duty to prepare and deliver, was an act within the scope of
his employment. 62 It will be observed that in this case, contrary to
the usual facts, the alleged malice of the servant existed against his
employer and not against the plaintiff.
1968. In another case it appeared that the defendant, a
telegraph company had a squad of men at work erecting wires under
the charge of the company's servant. It was desired to erect the wires
across the plaintiff's land. The plaintiff objected and offered forcible
resistance. In order to get the plaintiff out of the way, the servant in
charge of the work lodged a complaint against the plaintiff before a
local magistrate and caused him to be arrested and taken from the
scene of action. While he was thus absent, the work was hastily com-
pleted. Upon the hearing of the complaint, the magistrate found that
it was "frivolous and malicious" and discharged the plaintiff. The
plaintiff sued the telegraph company for false imprisonment and ma-
licious prosecution. It was held to be a question for the jury whether
the servant, in causing the plaintiff's arrest, was performing his mas-
ter's business or was engaged in some pursuit -of his own. The jury
found that the defendant's servant "caused the plaintiff to be unlaw-
fully arrested for the purpose of putting him out of the way so that
its agents and servants might erect telephone and telegraph poles on
his land." The court said : "If this is not an act done in the course of
ei Nelson Business College Co-, v. 62 Stranahan Co. v. Coit, 55 Ohio St.
Lloyd, 60 Ohio St. 448, 71 Am. St. Rep. 398, 4 L. R. A. (N. S.) 506.
729, 46 L. R. A. 314.
1527
J 9^9] THE LAW OF AGENCY [BOOK iv
the employment and in furtherance of the master's business for his
benefit and advantage, it would be hard to conceive of one which would
C9me under that class." 63
Many other cases in which the master was held liable are cited in
the notes. 64
1969. Even under the most extreme statement of the
modern rule, however, there are many cases in which the master will
not be liable. As has been already stated, it is not enough that the act
be done while the servant was generally acting in the execution of his
authority but the act complained of must be an act within the scope of
the employment. As was pointed out in a preceding section, this is not
merely a question of time but of incident and relation. As is stated in
a recent case it seems sometimes to be assumed "that an act done by a
servant while engaged in the master's work is necessarily an act done
within the scope of the former's employment. But this is conspicu-
ously a non sequitur. An act done by the servant while engaged in
the work of his master may be entirely disconnected therefrom, done,
not as a means or for the purpose of performing that work, but solely
for the accomplishment of the independent, malicious, or mischievious
purpose of the servant. Such an act is not, as a matter of fact, the act
of the master in any sense and should not be deemed to be so as a mat-
ter of law. As to it, the relation of master and servant does not exist
between the parties, and for the injury resulting to a third person from
it the servant alone should be held responsible." w
<53 Jackson v. Telegraph Co., 139 N. court held the master would be liable
C. 347, 70 L. R. A. 738. for a wilful, wanton or reckless in-
* St. Louis, etc., Ry. Co. v. Hack- jury, only if it was committed in the
ett, 58 Ark. 381, 41 Am. St. Rep. 105 general scope of the watchman's em-
( night-watchman of railroad wan- ployment); Aiken v. Holyoke St. Ry.
tonly shooting an unresisting and Co., 184 Mass. 269 (a motorman wan-
harmless trespasser) ; Chicago, etc., tonly started his car and injured the
Ry. Co. v. Kerr, 74 Neb. 1 (where a plaintiff, a six year old boy, who was
conductor threw a boy, who was steal- trying to get a secure position on the
ing a ride, under the train, after the front step and who was calling to the
boy had left the train in obedience to motorman to stop),
the conductor's command); Mott v. es Evers v. Krouse, 70 N. J. L. 653,
Consumers' Ice Co., 73 N. Y. 543 66 L. R. A. 592. That there is a
(driver of ice-wagon purposely drove marked distinction between the lia-
into plaintiff; court held fact it was bility of the master for acts done
a wilful act did not exclude all pre- during the employment and those
sumption of liability; it was still a done within the scope of the employ-
question for the jury whether he was ment, see Bowen v. Illinois Cent. R.
executing his authority); Magar v. Co., 69 C. C. A. 444, 136 Fed. 306, 70
Hammond, 183 N. Y. 387, 3 L. R. A. L. R. A. 915. Compare Haehl v. Wa-
(N. S.) 1038 (a poacher was shot by bash Ry. Co., 119 Mo. 325.
a watchman of a game preserve; the
1528
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES [ IQ/O, 1971
1970. In the case from which this quotation was made
it appeared that the defendant's minor son was engaged in sprinkling
his father's lawn under such circumstances as to warrant the inference
that in so doing he was acting as the father's servant. While so doing
he turned the hose off the lawn and, apparently in a spirit of mischief,
threw water upon a horse, standing on the opposite side of the street,
causing the horse to run away and bringing about the injury for which
a recovery was sought against the father. The trial judge instructed
the jury that if they should find that the boy was in the father's service,
and either negligently or "from a mischievous disposition" threw the
water upon the horse and thereby caused the injury, the father would
be responsible. The court of errors and appeals unanimously held that
this instruction was erroneous and reversed a judgment which had been
rendered for the plaintiff. The court said: "If the act of the defend-
ant's son in throwing water upon the plaintiff's horse was not the re-
sult of his careless handling of the garden hose while sprinkling his
father's lawn, but was deliberately done by him purely out of a spirit
of mischief, for the purpose of frightening the animal, the fact that he
used the tool supplied to him for the doing of his father's work for
the accomplishment of his own mischievous purpose did not make it an
act within the scope of his employment and did not render the defend-
ant liable for the injury resulting therefrom." es
1971. In a recent case in Pennsylvania where damages
were sought against the master for the act of his servant, a teamster,
who had with his whip struck a boy who had climbed up on the side
of the master's wagon while the servant was driving it upon the mas-
ter's business, and had thereby caused the boy to fall beneath the
wheels, the court said it was a question for the jury to determine
whether the driver did the act for the purpose of ejecting a trespasser
from his master's wagon a result which it would be both his right
and his duty to accomplish and for accomplishing which, either negli-
gently or with excessive force the master would be responsible, or
whether he struck the boy to gratify some personal feeling of his own,
in which event the master would not be liable. In the language of the
court: "If his act in striking the boy was intended to remove him by
force from the wagon, it would be the act of his employer for which
the latter would be responsible. If, on the other hand, the purpose of
the driver was not to cause the boy to leave the wagon, but to inflict
punishment upon him to gratify the ill-will of the driver, the defendant
company is not responsible for the wrongful or tortious act. It would
ee Evers v. Krouse, supra.
i97 2 > J 973l TIIE LAW OF AGENCY [BOOK iv
not be an act done by the employee in the execution of his employer's
business, although it was performed while he was in the service of the
employer. It would be an act of the employee directed against the boy
independently of the driver's contract of service, and in no way con-
nected with, or necessary for, the accomplishment of the purpose for
which the driver was employed." 6T
1972. In another case the master, a railroad company,
was sought to be held liable for the alleged act of the conductor and
other train-men in forcibly putting a man upon the train against his
will and carrying him away. The act, if done at all, was done while
the servants were acting generally in the execution of their authority.
But it was held that the act, if done, would not be an act within the
course of the employment. "If a conductor," said the court, "know-
ingly and wilfully participates in the act of taking and transporting
upon the cars against his will, one whom he had no right to receive on
the cars for transportation, he and not the company, would be liable
for his conduct. The master is not liable for the criminal acts of his
servant, not authorized or sanctioned by him nor 'for his acts of wil-
ful and malicious trespass.' "
Other similar cases are cited in the note. 69
Attention may now be given to some of the classes of cases which
present themselves so frequently that they may be considered in
groups.
J 973- False imprisonment and unauthorized arrest.
The liability of the master for false imprisonment or unauthorized ar-
rest must also depend upon the circumstances of each case. A person
may be employed, as for example a detective, for the express purpose
of bringing about an arrest or imprisonment. 70 Even though author-
ity to arrest was not expressly given it may arise by implication, as an
T Brennan v. Merchant & Co., 205 tiff and a station agent which grew
Pa. 258. out of the provoking conduct of the
In a later case, almost identical in plaintiff even though the original
its facts, the court held the master ground of controversy arose out of
liable on the first ground. Hyman v. matters connected with the railroad
Tilton, 208 Pa. 641. company's business.
es Jackson v. St. Louis, etc., Ry. ?o Pennsylvania Co. v. Weddle, 100
Co., 87 Mo. 422, 56 Am. Rep. 460. Ind. 138; Evansville, etc., R. Co. v.
8 Thus in Lynch v. Florida, etc., McKee, 99 Ind. 519, 50 Am. Rep. 102;
R. Co., 113 Ga. 1105, 54 L. R, A. 810, American Express Co. v. Patterson,
the railroad company was held not 73 Ind. 430; Duggan v. Baltimore,
responsible for a personal assault etc., R. Co., 159 Pa. 248, 39 Am. St.
made by its station agent during a Rep. 672; Kastner v. Long Island R.
personal encounter between the plain- Co., 76 N. Y. App. Div. 323.
1530
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES
[ 1973
incident of some other employment. Thus watchmen, private police-
men or private detectives are not infrequently employed by railroad
and steamboat companies, theaters and department store companies, and
the like, for the purpose of protecting property, preventing crime and
apprehending offenders. 71 It is not uncommon, in such cases, for the
persons so appointed to be also commissioned by the state or the mu-
nicipality as public policemen or detectives. 72 Authority to arrest and
?i A private railroad detective was 87 Ark. 524; Union Depot Co. v.
authorized to make arrests only on
consultation with attorneys, unless
the proof was clear and the necessity
urgent. Without consulting any one
he caused the arrest of plaintiff for
passing counterfeit money. The
charge being groundless, it was held
that the defendant company was lia-
ble for the false arrest. Eichengreen
v. Louisville, etc., R. Co., 96 Tenn.
229, 54 Am. St. Rep. 833, 31 L. R. A.
702.
A watchman in the employ of the
defendant wrongfully arrested the
plaintiff for throwing sticks at pas-
senger trains. The watchman had
been specifically authorized to inves-
tigate the matter of throwing at
cars. The court held that the watch-
man was performing his duty in his
own way, and even though the means
used were unlawful and unauthor-
ized, the company was, nevertheless,
liable. Johnston v. Chicago, etc., Ry.,
Co., 130 Wis. 492.
72 It is often difficult in these cases
to determine whether what was done
was done as servant of the master or
as public officer for the public good.
The mere fact that the servant was
also a public officer will not relieve
the master from liability. Nor does the
fact that the public officer was also a
servant impose such liability. It
seems to be a question of fact in
each case. If what was done was
clone as servant and for the protec-
tion of the master's property the
master would be liable; otherwise
not. See St. Louis, etc., Ry. Co. v.
Hackett, 58 Ark. 381, 41 Am. St. Rep.
105; Chicago, etc., Ry. Co. v. Nelson,
Smith, 16 Colo. 361; Wells v. Wash-
ington Market Co., 8 Mackey (D. C.),
385; Dickson v. Waldron, 135 Ind.
507, 41 Am. St. Rep. 440, 24 L. R. A.
483, 488; Baltimore, etc., Ry. Co. v.
Ennalls, 108 Md. 75, 16 L. R. A. (N.
S.) 1100; Tolchester Beach Imp. Co.
v. Steinmeier, 72 Md. 313, 8 L. R. A.
846; Deck v. Baltimore, etc., Ry. Co.,
100 Md. 168, 108 Am. St. Rep. 399;
Baltimore, etc., R. Co. v. Deck, 102
Md. 669; Baltimore, etc., R. Co. v.
Twilley, 106 Md. 445; Tolchester
Beach Imp. Co. v. Scharnagl, 105 Md.
199; Healey v. Lothrop,- 171 Mass.
263; Foster v. Grand Rapids Ry. Co.,
140 Mich. 689; Buman v. Michigan
Cent. R. R. Co., 168 Mich. 651; King
v. 111. Cent. R. Co., 69 Miss. 245; Brill
v. Eddy, 115 Mo. 596; Rand v. Butte
Elec. Ry. Co., 40 Mont. 398; Cordner v.
Railway Co., 72 N. H. 413; Tucker v.
Erie Ry. Co., 69 N. J. L. 19; Taylor
v. New York, etc., R. Co., 80 N. J. L.
282, 39 L. R. A. (N. S.) 122; Clark
v. Starin, 47 Hun (N. Y.), 345; Ty-
son v. Bauland Co., 186 N. Y. 397, 9
L. R. A. (N. S.) 267; Sharp v. Erie
Ry. Co., 184 N. Y. 100, 6 Ann. /Cas.
250; Fults v. Munro, 202 N. Y. 34,
Ann. Cas. 1912 D. 870; Texas, etc.,
R. Co. v. Parsons, 102 Tex. 157, 132
Am. St. Rep. 857; Norfolk, etc., R.
Co. v. Galliher, 89 Va. 639; McKain
v. Baltimore, etc., R. Co., 65 W. Va.
233, 131 Am. St. Rep. 964, 17 Ann.
Cas. 634, 23 L. R. A. (N. S.) 289;
Layne v. Chesapeake, etc., Ry. -Co.,
66 W. Va. 607; Pennsylvania R. Co.
v. Kelly, 101 C. C. A. 359, 177 Fed.
189, 30 L. R. A. (N. S.) 481; Thomas
v. Can. Pac. R. Co., 14 Ont. L. Rep.
1531
I973J
THE LAW OF AGENCY
[BOOK iv
imprison in such cases may often be expressly given, but where it is
not authority to detain or give into custody may often be regarded as
a fair incident of the employment, and the employer will be liabk for
its wrongful exercise. Ticket agents and gatemen of railroads, steam-
boats, theaters, and the like, may be expressly or by implication author-
ized to arrest or detain persons attempting to pass without paying fare
or having the proper ticket ; 73 "floorwalkers," managers of stores, and
55, 8 Ann. Gas. 324. See also, Pres-
ley v. Fort Worth, etc., Ry. Co. (Tex.
Civ. App.), 145 S. W. 669.
In St. Louis, etc., Ry. Co. v. Hud-
son, 95 Ark. 506, there was a statute
authorizing conductors on trains to
act as peace officers in arresting
drunken persons. The court in-
structed that if the conductor erred
in thinking plaintiff drunk the com-
pany was liable. Held: Erroneous;
the company is not liable if the con-
ductor reasonably and bona fide be-
lieved plaintiff to be drunk.
In St. Louis, etc., R. Co. v. Morrow,
88 Ark. 583, a town marshal was fur-
nished with a pass over appellant's
railroad, in return for which the
marshal was to give particular pro-
tection to the railroad property.
The marshal, in arresting a tramp
who was stealing a ride on the ap-
pellant's train shot and wounded
him. The court thought it doubtful
whether there was evidence sufficient
to establish the relation of master
and servant; that there was evidence
warranting a finding that the mar-
shal was acting in the discharge of
his public duty, and that the jury
should have been instructed that if
they should so find, the appellant was
not liable.
A railroad company which pays for
a special policeman to guard its
property and preserve order upon one
of its piers, is not liable for an un-
provoked assault by the policeman
upon a driver of a team in the pub-
lic street but coming to the pier, be-
cause the driver did not stop as soon
as the policeman signalled to him to
do so. Pennsylvania R. Co. v. Kelly,
supra.
7a A ticket agent who, in order to
collect a fare which he claims has
not been paid, follows a woman out
upon the platform of an elevated
railway structure and there accuses
her of passing counterfeit money,
slanders her character, lays hands
upon her and detains her for some
time, is acting within the course of
his employment. Palmeri v. Man-
hattan R. Co., 133 N. Y. 261, 28 Am.
St Rep. 632, 16 L. R. A. 136.
The conductor of a passenger train
refused to accept plaintiff's ticket
and demanded cash fare. Some dif-
ficulty ensued and the conductor
caused the plaintiff to be arrested
and taken from the train at the next
town. The company was held liable
for the false arrest. Atchison, etc.,
R. Co. v. Henry, 55 Kan. 715, 29 L. R.
A. 465. See also, Palmer v. Maine
Central R. Co., 92 Me. 399, 69 Am. St.
Rep. 513, 44 L. R. A. 673; Lynch v.
Metropolitan El. R. Co., 90 N. Y. 77,
43 Am. Rep. 141; Krulevitz v. East-
ern R. Co., 143 Mass. 228; Ruth v. St.
Louis Transit Co., 98 Mo. App. 1;
Dwyer v. St. Louis Transit Co., 108
Mo. App. 152; Farry v. Great North.
Ry. Co., [1898] 2 Irish, 352; Robert-
son v. Balmain Ferry Co., 6 New
South Wales State Rep. 195.
A railroad company is liable for an
assault and battery by the conduc-
tor upon a passenger in seizing or at-
tempting to seize her property in or-
der to enforce payment of fare.
Ramsden v. Boston, etc., R. Co., 104
Mass. 117, 6 Am. Rep. 200.
Where the agent of an express com-
pany instituted criminal proceedings
against consignees who had ob-
tained a package without paying the
1532
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES
L 1973
others similarly situated may be found to be expressly or by implica-
tion, authorized to apprehend, detain or give into custody persons guilty
of "shop-lifting" and other similar offenses. 74 Conductors and other
similar agents on trains and boats, door-keepers at theaters, and the
charges, it was held that if he did
this as a means of collecting the
money for his principal the latter
was liable: but not, if the purpose
was simply to punish the offender.
Cameron v. Pacific Express Co., 48
Mo. App. 99.
But where a ticket agent directed
the arrest of one who he thought had
attempted to rob the till, he was held
to be acting without the scope of his
authority: his authority being lim-
ited to the protection of his princi-
pal's property, and as the attempt of
plaintiff to rob the till had been com-
pleted, and without success, his ar-
rest was not an act of protection but
of punishment, for which the de-
fendant was not liable. Allen v.
London, etc., R. Co., L. R. 6 Q. B. 65.
Followed in Knight v. North Metro-
politan Tramways Co., 78 L. T. 227,
where a conductor caused the arrest
of a passenger because he errone-
ously thought the passenger had at-
tempted to pay fare with counterfeit
money.
74 Where a saleswoman mistakenly
thought she saw a customer steal
lace, and reported it immediately to
the floor walker, who arrested the
customer and searched her, the em-
ployer was held liable. Knowles v.
Bullene, 71 Mo. App. 341.
A clerk was temporarily left in
charge of a small store. Erroneously
thinking he discovered a customer
stealing silverware he detained her
and sent for a police officer who
searched her. The court held the
employer liable on the ground that
protecting and attempting to recover
the master's property might be found
to be within the course of the serv-
ant's employment. Staples v. Schmid,
18 R. I. 224, 19 L. R. A. 824 (disap-
proving Mali v. Lord, 39 N. Y. 381,
100 Am. Dec. 448); Mallach v. Rid-
ley, 43 Hun (N. Y.), 336, follows
Mali v. Lord, supra. In Gearity v.
Strasbourger, 133 N. Y. App. Div. 701,
a saleswoman in a department store
falsely reported to the manager that
the plaintiff had stolen goods. The
manager took plaintiff to one of the
proprietors, called a police officer and
with the acquiescence of the proprie-
tor caused plaintiff's arrest. Held,
that both manager and proprietor
were liable. See also, Vrchotka v.
Rothschild, 100 111. App. 268.
Where a floor-walker, for the pur-
pose of extortion, arrested a woman
and accused her of theft when he
knew 'she had not stolen anything,
the employer is not liable. Cobb v.
Simon, 124 Wis. 467.
In Smith v. Munch, 65 Minn. 256,
the plaintiff was a striker who cre-
ated some disturbance in and about
the factory of the Bohn Mfg. Co., at
the noon-hour. Munch, who was su-
perintendent of the shops and yard,
was absent at the time. Late in the
afternoon Munch returned to the fac-
tory, and upon learning of the trou-
ble at noon, directed a policeman to
arrest the plaintiff, which was done
without a warrant. The court held
the company liable for the unlawful
arrest, saying, by Mitchell, J. : "This
duty [of the general superintend-
ency] impliedly included the protec-
tion of the premises and property
from trespassers, and the protection
of the employees, while at work,
from the interference of intruders.
The act of Munch in directing plain-
tiff's arrest was evidently not done
in his own interest, or for his own
benefit, but in the furtherance of the
interest of the company by protect-
ing its property and employees from
wrongdoers."
1533
1974]
THE LAW OF AGENCY [BOOK IV
;
like, have often express, and may have implied, authority to arrest
and give into custody persons misbehaving themselves upon the em-
ployers' premises or vehicles. 75 Many other similar cases will at once
suggest themselves.
In all these cases the master will be liable if the servant thus author-
ized, while acting within the course of his master's business and not
solely for his own ends or purposes, makes an unjustifiable arrest or,
causes an illegal imprisonment, even though the servant acted upon
insufficient evidence or with mistaken zeal or even in direct disregard
of the precautionary instructions which had been given him by the
master. 76
1974. Where' however no express authority to arrest
has been given and it cannot be regarded as a legitimate incident of
any power expressly given, the master will not be liable, even though
the servant may have caused the arrest with the mistaken notion of
furthering the master's business. 77 A fortiori will the master not be
75 In Gillingham v. Ohio River R.
Co., 35 W. Va. 588, 29 Am. St. Rep.
827, 14 L. R. A. 798, the conductor of
the defendant had a controversy
with an intoxicated passenger. He
summoned a policeman to arrest the
disturber, but by mistake he pointed
out the Wrong passenger. The court
held the company liable for the false
arrest, as the conductor was acting
on behalf of the company in direct-
ing the arrest of the plaintiff.
For cases of unauthorized arrests
growing out of controversies over the
payment of fare, see, Ruth v. St.
Louis Transit Co., 98 Mo. App. 1;
Kelly v. Durham Traction Co., 132
N. Car. 368.
Proprietor of theater liable. for as-
sault and arrest of patron by door-
keeper and ticketseller. Dickson v.
Waldron, 135 Ind. 507, 41 Am. St.
Rep. 440, 24 L. R. A. 483.
76 See, Hull v. Boston, etc., R. Co.,
210 Mass. 159, 36 L. R. A. (N. S.)
406, Ann. Gas. 1912, C. 1147; Whit-
man v. Atchison, etc., R. Co., 85 Kan.
150, Ann. Gas. 1912, D. 722; Pennsyl-
vania R. Co. v. Weddle, 100 Ind. 138;
Evansville, etc., R. Co. v. McKee, 99
Ind. 519, 50 Am. Rep. 102; American
Express Co. v. Patterson, 73 Ind. 430;
Gillingham v. Ohio R. R. Co., 35 W.
Va. 588, 29 Am. St. Rep. 827, 14 L. R.
A. 798; Smith v. Munch, 65 Minn.
256; Singer Mfg. Co. v. Rahn, 132
U. S. 518, 33 L. Ed. 440; Kastner v.
Long Island R. Co., 76 N. Y. App.
Div. 323; Chicago, etc., R. Co. v. Hol-
liday, 30 Okla. 680, 39 L. R. A. (N.
S.) 205. And other cases cited in
preceding notes.
77 An agent in possession of a stock
of goods as agent for a chattel mort-
gagee has no implied authority to
prosecute for perjury. Laird v. Far-
well, 60 Kan. 512.
Authority to arrest persons for vio-
lation of labor contracts is not inci-
dent to the employment of clerks in
a commissary store maintained by the
construction company whose con-
tracts had been violated. Vara v.
Quigley Const. Co., 114 La. 262.
Authority to exclude all persons
from a certain building who do not
have a ticket, does not authorize the
servant to procure a policeman to ar-
rest a woman who tried to force her
way in without a ticket. Barabasz v.
Kabat, 86 Md. 23.
It is no part of a ticket agent's
duty to endeavor to apprehend coun-
terfeiters, and the company is not re-
1534
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES
[ 1974
liable where the arrest or imprisonment is merely the result of the serv-
ant's own persona] malice or ill-will, 78 or of his, generally commenda-
ble, desire, as a citizen, after his duty to his master has ceased, to bring
offenders to justice. 79
sponsible for an unauthorized arrest
where the company's interests are
not concerned, as where the ticket
agent deliberately takes a bill which
he believes to be counterfeit in order
to aid the police in the detection of
counterfeiters. Mulligan v. N. Y.,
etc., Ry. Co., 129 N. Y. 506, 26 Am. St.
Rep. 539, 14 L. R. A. 791. See also,
Central Ry. Co. v. Brewer, 78 Md.
394, 27 L. R. A. 63; Gulf, etc., R. Co.
v. Donahoe, 56 Tex. 162.
In Little Rock Trac. & Elec. Co. v.
Walker, 65 Ark. 144, 40 L. R. A. 473,
a street car conductor called a police-
man to take off and arrest a delin-
quent passenger. The company was
held not liable as the conductor's au-
thority was limited to removing pas-
sengers.
In Milton v. Missouri Pac. Ry. Co.,
193 Mo. 46, 4 L. R. A. (N. S.) 282, the
defendant company employed a de-
tective to ascertain the facts sur-
rounding a train robbery. The de-
tective caused the arrest of the plain-
tiff. The court held the defendant
was not liable, as authority to ascer-
tain facts does not imply authority
to arrest persons for the purpose of
ascertaining whether or not the per-
son arrested was concerned in the
robbery; (substantially similar is
Murrey v. Kelso, 10 Wash. 47).
In Lubliner v. Tiffany & Co., 54 N.
Y. App. Div. 326, the defendant was
held not liable for an unauthorized
arrest, since the agent who caused it
was not one who had any duty in the
matter. To same effect: Waters v.
Anthony, 20 App. Cases (D. C.), 124.
See also, Hern v. Iowa State Agri-
cultural Society, 91 Iowa, 97, 24 L. R.
A. 655.
78 If a "floor-walker" in a store
knowingly makes a false charge of
theft against a person and by trick
attempts to sustain it, for the pur-
pose of extorting money from her,
the master is not liable. Cobb v.
Simon, 124 Wis. 467, 119 Wis. 597.
79 Arrests made or caused after the
emergency is passed and merely for
the purpose of punishing the offender
or bringing him to justice, are not
ordinarily within the scope of the
employment of an agent whose duty
it is to guard or protect property or
to recover it if taken. Markley v.
Snow, 207 Pa. 447, 64 L. R. A. 685;
Hanson v. Waller, [19011 1 Q. B. 390,
Abrahams v. Deakin, [1891] 1 Q. B.
516 (where the servant having first
been offered a coin which he thought
was counterfeit, and having refused
it and received another which was
good, shortly afterwards gave the
payer into custody for attempting to
pass counterfeit money); Allen v.
London, etc., Ry. Co., L. R. 6 Q. B. 65;
Travis v. Standard L. & A. Ins. Co.,
86 Mich. 288 (followed in Govaski v.
Downey, 100 Mich. 429; Singer Mfg.
Co. v. Hancock, 74 111. App. 556.
In Decker v. Lackawanna, etc., R.
Co., 39 Pa. Super. Ct. 225, the con-
ductor of a train telegraphed ahead
to the train dispatcher that there was
a crowd of disorderly persons on his
train. The dispatcher telegraphed
back that there would be police offi-
cers at the station when the train ar-
rived, but that they were instructed
not to arrest anyone for what he
had done upon the train. When the
train arrived, a police officer asked
the conductor to point out the dis-
orderly group and the conductor did
so. Thereupon the officer arrested
the plaintiff who was one of them.
Held, that the company was not lia-
ble for this arrest.
Arrests caused by an agent to save
himself from liability to master
1535
1975]
THE LAW OF AGENCY
[BOOK iv
1975.
Unfounded prosecutions. Closely allied to the
questions just considered and in many cases identical with them, is the
question of the master's liability for unjustified prosecutions. The au-
thority to institute prosecutions may be expressly conferred, 6r i: it
mav be found to be within the scope of an authority conferred for some
other purpose. In either event a prosecution undertaken in pursuance
of it and for the purpose of furthering the masters business would, if
unfounded, impose liability upon the master. 80
^Prosecutions, however, the institution of which has no legitimate
relation to the master's business or which can not be deemed to be
i . *
rather than to further the master's
interests, do not make master liable.
Larson v. Fidelity Mut L. Ass'n, 71
Minn. 101. Nor does an arrest di-
rected by a ticket collector of a pas-
senger who pushed him while going
upon the platform to take a train.
Hamilton v. Railway Commissioners,
5 New S. Wales S. R. 267.
so See Ruth v. St. Louis Transit
Co., 98 Mo. App. 1 (a case where the
foreman of the transit company in-
stituted a proceeding against the
plaintiff for a disturbance of the
peace, as the reSult of a controversy
over an unfounded claim that the
plaintiff had not paid his fare);
Dwyer v. St Louis Transit Co., 108
Mo. App. 152, (a case of the same
general nature). But see Central
Ry. Co. v. Brewer, 78 Md. 394, 27 L.
R. A. 63; Cameron v. Pacific Express
Co., 48 Mo. App. 99, (a more ques-
tionable case, where the agent of an
express company instituted criminal
proceedings for the purpose of coerc-
ing payment of charges upon a pack-
age sent C. 0. D. which the con-
signees had obtained from a boy in
charge of the office without paying
the charges); Lyden v. McGee, 16
Ont 105; Wheeler & Wilson Mfg. Co.
v. Boyce, 36 Kan. 350, 59 Am. Rep.
571, (where the company had di-
rected an agent to bring replevin for
a machine sold, which the agent did,
and then as the constable could not
find it caused the plaintiff, who was
the buyer's husband, to be arrested,
charged with secreting the machine).
si In the following cases the de-
fendant was held not liable: Govaski
v. Downey, 100 Mich. 429, (prosecu-
tion for the theft of a railroad com-
pany's property instituted by one
called a detective but no evidence
given showing that the act was
within the scope of his employment) ;
Murrey v. Kelso, 10 Wash. 47,
(where agent employed to search for
property which had been lost and to
take all legal steps for its recovery,
instituted a prosecution for the lar-
ceny of the property) ; Laird v. Far-
well, 60 Kan. 512, (where an agent
put in charge of goods instituted
prosecution for perjury against a per-
son who had made an affidavit In at-
tachment proceedings wherein some
of the goods in the agent's possession
were seized) ; Springfield Engine Co.
v. Green, 25 111. App. 106, (where the
collection agent instituted prosecu-
tions for forgery against a debtor
who, as he contended, had forged an
agreement giving a rebate on the
claim); Atchison, etc., Ry. Co. v.
Brown, 57 Kan. 785, (where the claim
agent of a railroad company insti-
tuted prosecution for the robbing of
a post-office on the theory, as it was
contended, that he might thereby
discover who had robbed the railroad
company on another occasion) ; Sta-
ton v. Mason, 106 N. Y. App. Div. 26,
(where a prosecution was instituted
by one called the 'credit clerk" of the
defendant, hut concerning the scope
of whose duty no evidence at all ap-
pears).
1536
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES [ 1976
within the scope of the agent's authority ; 81 and those instituted merely
to punish an offender or to bring a wrongdoer to justice; 82 and those
instituted merely to accomplish some purpose of the agent only ; 83 and
those which owe their origin wholly to the personal ill-will or malice
of the agent, 84 impose no liability upon the master. *.&
1976. Malicious prosecution. It has been seen in an
earlier section 8B that there are many cases in which the principal may
be liable, as for an act within the scope of the employment, where his
agent has instituted a prosecution against a third person without rea-
sonable cause. Although these are called cases of malicious prosecu-
tion, the cause of action does not depend upon the existence of express
or actual malice. The question now in hand concerns cases where such
express or actual malice is involved. May the principal be held liable
for a prosecution instituted because of the express and actual malice
of hi's agent? The determination of this question seems to depend
upon the same considerations as those already referred to in connection
with the general subject of malicious motive. If, though the agent had
actual ill-will against the person prosecuted, the prosecution of that
person was an act within the scope of his employment, and was insti-
tuted because it was within the scope of his employment, the princi-
pal would be liable regardless of the motive. 86 If, on the other hand,,
though the prosecution of some other person might be within the scope
of the employment, the prosecution of this person was not, or though
the prosecution of this person under some other circumstances would be
within the course of his employment, the prosecution of him under
these circumstances was not, and the agent prosecuted this person, or
this person under these circumstances, merely to give expression to
sa Markley v. Snow, 207 Pa. 447, stituted by an agent primarily to co-
64 L. R. A. 685; Singer Mfg. Co. v. erce payment of a claim upon which
Hancock, 74 111. App. 556; Carter v. the agent was also liable).
Howe Machine Co., 51 Md. 290, 34 In Kutner v. Fargo, 20 N. Y. Misc.
Am. Rep. 311; Daniel v. Atlantic 207, it was held that the master is
Coast L. R. Co., 136 N. C. 517, 1 Ann. not chargeable with the malice of his
Cas. 718, 67 L. R. A. 455. agent or servant in giving testimony
T^ie master is not liable for ar- upon a criminal proceeding,
rests or prosecutions by a servant 84 See post, 1976.
"on his own responsibility only," 85 See ante, 1973.
even though his purpose was to pro- 86 See Ruth v. St. Louis Transit
mote his master's interest, e. g., to Co., 98 Mo. App. 1; Stubbs v. Mulhol-
collect a debt due to the master. land, 168 Mo. 47; Dw.yer v. St Louis
Emerson v. Lowe Mfg. Co., 159 Ala. Transit Co., 108 Mo. App. 152; Hus-
350. sey v. Norfolk, etc., R. R. Co., 98 N.
ss Larson v. Fidelity Mutual Life C. 34, 2 Am. St. Rep. 312.
Ass'n, 71 Minn. 101, (prosecution in-
97 1537
1977] THE LAW OF AGENCY [BOOK rv
some actual malice of his own, the principal would not be liable. 87 In
some cases, the time at which the prosecution was instituted may be
material. The institution of proceedings at the time of the transaction
may sometimes be deemed to be so closely incidental to the transaction,
as to come within the scope of the authority to do it ; while if the pros-
ecution be delayed it can only be accounted for upon the ground that
its purpose was to punish or to get revenge or simply to perform a
public duty by bringing the offender to justice. 88 No one of these pur-
poses would ordinarily be within the scope of the authority, and the
second one, which is the only one here pertinent, would obviously not
be within its scope.
1977. Assaults. The cases in which the master can be
held liable for assaults committed by his servant, upon the ground that
the assault was committed within the scope of the employment, are not
very numerous. The cases in which the master owes a special duty of
protection, as in the case of the carrier of passengers and others simi-
larly situated, stand upon special ground, and have already been con-
sidered. 89 They do not usually rest merely upon the doctrine of re-
spondcat superior. So it has been seen that where the master confides
to the servant the performance of a duty which ordinarily and directly
involves the exercise of force and the servant is put in a position where
he must determine when the force is to be exercised, and to what de-
gree, the master may be liable though the servant mistakes the occa-
sion or uses the force to an excessive degree. 90 So, though the master
.
8 7 See Larson v. Fidelity Mutual souri Valley R. Co., 55 Mo. 315, 17
Life Ass'n, 71 Minn. 101; Carter v. Am. Rep. 653; Daniel v. Atlantic
Howe Machine Co., 51 Md. 290, 34 Coast L. R. Co., 136 N. Car. 517, 1
Am. Rep. 311; Wallace v. Finberg, Ann. Cas. 718, 67 L. R. A. 455.
46 Tex. 35. 89 See 1931.
ss See Allen v. London, etc., Ry. 90 "If the master give an order to
Co., L. R. 6 Q. B. 65, (where the a servant which implies the use of
court refers to "a marked distinction force and violence to others, leav-
between an act done for the purpose ing to the discretion of the servant
of protecting the property by pre- to decide when the occasion arises to
venting a felony, or of recovering if which the order applies, and the ex-
back, or an act done for the purpose tent and kind of force to be used, he
of punishing the offender for that is liable if the servant in executing
which has already been done") ; Car- the order makes use of force in a
ter v. Howe Machine Co., 51 Md. 290, manner or to a degree which is un-
34 Am. Rep. 311; Travis v. Standard justifiable." Howe v. Newmarch, 12
L. & A. Ins. Co., 86 Mich. 288; Allen (Mass.), 49.
Markley v. Snow, 207 Pa. 447, This doctrine is constantly applied
64 L. R. A. 685; Tolchester Beach in a great variety of cases against
Imp. Co. v. Steinmeier, 72 Md. railroad companies which have au-
313, 8 L. R. A. 846; Gillett v. Mis- thorized their servants to eject or
1538
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES
[ 1977
may not have contemplated the exercise of force, still if he sends his
servant to perform an act which is immediately and directly likely to
result in the exercise of force by the servant, as where resistance to
the act is reasonably to be anticipated, the master will be liable if, in
a conflict which ensues, the servant is guilty of illegal or excessive
force. 91 There may also be cases in which the use of force for the pro-
remove persons who do not pay their
fare or comply with other regulations
of the company, or persons who tres-
pass upon the vehicles or premises
of the company. These cases are al-
most too numerous to mention, but
among them see: Golden v. Northern
Pac. Ry. Co., 39 Mont. 435, 18 Ann.
Cas. 886, 34 L. R. A. (N. S.) 1154;
Chicago, etc., Ry. Co. v. Kerr, 74
Neb. 1; Central of Georgia Ry. Co.
v. Brown, 113 Ga. 414, 84 Am. St.
Rep. 250; M. & O. R. R. Co. v. Scales,
100 Ala. 368; Kansas City, etc., R.
Co. v. Kelly, 36 Kan. 655, 59 Am. Rep.
596; Marion v. Chicago, etc., R. Co.,
64 Iowa, 568; St. Louis, etc., R. Co. v.
Pell, 89 Ark. 87.
Within the same principle are Bar-
den v. Felch, 109 Mass. 154; where
the defendant entered on land and
directed his servant to maintain pos-
session by force. The servant injured,
the plaintiff in a conflict which en-
sued over the possession.
Rogahn v. Moore Mfg. Co., 79 Wis.
573, where the foreman of the
defendant's works discharged an em-
ployee and seriously injured him
while forcibly ejecting him from the
works.
Canfield v. C. R. I. & P. Ry. Co., 59
Mo. App. 354, where the defendant
had employed a servant to prevent
telegraph operators, who were on a
strike, from persuading the operators
in the employ of the defendant from
joining the strike, and such servant
had viciously assaulted plaintiff, one
of the striking operators, while
plaintiff was in the company's offices
talking to the operator.
Houston, etc., Ry. Co. v. Bell, 73
S. W. 56 (Tex. Civ. App.), where a
freight agent whose duties included
the protection of freight, injured
plaintiff in an altercation which grew
out of rough handling of freight by
plaintiff.
In Alton Ry. & Illuminating Co.
v. Cox, 84 111. App. 202, a care-taker
of a park owned by defendant or-
dered plaintiff to leave the park.
The plaintiff started out, and a con-
troversy arose as to the keeper's au-
thority to put him out of the
grounds. In the controversy and
physical combat which followed the
keeper threw stones at the plaintiff
and struck him. The master was held
liable. See also, Johnson v. C. R. I.
& P. Ry. Co., 58 Iowa, 348.
In Lesch v. Great Northern Ry. Co.,
93 Minn. 435, a watch'man authorized
to search for stolen property, brutally
conducted a search and seriously
frightened plaintiff. The defendant
was held liable.
See also, Griffith v. Friendly, 30
Misc. 393; Oakland City Agricultural
Society v. Bingham, 4 Ind. App. 545.
si In McClung v. Dearborne, 134 Pa.
396, 19 Am. St. Rep. 708, 8 L. R. A.
204, the defendant instructed his col-
lector to take possession of a certain
organ if he could get it peaceably and
without assaulting anyone. The col-
lector assaulted the plaintiff in his
effort to get possession of the organ.
The court held the defendant liable.
Followed in Shear v. Singer Sewing
Mach. Co., 171 Fed. 678.
For a case very similar in its facts,
except that the master did not cau-
tion the servant not to commit an as-
sault, see Ferguson v. Roblin, 17 Ont.
167; also, O'Connell v. Samuel, 81
Hun (N. Y.), 357; Levi v. Brooks, 121
Mass. 501; Regg v. Buckley-Newhall
Co., 72 N. Y. Misc. 387, (where such
1539
1978]
THE LAW OF AGENCY
[BOOK iv
tection of property, or the prevention of trespasses, and the like, was
so far contemplated as to make the master liable for an unlawful as-
sault in the performance of these duties. 92 Aside from cases of this
nature, the instances must be rare in which the exercise of personal
violence can be regarded as within the scope of the employment. 93
1978. The servant's act in punishing persons who annoy
him in the performance of the service, or who interfere with or in-
jure the master's property, or his own gratuitous act in using personal
violence as a means of coercing the performance of contracts or the
payment of debts due the master,, can very seldom be regarded as
within the course of the employment. 94 A fortiori will this be true
instructions were given); see also, without provocation assaulted a cus-
tomer against whom he had personal
ill-will); Paulton v. Keith, 23 R. I.
164, 54 L. R. A. 670 (the manager of
the defendant's theater held the door
to the stage to prevent an officer serv-
ing a writ on an actor within); Ever-
ingham v. Chicago, Burlington, etc.,
R. R. Co., 148 Iowa, 662, Ann. Gas.
1912, C. 848 (where the defendant's
switchman while switching cars on
the spur track near plaintiff's eleva-
tor, walked over to the plaintiff and
assaulted him after abusive words
had passed between them); Berry-
man v. Pennsylvania R. R. Co., 228
Pa. 621, 30 L. R. A. (N. S.) 1049
(where the plaintiff had just stepped
off the defendant's train, the defend-
ant's watchman without provocation
fired several revolver shots at him);
Miller v. Wanamaker, 111 N. Y.
Supp. 786 (where the defendant's
driver, irritated because the plain-
tiff would not let him unload his
wagon as soon as he desired, kicked
the plaintiff's horse, causing it to run
away) ; Ducre v. Sparrow-Kroll Lum-
ber Co., 168 Mich. 49 (the plaintiff
had been using abusive and indecent
language in the defendant's store, and
after he had become quiet, the de-
fendant's servant assaulted him with
a hammer).
4 In the following cases the mas-
ter was held not liable: Dolan v.
Hubinger, 109 Iowa, 408 (where a
motorman threw a stone at boys who
had placed obstructions on the track
Dyer v. Munday, [1895] 1 Q. B,
D. 742. Peddie v. Gaily, 109 N.
Y. App. Div. 178, is put on the
same ground, although the in-
ference of authority does not seem
to the present writer so obvious as it
did to the court. Canton v. Grinnell,
138 Mich. 590; Zart v. Singer Sewing
Mach. Co., 162 Mich. 387, lay down a
narrower rule.
See also, Hardeman v. Williams,
169 Ala. 50. Probably Miller-Brent
Lumber Co. v. Stewart, 166 Ala. 657,
where the assault occurred in forcing
a disputed way, must rest on some
such ground as this if it be sound.
Waaler v. Great Northern Ry. Co., 22
S. Dak. 256, 18 L. R. A. (N. S.) 297,
another case of a disputed way, was
put upon this ground.
In Cleveland v. South Covington,
etc., Ry. Co., 30 Ky. L. Rep. 1072, 100-
S. W. 283, 11 L. R. A. (N. S.) 853, a
street railway company was held lia-
ble where its inspector, whose duty
It was to visit and interview persons
claiming to have been injured and to
ascertain the nature and extent of
their injuries, undertook to do this
by putting his hands on the plaintiff
and physically examining her alleged
injuries.
2 See ante under False Imprison-
ment and Arrest and post under head
of Shooting.
3 Thus the master was held not
liable in Linck v. Matheson, 63 Wash.
593 (an employee in a billiard parlor
1540
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES
[ 1978
where the violence is resorted to for the purpose of coercing the per-
formance of that in which the servant was primarily interested rather
and struck the plaintiff, one of the
boys); Rudgeair v. Reading Traction
Co., 180 Pa. 333 (where a motorman
left a car and struck the driver of a
team which was on the track ahead of
him); Lynch v. Florida, etc., Ry. Co.,
113 Ga. 1105, 54 L. R. A. 810 (where
a station agent and his father struck
and injured plaintiff in an altercation
arising from a personal quarrel,
which quarrel had its inception in a
dispute over a business transaction
of the plaintiff with the defendant
railroad); Georgia Railroad & Bank-
ing Co. v. Wood, 94 Ga. 124, 47 Am.
St. Rep. 146 (where a brakeman threw
a stone at a boy who had been jump-
ing on the train, and struck the plain-
tiff, a by-stander) ; Guille v. Camp-
bell, 200 Pa. 119, 86 Am. St. Rep. 705,
55 L. R. A. Ill (where a servant of
defendant who was engaged in hand-
ling bales of cotton, waved an iron
hook, furnished by defendant to fa-
cilitate the handling of the cotton, to
frighten boys who were playing on
the bales; the hook slipped from his
hand and struck plaintiff); Williams
v. Pullman Car Co., 40 La. Ann. 87,
8 Am. St. Rep. 512 (where a porter
of defendant violently assaulted the
plaintiff who had stepped from the
day coach into the sleeper operated
by defendant to ask permission to use
the toilet accommodations therein);
Fairbanks v. Boston Storage Ware-
house Co., 189 Mass. 419, 109 Am. St.
Rep. 646, 13 L. R. A. (N. S.) 422
(where an elevator operator em-
ployed by defendant struck the plain-
tiff, without provocation, while the
plaintiff was in defendant's ware-
house looking after his goods that
were stored there); Brown v. Boston
Ice Co., 178 Mass. 108, 86 Am. St. Rep.
469 (where the driver of defendant's
ice wagon left the company's ax on
the sidewalk while he delivered ice
to a house; upon returning he found
that plaintiff, a boy, had broken it,
and the driver struck him to punish
him for the act); Johanson v. Pio-
neer Fuel Co., 72 Minn. 405 (where
an employee in charge of a coal yard
accused the plaintiff of attempting to
get more coal than he was entitled to,
and upon plaintiff denying it, became
enraged and beat plaintiff) ; Campbell
. v. Northern Pacific Ry. Co., 51 Minn.
488 (where a surgeon employed by
defendant railroad assaulted and in-
jured the plaintiff, an assistant, while
both were in a hospital performing
their respective duties) ; Walker v.
Hannibal, etc., Ry. Co., 121 Mo. 575,
42 Am. St. Rep. 547, 24 L. R. A. 363
(where a baggageman threw drills
out of his car which struck plaintiff,
which drills the baggageman was car-
rying merely for accommodation and
without authority from the defend-
ant) ; Collette v. Rebori, 107 Mo. App.
711 (where a debtor called to see
about a bill he claimed to have paid,
and a servant of the defendant who
was authorized to collect, assaulted
him in an altercation that followed);
Feneran v. Singer Mfg. Co., 20 N.
Y. App. Div. 574, 47 N. Y. Supp. 284
(where an agent of defendant, au-
thorized to collect installments but
directed not to re-take property, in-
jured plaintiff in an attempt to
re-take property); Meehan v. More-
wood, 52 Hun (N. Y.), 566 (where
the foreman of the defendant's
tea-house assaulted the plaintiff, a
truckman who was getting a load
of tea, because the plaintiff re-
fused to take a chest he thought was
in bad order) ; Kennedy v. White, 91
N. Y. App. Div. 475 (a janitor em-
ployed by defendant occasionally
drove away unruly boys from about
the premises; on one such occasion
the boys who were disturbing him
ran away at his approach, and look-
ing across the street he saw plaintiff,
who was not and had not been mis-
conducting himself, and threw a stick
1541
THE LAW OF AGENCY
[BOOK iv
than the master. 95 It is true that expressions indicating a wider lia-
bility are sometimes to be found. Thus in a case in Wisconsin 9e where
the servant who was a barkeeper had made an assault upon one of his
master's patrons, for the purpose, as it was contended, of coercing pay-
ment for liquors which he had purchased, the court said : "If B (the
servant) committed the assault for the purpose of collecting payment
for his master's liquor, he was within the scope of his employment. It
was his method of performing the duty delegated to him, and, although
the method may not have been either authorized or even contemplated,
nay, although it may have been expressly prohibited, yet the mas-
'8 8i9fjw) H& J'fiifiirp riv(ic*i't'.>(| t: uio
-tti fvnfi bftjiufisefl bioift/n Infibnalab
at him which struck and injured
him); Wagner v. Haak, 170 Pa. 495
(where defendant told his lessees of
a quarry to tear down a fence erected
by plaintiff, and "he would stand by
them," and the lessees struck and
beat plaintiff when he resisted) ; Ben-
ton v. Hill Mfg. Co., 26 R. I. 192
(where an operator of defendant
threw a sharp piece of iron and
struck the plaintiff, a child, who was
annoying such operator by watching
him work ) ; Waaler v. Great North-
ern Ry. Co., 18 S. D. 420, 112 Am. St.
Rep. 794, 70 L. R. A. 731 [but see s. c.
22 S. Dak. 256, 18 L. R. A. (N. S.)
297] (where the owner of land on
which defendant's foreman had been
directed to build a snow fence sent
the plaintiff to remonstrate and
thereupon, at the foreman's direction,
one of the foreman s crew assaulted
plaintiff) ; Ware v. Barataria, etc.,
Canal Co., 15 La. 169, 35 Am. Dec.
189 (where a lock-keeper on a canal
assaulted the plaintiff under the pre-
text that the latter had not paid the
toll) ; Kaiser v. McLean, 20 N. Y. App.
Div. 326 (a servant employed to light
lamps and guard them on an elevated
railroad structure, threw stones at
plaintiff, which caused plaintiff to
run in front of an approaching train;
the court held the servant had no au-
thority to assault anyone).
ss In McDermott v. American Brew-
ing Co., 105 La. 124, 83 Am. St. Rep.
225, 52 L. R. A. 684, defendant's
driver made an assault to secure pay-
r> nl nofjq-mi sji barf [fmenp
ment for beer delivered the day be-
fore without being paid for, and for
which the driver was therefore per-
sonally responsible. Held, that the
defendant company was not liable for
the assault.
In Steinman v. Baltimore Antisep-
tic Laundry Co., 109 Md. 62. 21 L. R.
A. (N. S.) 884, the same result was
reached in a case involving similar
facts.
ee Bergman v. Hendrickson, 106
Wis. 434, 80 Am. St. Rep. 47.
Compare McDermott v. American
Brewing Co., 105 La. 124, 83 Am. St.
Rep. 225, 52 L. R. A. 684, supra. See
also, McClung v. Dearborne. 334 Pa.
396, 19 Am. St. Rep. 708, 8 L. R. A.
04; O'Connell v. Samuel, 81 Hun
(N. Y.), 357; Peddle v. Gaily, 109 N.
Y. App. Div. 178; Ferguson v. Rob-
lin, 17 Ont. 167.
Language very similar to that of
the Wisconsin court is found in the
opinion of Vann, J., in Nowack v.
Metropolitan St. Ry. Co., 166 N. Y.
433, 82 Am. St. Rep. 691, 54 L. R. A.
592. With deference, the implica-
tions of his language are too wide.
An assault to coerce the payment
of a debt seems to have been thought
to be within the course of the em-
ployment of the foreman of a gang
of men engaged in railroad construc-
tion in Bucken v. South, etc., R. Co.,
157 N. Car. 443. The writer cannot
understand how reasonable men
could come to that conclusion, but it
is evident that they did.
1542
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES
[ 1979
tcr is liable for the damages caused thereby, provided he has entrusted
to the servant the duty he was attempting to perform." Unless there
was something indicating that the use of force was contemplated or
usual, of which there was no evidence or unless the court deemed
the case to fall within the principle of those in which a special duty of
protection is supposed to exist (which seems probable from the cases
cited), it must be thought that the rule here laid down is wider than
sound principle or the authorities generally will justify. It surely can-
not be true that because the master has entrusted to a servant the per-
formance of a duty, the master can be held responsible for whatever
method the servant may adopt in attempting to perform it.
1979. Shooting. The question whether a master can be
held responsible for the shooting of a person by a servant whom the
master has placed in charge of property, is a question which must de-
pend upon a great variety of circumstances. The master may undoubt-
edly authorize the use of force under such circumstances as to be liable
even for so extreme an application of it. 87 Under familiar principles
OT In Letts v. Hoboken Ry., etc.,
Co., 70 N. J. L. 358, the plaintiff's
petition alleged that defendant's
watchman, while executing his au-
thority by removing the plaintiff
from the defendant's premises, shot
and injured the plaintiff. The court
held the petition good on demurrer,
saying: "Authority, given by the
master to his servant, to eject tres-
passers from the former's premises,
charges the master with liability for
the act of the servant in using ex-
cessive or inappropriate force in re-
moving one who was a trespasser."
In Fraser v. Freeman, 56 Barb. (N.
Y.) 234, the defendant was in a dis-
pute with the plaintiff's intestate
over the right to a building occupied
by defendant. The defendant took
two servants, both armed to defend-
ant's knowledge, with the declared
intention of "fighting it out" with
plaintiff's intestate. The plaintiff's
intestate offering resistance, the serv-
ant of defendant killed him. The
master was held liable for the serv-
ant's acts.
In Haehl v. Wabash Ry. Co., 119
Mo. 325, a watchman of defendant,
'
employed on a bridge with authority
to keep trespassers off, shot and
killed the plaintiff's intestate, while
he was trespassing on the bridge, al-
though the. evidence fails to show
any personal ill will held by the serv-
ant against the trespasser. The court
held the defendant liable, but this
case goes very far, and it cannot be
reconciled with some of the cases
cited in the following note.
In Magar v. Hammond, 183 N. Y.
387, 3 L. R. A. (N. S.) 1038, the de-
fendant employed a watchman to
guard his game preserve. The watch-
man shot the plaintiff, who was
poaching thereon. The court held
that to render the defendant liable
the shooting must have been done by
the watchman while acting in the
scope of his employment, and whether
it was so done is a question for the
jury to determine.
In Southern Ry. Co. v. James, 118
Ga. 340, 63 L. R. A. 257, the railway
company hired a watchman to arrest
tramps who were stealing rides.
This watchman arrested plaintiff and
was taking him to the jail when the
plaintiff sought to escape by running
1543
1979]
THE LAW OF AGENCY
[BOOK iv
he may be liable where, having authorized the servant to use some
force, the servant has used excessive force. The mere fact however
that the servant is put in charge of property will not justify him in
shooting any one who interferes with it, and the master will certainly
not be liable where the servant shoots simply to give vent to his own
personal malice or resentment, and certainly not in any case in which
the shooting had no connection with or relation to the act which the
s'ervant was authorized to perform."
away. The watchman shot him to
stop him. The company was held
liable.
In Savannah Electric Co. v.
Wheeler, 128 Ga. 550, 10 L. R. A. (N.
S.) 1176, a drunken street car con-
ductor refused to give a passenger
change, and when asked for it, drew
his revolver, and attempted to shoot
the passenger, but the passenger so
deflected his aim as to cause the bul-
let to go wide, and it struck and killed
a passer-by on the street. The com-
pany was held to be responsible for
such acts of the conductor (as the as-
sault was really upon the passenger),
and to be liable for the death of the
pedestrian.
See also, Deck v. Baltimore, etc.,
R. Co., 100 Md. 168, 108 Am. St. Rep.
399.
In Conchin v. El Paso & S. W. R.
Co., 13 Ariz. 259, 28 L. R. A. (N. S.)
88, the watchman, with a revolver
furnished by defendant, shot toward
plaintiff, intending to frighten him
away only, and hit him. Plaintiff
was a technical trespasser. The de-
fendant was held liable.
In Jones v. Railroad, 150 N. C. 473,
plaintiff was climbing upon a freight
car. The flagman told him to come
on up, but plaintiff turned to run,
when the flagman shot him. The
jury, in answer to a specific instruc-
tion, said the agent was not acting
within the scope of employment, yet
gave verdict for plaintiff. Held, it was
error to enter judgment for plaintiff.
In Robarda v. Bannon Sewer Pipe
Co., 130 Ky. 380, 18 L. R. A. (N. S.)
923, where the defendant's watchman
shot and injured the plaintiff, allega-
tions that the defendant placed fire-
arms in the servant's hands to use at
his discretion in protection of the de-
fendant's property, and that the serv-
ant negligently adjudged the plain-
tiff, who was on or near the prem-
ises, to be a wrongdoer, and fired
upon him, were held to be good on
demurrer as showing an act within
the scope of employment.
In Texas, etc., R. R. Co. v. Parsons,
102 Tex. 157, 132 Am. St. Rep. 857,
the defendant company employed a
deputy sheriff regularly to protect
their yards from trespassers. While
driving a group of trespassers from
the yards, he shot at an innocent
third party, whom he mistook for one
of the trespassers and accidentally
hit the plaintiff, one of the trespass
ers. The defendant was held liable.
os The master was held not liable
In Lytle v. Crescent News & Hotel
Co., 27 Tex. Civ. App. 530 (the plain-
tiff disputed with the waiter at de-
fendant's restaurant over a matter of
change. The plaintiff called waiter
an opprobrious name as he was leav-
ing the restaurant. The waiter pur-
sued and shot him); Turley v. B. &
M. Ry. Co., 70 N. H. 348 (a servant of
defendant, whose duty it was to trim
switch-lamps, shot plaintiff, a member
of a gang he was trying to drive from
the yards. It was no part of his duty
to clear the yards of trespassers);
Grimes v. Young, 51 N. Y. App. Div.
239 (a night watchman was furnished
with a revolver by defendant, his
master, and instructed to use it only
in self defense, or to fire in the air
1544
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES
1980. Slander and libel. The principal or master,
whether individual, corporate or partnership, may also be held liable
in many cases for the publication or utterance of a libel or slander by
his servant or agent. In the case of libel, where the publication is in
the ordinary course of business and involves no other malice or ill-will
than that inferred from the unjustifiable publication of the derogatory
matter, the cases holding the principal liable are now so numerous as
to require no discussion. 09 The principal is liable in such a case even
though he was not personally present or aware of the publication, but
to scare trespassers. The watchman
killed a boy wantonly, who was not
on defendant's property nor interfer-
ing in any way with it) ; Sandles v.
Levenson, 78 N. Y. App. Div. 306 (a
watchman seized and held a boy who
had gone into defendant's yards
(guarded by the watchman) for a
ball. While so holding the boy the
watchman, for some purpose, dis-
charged his revolver in the air, and
the bullet accidentally struck plain-
tiff) ; Holler v. Ross, 68 N. J. L. 324,
96 Am. St. Rep. 546, 59 L. R. A. 943
(defendant hired a watchman to
guard his goods stored on a wharf
belonging to another. The watchman
saw men prowling about the wharf
and ordered them to halt. They re-
fused and he shot them. The gun
used was not furnished by the de-
fendant); Golden v. Newbrand, 52
Iowa, 59, 35 Am. Rep. 257 (an armed
watchman, employed by defendant to
protect his property, shot and killed
an intoxicated man who had just been
engaged in a disturbance with an-
other, but who was retreating from
the defendant's property when
killed); Belt Ry. Co. v. Banicki, 102
111. App. 642 (a watchman shot a
trespasser; and the court held the
mere employment of a watchman to
guard premises and keep away tres-
passers, did not involve an authority
to shoot trespassers; a fortiori, where
the trespasser was actually leaving
the premises, as in this case, when
shot).
See also, Johnson v. Alabama Fuel
& Iron Co., .166 Ala. 534; Shay v.
American Steel W. Co., 218 Pa. 172;
Hidalgo v. Gulf, etc., R. Co., Tex.
Civ. App. , 128 S. W. 683; Strador
T. Hydraulic, etc., Co., 146 Ky. 580.
9 See, for example, in the case of
corporations. Hypes v. Sou. Ry. Co.,
82 S. C. 315, 17 Ann. Cas. 620, 21 L.
R. A. (N. S.) 873 (slander),; Rivers
v. Yazoo & Miss. R. R. Co., 90 Miss.
196, 9 L. R. A. (N. S.) 931 (slander);
Sawyer v. Norfolk & Sou. R. R., 142
N. C. 1, 115 Am. St. R. 716, 9 Ann.
Cas. 440 (slander); Peterson v.
Western U. Tel. Co., 65 Minn. 18, 33
L. R. A. 302 (libel); Philadelphia,
etc., R. Co. v. Quigley, 62 U. S. (21
How.) 202, 16 L. Ed. 73 (libel);
Washington Gas Light Co. v. Lans-
den, 172 U. S. 534, 43 L. Ed. 543
(libel); Hussey v. Norfolk & Sou. R.
R. Co., 98 N. C. 34, 2 Am. St. Rep. 312
(libel); Hardoncourt v. North Penn.
Iron Co., 225 Pa. 379 (libel).; Fogg v.
Boston & Lowell R. R. Co., 148 Mass.
513, 12 Am. St. Rep. 583 (libel);
Rowland v. Blake Mfg. Co., 156 Mass.
543 (libel); Rose v. Imperial Engine
Co., 127 N. Y. App. Div. 885, 195 N. Y.
515 (libel); Fraternal Alliance v.
Mallalieu, 87 Md. 97 (libel); Minter
v. The Bradstreet Co., 174 Mo. 444
(libel).
For cases involving liability ol
partners for libel, see: Woodling v.
Knickerbocker, 31 Minn. 268; Atlan-
tic Glass Co. v. Paulk, 83 Ala. 404;
Wheless v. Davis (Tex. Civ. App.),
122 S. W. 929; Haney Mfg. Co. v.
Perkins, 78 Mich. 1 (slander, and
libel); Lothrop v. Adams, 133 Mass.
471, 43 Am. Rep. 528.
1545
1981]
THE LAW OF AGENCY
[BOOK IV
had confided the conduct of the business to an agent. 1 The principal
may also be liable for publications in the course of the business, even
though actual malicious intention must be proved, 2 and he will be liable
for a publication made in the course of the business and for the pur-
pose of furthering the principal's interests even though it was the re-
sult of actual malice. 8 On the other hand, there could be no doubt that
a servant or agent who merely took advantage of the opportunity af-
forded by his position, to libel others in order to gratify his own malice
and ill-will, in matters in no way within the course of his employment,
would not impose a liability upon his principal.*
1981. 'With reference to slander, the case presents some
differences of aspect. It is more easy to see, for example, that a prin-
cipal or master, whose business is that of publishing, may be liable for
That a partner is not liable for the
slander of a co-partner, depending
upon statute. Ozborn v. Woolworth,
106 Ga. 459; Hendricks v. Middle-
brooks Co., 118 Ga. 131, 136.
For cases involving liability of in-
dividual principal or master for libel
of agent or servant, see Dunn v.
Hearst, 139 Cal. 239; Taylor v.
Hearst, 107 Cal. 262; Williams V.
Fuller, 68 Neb. 354, 68 Neb. 362.
1 See Storey v. Wallace, 60 111. 51;
Dunn v. Hall, 1 Ind. 344; Andres v.
Wells, 7 Johns. (N. Y.) 260, 5 Am.
Dec. 267; Ferret v. New Orleans
Times, 25 La. Ann. 170.
2 Lothrop v. Adams, 133 Mass. 471,
43 Am. Rep. 528 (a case involving lia-
bility of one partner for act of an-
other); Bruce v. Reed, 104 Pa. 408,
49 Am. Rep. 586.
3 Pennsylvania Iron Works v.
Voght Machine Co. (Ky.), 96 S. W.
551, 29 Ky. L. Rep. 861, 8 L. R. A.
(N. S.) 1023 (a case of libelous letter
written by the agent of a corporation
in an endeavor to get business for
principal); Citizens' Life Assurance
Co. v. Brown, [1904] A. C. 423 (a li-
belous circular sent out by defend-
ant's superintendent as a means of
promoting and keeping business) ;
Fitzsimons v. Duncan, [1908] 2 Ir. R.
483 (libelous report by correspondent
of a commercial agency).
Blacklisting, Etc. Where defend-
ant's manager notified other estab-
lishments in the same business not
to employ plaintiff because the latter
was defendant's apprentice who had
quit without cause, but in fact plain-
tiff was not an apprentice and was
discharged from defendant's employ
by defendant's foreman, Held, de-
fendant's manager having acted in
good faith for his principal's interest,
was acting in the general scope of
his employment, and defendant is lia-
ble in a tort action for preventing
plaintiff from securing employment.
Blumenthal v. Shaw, 23 C. C. A. 590,
77 Fed. 954.
But in Graham v. St. Charles
Street R. R. Co., 47 La. Ann. 1656,
where defendant's foreman, having
authority to employ and discharge
laborers, used that power in such a
way as to discriminate against those
trading at plaintiff's store, his mo-
tives not being to enforce any rule
of the company, such act was held to
be without the scope of his employ-
ment.
* See Washington Gas L. Co. v.
Lansden, 172 U. S. 534, 43 L. Ed. 543.
Where an agent was authorized only
to write routine letters, a letter to
other dealers containing false state-
ments about a discharged employe,
was outside the course of the agent's
business. Willner v. Silverman, 109
Md. 341, 24 L. R. A. (N. S.) 895.
1546
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES [ 1982
defamatory publications by his servant or agent, than it is to see how
liability for defamatory spoken words may arise in the conduct of a
business in which publication is not an incident. Nevertheless such
cases may exist, the difficulty ordinarily being to find that the speak-
ing was within the scope of the employment. In the case of corporate
principals or masters, several text writers and some courts have held
that there can be no liability for slander by a servant or agent, it being
said that "there can be no agency to slander." B But this reasoning
is not conclusive, and several courts have held that liability may exist
in these cases if the speaking of the words was in the course of the
employment, 6 though it must be said that, upon the latter point, there
has been a tendency in some courts to overlook the distinction between
acts done in the course of the employment and those done merely dur-
ing the employment.
1982. How question decided Court or jury. Here, as in the
preceding case of negligence, the question of whether the act was one
within the course of the employment, is usually a question of fact, in
view of what the employment was and what can fairly be deemed to
be within its course under the circumstances of the case. Where only
one legal inference may reasonably be drawn from the facts, the court
should decide it; but where differing legal inferences may reasonably
Odgers on Libel and Slander (1st Text Book Co. v. Heartt, 69 C. C. A.
Am. ed.) *368; Newell on Defamation 127, 136 Fed. 129 (same); Rivers v.
(1st ed.) 361 [but see 2d ed. 376]; Yazoo, etc., R. Co., 90 Miss. 196, 9 L.
Townshend on Slander and Libel (2d R- A. (N. S.) 931 (a case which was
ed.) 265; Behre v. National Cash decided upon the pleadings but which
Reg. Co., 100 Ga. 213, 62 Am. St. Rep. seems questionable upon the facts):
320; Singer Mfg. Co. v. Taylor, 150 Hypes v. Southern Ry. Co., 82 S. Car.
Ala. 574, 9 L. R. A. (N. S.) 929 and 315, 17 Ann. Gas. 620.
Note, 124 Am. St. Rep. 90; Duquesne In Interstate Amusement Co. v.
Distrib. Co. v. Greenbaum, 135 Ky. Martin, Ala. App. , 62 So. 404,
182, 24 L. R. A. (N. S.) 955 (a part- the proprietor of a theater was held
nership) ; Lindsey v. St Louis, etc., responsible for abusive language used
Ry. Co., 95 Ark. 534; New South by an employee towards a patron,
Wales Country Press Co. v. Stewart, but the decision goes largely upon a
12 Comw. L. R. (Australia) 481. special duty of protection.
May v. Shreveport Traction Co., See Ellis v. National Free Labor
127 La. 420, 32 L. R. A. (N. S.) 206; Ass'n, 7 Ct. of Sess. Cases (Scotch),
Empire Cream Co. v. De Laval Dairy 629; Sheppard Publishing Co. v.
Co., 75 N. J. L. 207; Sawyer v. Nor- Press Pub. Co., 10 Ontario L. R. 243;
folk, etc., R, Co., 142 N. C. 1, 115 Am. May v. Western Un. Tel. Co., 157 N.
St. Rep. 716 and Note (defendant Car. 416, 37 L. R. A. (N. S.) 912.
held not liable in this case because act Municipal corporation not liable for
not in course of employment), 9 Ann. slander by its tax collector. Glas
Cas. 440; Redditt v. Singer Mfg. Co., gow v. Lorimer, [1911] App. Cas. 209.
124 N. C. 100 (same); International
IS47
THE LAW OF AGENCY
[BOOK iv
be drawn, it is a question for the jury. 7 The court, however, should
carefully instruct the jury as to the principles of law involved, and the
functions of the jury, and not leave them .to determine the matter by
their own unguided notions of what may be just or equitable.
1983. Ratification. Even though the act were not within the
course of the employment, liability for it may arise by ratification as in
other cases. 8 It seems unnecessary to discuss the conditions, as they
have been so fully dealt with in the chapter on Ratification.
6, Liability for Fraudulent Acts and Representations.
j
1984. Liability for agent's fraudulent act. The principal is
also liable for the fraudulent or deceitful act of his agent committed as
an incident to and during the performance of an act which is within
the scope of the agent's authority. 9 As is said in a leading case 10 "no
139; Palo Alto Bank v. Pacific, etc.,
Cable Co., 103 Fed. 841; Alger v. An-
derson, 78 Fed. 729; London Life Ins.
Co. v. Molsons Bank, 5 Ont. L. Rep.
407; Rex v. Canadian Pac. R. Co., 14
Can. Exch. 150; Stevenson v. Bear, 2
Viet. L. Rep. 220.
10 Barwick v. English Joint Stock
Bank, L. R. 2 Ex. 259.
In Nowack v. Metropolitan St. Ry.
Co., 166 N. Y. 433, 82 Am. St. Rep.
691, 54 L. R. A. 592, a bare majority
of the court of appeals held that evi-
dence was admissible that an agent
authorized to look up the testimony
in cases and "to see to the witnesses
and take statements and to interview
witnesses," had attempted to bribe
the most important witness of the op-
posite side. [Vann, J., said: "He
was employed 'to see to the wit-
nesses,' and this was his manner of
seeing to them. He was to procure
evidence, the method not being speci-
fied, and he tried to get it by an un-
lawful method. The subject was left
to his judgment and he acted accord-
ing to his judgment. The scope of
the business intrusted to him in-
cluded whatever he thought best to
do in order to get the right kind of
witnesses." With deference, the pres-
ent writer ventures to think that this
last sentence and its implications are
wholly unsound.] On the main point,
of the admissibility of the evidence
f Among many other cases, see Col-
lins v. Butler, 179 N. Y. 156 (citing,
many others); Bucken v. South.,
etc., R. Co., 157 N. Car. 443; May v.
Western Un. Tel. Co., 157 N. Car. 416,
37 L. R. A. (N. S.) 912; St. Louis,
etc., Ry. Co. v. Hackett, 58 Ark. 381,
41 Am. St. Rep. 105.
s See ante, Book I, Chap. VII.
Locke v. Stearns, 1 Mete. (Mass.)
560, 35 Am. Dec. 382; Reynolds v.
Witte, 13 S. Car. 5, 36 Am. Rep. 678;
Fogel v. Schmalz, 92 Cal. 412; Hol-
lingsworth v. Holbrook, 80 Iowa, 151,
20 Am. St. Rep. 411; Noble v. Steam-
boat Northern Illinois, 23 Iowa, 109;
Durst v. Burton, 47 N. Y. 167, 7 Am.
Rep. 428; Fifth Ave. Bank v. Forty-
second St., etc., R. Co., 137 N. Y. 231,
33 Am. St. Rep. 712, 19 L. R. A. 331;
Dougherty v. Wells, Fargo & Co., 7
Nev. 368; McKinnon v. Vollmar, 75
Wis. 82, 17 Am. St. Rep. 178, 6 L. R.
A. 121; Andrews v. Clark, 72 Md.
396; New England Mutual Life Ins.
Co. v. Swain, 100 Md. 558; Binghamp-
ton Trust Co. v. Auten, 68 Ark. 299,
82 Am. St. Rep. 295; Goshorn v. Peo-
ple's Nat. Bank, 32 Ind. App. 428,
102 Am. St. Rep. 248; Western Cot-
tage, etc., Co. v. Anderson, 45 Tex.
Civ. App. 513; Thompson v. Barry,
184 Mass. 429; Robertson v. Cove-
nant, etc., Ins. Co., 123 Mo. App. 238;
Phipps v. Mallory Comm. Co., 105 Mo.
App. 67; Whaley v. Duncan, 47 S. C.
1548
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES
[
sensible distinction can be drawn between the case of fraud and the
case of any other wrong." In the same line it was said by a learned
judge in a case involving the fraudulent disposition by an agent of
bonds of a third person with which he had been intrusted by his prin-
cipal : "It is difficult to understand upon what ground the principal
that one party's agent employed to Am. St. Rep. 411 (agent to collect
look up the evidence had attempted
to tamper with the other party's wit-
nesses the decision is supported by
Chicago City Ry. Co. v. McMahon,
103 111. 485, 42 Am. Rep. 29. See also,
Snell v. Bray, 56 Wis. 156; Baltimore,
etc., R. Co. v. Rambo, 59 Fed. 75.
Compare Green v. Town of Wood-
bury, 48 Vt. 5.
In the following cases the princi-
pal was held to be responsible for, or
affected by, the fraudulent acts of his
agent. Durst v. Burton, 47 N. Y. 167,
7 Am. Rep. 428 (manager of defend-
ant's cheese factory put unsuitable
and unfit materials into the center
of cheeses); Fifth Avenue Bank v.
Forty-second St., etc., R. Co., 137 N.
Y. 231, 33 Am. St. Rep. 712, 19 L. R.
A. 331 (defendant's secretary and
transfer agent, in charge of surrender
and reissue of certificates, issued a
forged and fictitious certificate of
stock); (see also, Andrews v. Clark,
72 Md. 396, a case similar in princi-
ple); Dougherty v. Wells, Fargo &
Co., 7 Nev. 368, (agent cashed an old
certificate of deposit, delivered with
instructions to secure a renewal, and
absconded) ; McKinnon v. Vollmar, 75
Wis. 82, 17 Am. St. Rep. 178, 6 L. R.
A. 121, (agent fraudulently showed
prospective purchasers the wrong
tract of land ) ; Noble v. Steamboat
Northern Illinois, 23 Iowa, 109 (de-
fendant's agent obtained by fraud a
receipt for wages due an employee of
defendant, and then withheld a part
of employee's wages) ; Herbert v.
Huie, 1 Ala. 18, 34 Am. Dec. 755 (one
entrusted with a paper signed in
blank filled it in with a different
amount and used it in a different
manner than intended); Hollings-
worth v. Holbrook, 80 Iowa, 151, 20
and take security for a debt altered a
chattel mortgage which he took)',
Aultman v. Olson, 34 Minn. 450
(plaintiff's agent procured a renewal
of notes by agreeing to insert a war-
ranty provision in the renewal, and
instead inserted a clause releasing
plaintiff from warranty claims); Al-
ger v. Anderson, 78 Fed. 729 (defend-
ant's agents to sell land bribed plain-
tiff's land inspector, influencing his
report to plaintiff, who later pur-
chased); Honaker v. Board of Edu-
cation, 42 W. Va. 170, 57 Am. St. Rep.
847 (bribery by agent of members of
board to induce them to attend a
meeting) ; Bank of Palo Alto v. Paci-
fic Postal Tel. Cable Co., 103 Fed. 841
(defendant's operator in collusion
with a third party, sent a forged tele-
gram to plaintiff bank inducing the
payment of money to the third party;
to same effect, McCord v. Western
Union Tel. Co., 39 Minn. 181, 12 Am.
St. Rep. 636, 1 L. R. A. 143; see also,
Bank of California v. Western Union
Tel. Co., 52 Cal. 280; Elwood v. Tele-
graph Co., 45 N. Y. 549, 6 Am. Rep.
140); Jasper Trust Co. v. Kansas
City, etc., R. Co., 99 Ala. 416, 42 Am.
St. Rep. 75 (express agent fraudu-
lently induced money to be sent and
then embezzled it).
In Wilmerding v. Postal Tel. Co.,
118 N. Y. App. Div. 685, aff' d, no opin-
ion, 192 N. Y. 580, a majority of the
court held the defendant liable for
the fraud of its collecting agent who,
in presenting daily a number of gen-
uine bills for telegraphing, slipped
in also a number of fictitious ones
which plaintiff's clerk paid without
suspecting or detecting their fraudu-
lent character. The majority held
that "An employer who has put it
1549
1984]
THE LAW OF AGENCY
[BOOK iv
should be held liable for the negligence of his agent and not for his
fraud, where the act is done or omitted to be done to the very property
as to which the agency exists, and in the course of the agency. Fraud
by which the property is lost is generally considered one of the forms
of gross negligence. What is the proper understanding of the phrase
'within the scope of the agency?' Does 'the scope' include negligence
and exclude fraud? It cannot properly be restricted to what the par-
ties intended in the creation of the agency, for that would also exclude
negligence, as no agent is appointed for the purpose of being negli-
gent, any more than for the purpose of acting fraudulently. The ques-
tion cannot be determined by the authority intended to be conferred by
the principal. We must distinguish between the authority to commit
a fraudulent act, and the authority to transact the business in the course
of which the fraudulent act was committed. Tested by reference to the
intention of the principal, neither negligence nor fraud is within 'the
scope of the agency' ; but tested by the connection of the act with the
property and business of the agency, fraud in taking the very property
is as much 'within the scope of the agency' as negligence in allowing
others to take it. The proper inquiry is, whether the act was done in
within the power of his employee to
defraud a third person by interming-
ling fraudulent and genuine bills and
collecting money therefrom, should
be held responsible to an innocent
third party for the dishonesty of his
employee." As the minority pointed
out, however, both of the implica-
tions of fact, that defendant had "put
it within the power" of the agent and
that the plaintiff was "an innocent
third party" who owed no duty of
care, are certainly questionable.
In Bartlett v. First Nat. Bank, 247
111. 490, principals who knew that
their agent was making drafts to the
order of various persons not inter-
ested, and then forging the signa-
tures of the payees and obtaining the
money upon them, and who made no
objection so long as they thought the
money was being applied to their use,
were held liable to Z>ona fide holders
of similar drafts, the proceeds of
which the agent appropriated.
In Cribb v. Dwyer, [1910] St. Rep.
Queensland, 242, a principal was held
responsible for the fraudulent state-
ment of his agent to purchase land,
made at the time of executing the
contracts, that it was not necessary
to include a certain stipulation be-
cause he (the agent) had already re-
ported that stipulation to his princi-
pal and that the latter had assented
to it, a statement which in fact was
not true.
See also Malcolm v. Waterhouse, 24
Times L. R. 854.
Where a husband with fraudulent
intent took from his wife a power of
attorney to carry on business for her,
and by false representations obtained
goods not intending to pay for them,
and then induced his wife to make
an assignment, the wife though ac-
tually innocent is chargeable with
his fraud, and this vitiates the as-
signment Warner v. Warren, 46 N.
Y. 228.
In Brown v. American Tel. Co., 82
S. Car. 173, the defendant was held
liable for an entry upon land and a
cutting of trees, though It attempted
to justify under a permission ob-
tained by fraud of its agents.
1550
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES [ 1984
the course of the agency and by virtue of the authority as agent. If
it was, then the principal is responsible, whether the act was merely
negligent or fraudulent." u
Just as clearly, of course, is the principal not responsible where the
fraud was not committed while the agent was acting or, at least, pur-
porting to act within the scope of his authority, but was an incident
to an act done by the agent in pursuance of his own or some other prin-
cipal's purposes. 12
11 In Reynolds v. Witte, 13 S. Car.
5. 36 Am. Rep. 678.
12 The rule has no where been bet-
ter stated than by Lord Herschell, in
Thome v. Heard, [1895] App. Cas.
495, 502, as follows: "It appears to
me perfectly clear that in order to
charge any person with a fraud
which has not been personally com-
mitted by him the agent who has
committed the fraud must have com-
mitted it while acting within the
scope of his authority, while doing
something and purporting to do
something on behalf of the principal.
If the person is doing something
within the scope of his authority and
purporting to do it for his principal,
although in doing it he commits a
wrong which his principal neither
sanctioned nor intended, the princi-
pal may be liable. But if the person,
although he has been employed as
agent, is not, in the transaction
which is the wrongful act, acting for
or purporting to be acting for the
principal, it seems to me impossible
to treat that as the fraud of the
principal."
In Stimpson v. Achorn, 158 Mass.
342, it was held that a principal was
not liable for the fraud of an agent
in selling the property of another
person and pretending that the prin-
cipal's property belonged to that
other person and was included in the
sale.
In Foster v. The Essex Bank, 17
Mass. 478, 9 Am. Deec. 168, the de-
fendant was held not liable for the
theft by its cashier of a special de-
posit, the bank not having been neg-
ligent
In Bigelow v. Stilphen, 35 Vt. 521,
the plaintiff was held not to be af-
fected by the alteration of the note
sued upon, the alteration having been
fraudulently made by his agent.
In Robinson v. Bank of Pikeville,
146 Ky. 538, 37 L. R. A. (N. S.) 1186,
a creditor was held not liable for the
fraud of his attorney and collecting
agent who was alleged to have con-
nived at getting credit on a forged
check at the bank in order to pay the
claim. The act had no relation to
anything he was authorized to do.
In Weisser v. Denison, 10 N. Y. 68,
61 Am. Dec. 731; Hardy v. Chesa-
peake Bank, 51 Md. 562, 34 Am. Rep.
325, the principal was held not lia-
ble for forgery of checks by his agent
who had no authority to draw checks
at all.
See also, German Savings Bank v.
Citizens Nat. Bank, 101 Iowa, 530, 63
Am. St. Rep. 399.
See also, Merchants' Bank v. Pru-
dential Ins. Co., 110 Mo. App. 62
(defendant's local agent forged the
payee's name on a check drawn by
the defendant and entrusted to him
for delivery in settlement of a loss,
and also acted as a witness to the
pretended signature of the payee.
Held, that defendant is not responsi-
ble); Harvey v. Schuylkill Trust Co.,
199 Pa. 421; (plaintiff could not re-
cover money paid to defendant's so-
licitor to be invested in mortgages,
and which was embezzled by him
where he had no authority to invest
or receive money for investment).
Gompertz v. Cook, 20 Times L. Rep.
106 (agent had authority simply to
endorse bills for deposit but not to
1551
I 9^5> 1986] THE LAW OF AGENCY [BOOK IV
1985. Within familiar rules, previously considered, 13
however, the principal may often be liable where, though the fraudulent
act could not be considered within the scope of the employment, the
principal voluntarily and with knowledge seeks to enforce, or to base
a defence upon, or to claim benefits under, a contract, grant or other
similar act, actually induced by the fraud of his agent. In such a case
he may be held to have assumed responsibility for the instrumentalities
which brought about the contract. 1 *
1986. Agent's fraud supplemented by some act or omis-
sion of the principal. It may also happen that, while the agent's
fraud alone would not, under the circumstances, involve the principal,
the latter himself may, by some culpable act or omission of his own,
so supplement or assist the agent's act as to charge the principal with
the consequences. There are, as has elsewhere been pointed out, 15 many
loose statements to be found in the books to the effect that there is a
general principle of the law that, where one of two innocent persons
must suffer by the act of a third, that one should bear the loss by whose
act the loss was made possible, or who enabled the wrongful act to be
committed, or who first reposed trust and confidence in the wrongdoer,
and the like. As a matter of fact, notwithstanding these general state-
ments, there is no such general principle as that which is thus declared.
Like many other alleged maxims, this one contains only a half truth at
most, and its use seems to be resorted to only to cover loose reason-
ing or to span a gap without noticing it.
It is, of course, true that the principal may clothe the agent with the
apparent indicia of ownership or authority, and he may then be estop-
ped to deny the validity of the agent's acts done thereunder, even
though the agent was attempting to perpetrate a fraud. 16 He may also
: <m*2a t!
cash them; he endorsed some such derson v. Railroad Co., 17 Tex. 560,
bills, obtained the money on them 67 Am. Dec. 675; Wright v. Calhoun,
from the defendant and absconded 19 Tex. 412; White v. New York, etc.,
with it. Held, that the defendant R. Co., 68 N. J. L. 123; Western Mfg.
must bear the loss); Executors of Co. v. Cotton, 126 Ky. 749, 12 L. R,
Luse v. Parke, 17 N. J. Eq. 415. A. (N. S.) 427.
13 See ante, 435 et seq. Many other cases are cited, post,
i* See Bennett v. Judson, 21 N. Y. 1993.
238; Fairchild v. McMahon, 139 N. Y. i See ante, 748.
290, 36 Am. St. Rep. 701; Mundorff See post, 3015, et seq, where
v. Wickersham, 63 Pa. 87, 3 Am. Rep. this question is more fully discussed.
531; Keough v. Leslie, 92 Pa. 424; Such cases as Pickering v. Busk, 15
Aultman v. Olson, 34 Minn. 450; Man- East, 38: McNeil v. Tenth Nat. Bank,
kin v. Mankin, 91 Iowa, 406; Me- 46 N. Y. 325, 7 Am. Rep. 341; Bowers
fceighan v. Hopkins, 19 Neb. 33; v. Bryan Lumber Co., 152 N. Car. 604,
<5oetz v. Flanders, 118 Mo. 342; Hen- are here in point.
1552
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES
[ 1987
by his culpable act or omission involve himself in a liability which
would not otherwise have attached to him. But even in this latter case
he can only be responsible for the natural and proximate consequences
of his negligence ; and his act or omission will not constitute negligence
where the result was not one reasonably to be apprehended and guarded
against. 17 That a previously honest agent will commit a crime is
not, for example, ordinarily an act reasonably to be so anticipated. 18
1987. Liability of principal for agent's false or fraudulent rep-
resentations. 'The liability of the principal for the agent's false or
fraudulent representations, rests upon much the same ground as his
liability for the agent's fraudulent acts, considered in the preceding
section. There is also involved the. question, considered in an earlier
section, of the authority of an agent to bind his principal by his ad-
missions and representations generally. 19
The principal may, either expressly or by implication, put the agent
in such a position, or charge him with such duties, that the making of
representations will fall within the scope of his authority, as where, ex-
pressly or by implication, he refers persons to the agent for informa-
tion 20 or authorizes him to do acts to which the making of representa-
tions is a necessary or a usual incident. 21
IT Knox v. Eden Musee Co., 148 N.
Y. 441, 51 Am. St. Rep. 700, 31 L. R.
A. 779; Baxendale v. Bennett, L. R.
3 Q. B. Div. 525; Smith v. Prosser,
[1907] 2 K. B. 735.
is Thus in Knox v. Eden Musee Co.,
supra, it is said: "It is not generally
an omission of ordinary prudence
that an employer deals with his em-
ployees on the assumption that those
who have hitherto been faithful in
the performance of their duties will
continue so to be, or because he does
not anticipate and provide against
the possibility of their criminal acts.
Breaches of trust and confidence un-
fortunately are not infrequent. But
honesty is nevertheless, we believe,
the general rule of human conduct,
and one may indulge in this faith in
human nature and trust those who
have proved themselves worthy of it,
without subjecting himself to a
charge of negligecne if it should turn
out that they afterwards yielded to
temptation and used their position to
the injury of others. 'It is one thing
to say that a man shall be amenable
for such immediate consequences of
his acts as a reasonable man might
foresee and dread and, therefore,
shun. But it is another and very
different proposition to maintain
that a man shall forfeit his property
because he has done an act which
will not be perilous unless others are
guilty of misconduct which that act
does not cause.' Williams, J., Ex
parte Swan, 7 C. B. N. S. 447."
See also, per Bramwell, L. J., in
Baxendale v. Bennett, L. R. 3 Q. B.
Div. 530, 47 L. J. Q. B. 624; Vaughan
Williams, L. J., in Smith v. Prosser,
[1907] 2 K. B. 735.
is See ante, 17-73 et seq.
20 Hahl v. Brooks, 213 111. 134;
O'Donnell, etc., Brewing Co. v. Far-
rar, 62 111. App. 471; Lindmeier v.
Monahan, 64 Iowa, 24.
21 A principal who employs an
agent to sell his real estate is liable
for a false representation made by
9 8
1553
1987]
THE LAW OF AGENCY
[BOOK IV
Where the principal thus authorizes the making of representations,
it may be proved or conceded that he intended the agent to make only
fair and honest ones. But a power to make representations, although
the agent as to matters of the sort
concerning which representations are
naturally and ordinarily made, such
as the condition, situation, title,
boundaries and encumbrances of the
land. Rhoda v. Annis, 75 Me. 17, 46
Am. Rep. 354; Wolfe v. Pugh, 101
Ind. 293; Lynch v. Mercantile Trust
Co., 18 Fed. 486; Law v. Grant, 37
Wis. 548; Quarg v. Scher, 136 Cal.
406; Haskell v. Starbird, 152 Mass.
117, 23 Am. St. Rep. 809; Millard v.
Smith, 119 Mo. App. 701; Howe v.
Martin, 23 Okl. 561, 138 Am. St. Rep.
840; Ballard v. Lyons, 114 Minn.
264, 38 L. R. A. (N. S.) 301; Sand-
ford v. Handy, 23 Wend. (N. Y.)
260; Gund Brewing Co. v. Peterson,
130 Iowa, 301; West Fla. Land Co. v.
Studebaker, 37 Fla. 28; Williamson
v. Tyson, 105 Ala. 644; Krolik v.
Curry, 148 Mich. 214.
See also, McNeile v. Cridland, 168
Pa. 16; Shepard v. Pabst, 149 Wis.
35; Brandt v. Krogh, 14 Cal. App.
39.
Same, in sale of chattels, stocks,
notes, etc. Jewett v. Carter, 132
Mass. 335; Locke v. Stearns, 1 Mete.
(Mass.) 560, 35 Am. Dec. 382; White
v. Sawyer, 16 Gray (Mass.), 586;
Erie City Iron Works v. Barber, 106
Pa. 125; Morton v. Scull, 23 Ark.
289; Wheeler v. Baars, 33 Fla. 696;
Campbell v. Park, 128 Iowa, 181;
Ferguson v. Hamilton, 35 Barb. (N.
Y.) 427; Chisholm v. Eisenhuth, 69
N. Y. App. Div. 134; Hindman v.
First Nat. Bank, 50 C. C. A. 623, 112
Fed. 931, 57 L. R. A. 108.
Oral misrepresentations will bind,
even though the sale is finally con-
summated by writing. St. Louis
Refrig. Co. v. Vinton Wash. Mach.
Co., 79 Iowa, 239, 18 Am. St. R. 366.
In Fifth Ave. Bk. v. Forty-second
St. R. Co., 137 N. Y. 231, 33 Am. St.
Rep. 712, 19 L. R. A. 331, the trans-
fer agent of defendant forged a cer-
tificate of stock; the plaintiff was
later asked to make a loan on it by
the then holder; before doing so,
plaintiff inquired of the transfer
agent whether the certificate was
genuine, and was informed that it
was. The defendant was held liable
for this misrepresentation. Same ef-
fect: Jarvis v. Manhattan Beach Co.,
148 N. Y. 652, 51 Am. St. Rep. 727.
In the following cases the princi-
pal was held responsible for the
agent's misrepresentations. Arnold
v. Nat'l Bank of Waupaca, 126 Wis.
362, 3 L. R. A. (N. S.) 580 (defend-
ant's cashier, in employing plaintiff
to secure purchasers for defendant's
real estate, by mistake designated
the wrong tract; plaintiff sued for
commissions); Griswold v. Gebbie,
126 Pa. 353, 12 Am. St. Rep. 878 (a
vendor's agent made reckless and un-
true statements as to acreage of the
tract in connection with the sale) ;
Williard v. Key, 83 Neb. 850 (a simi-
lar case); Wilson v. Sale, 41 Pa.
Super. Ct. 566 (lessor's agent mis-
represented size of premises in mak-
ing a lease) ; Haynor Mfg. Co. v.
Davis, 147 N. C. 267, 17 L. R. A. (N.
S.) 193 (agent, in selling a so-called
"Buchu Tonic," warranted it to be
non-alcoholic, when he knew it was
not); Darks v. Scudder-Gale Co., 146
Mo. App. 246 (agent of a jobber of
drugs sold ginger extract containing
wood alcohol and represented it to be
fit for medicinal purposes); Head v.
Pacific Express Co. (Tex. Civ. App.),
126 S. W. 682, (agent of consignee of
a diamond ring represented to the
express agent that it was merely
merchandise, and ring was lost);
Morris v. Posner, 111 Iowa, 335 (a
husband, as his wife's agent to run
a clothing business, bought goods,
misrepresenting his wife's financial
condition); Park v. Brandt, 20
Idaho, 660 (fraudulent representa-
IS54
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES
[ 1988
fair and honest ones only were intended or directed, involves the pos-
sibility of the making of false and fraudulent ones ; and if the agent
in such a case, while acting in the course of the principal's business,
and for the purpose of promoting the principal's objects, and not those
of the agent only, makes false or fraudulent representations concern-
ing the subject matter of his agency, not so extravagant, unreasonable
or unrelated that a reasonably prudent man would not rely upon them,
the principal will be responsible for them. 22
1988. No liability for representations if any representa-
tion is outside authority. But if, on the other hand, the making of
any representation concerning the subject matter could not be deemed
to be within the scope of the authority, then obviously the making of
false or fraudulent ones cannot be; and (unless the principal, by some
act can be deemed to have ratified or adopted them, under the circum-
tlons of an agent of a seller of stal-
lions); Pulton v. Fisher, 151 Iowa,
429 (misrepresentation as to value of
land and a scheme between owner of
land and his agent whereby the
agent feigned ability to resell imme-
diately at an advance in connection
with a trade) ; Williams v. Goldberg,
58 N. Y. Misc. 210 (landlord's agent
represented to a tenant that a ceiling
was safe, and the latter remained in
the premises and was injured); Mat-
teson v. Rice, 116 Wis. 328 (land-
lord's agent on leasing premises rep-
resented to the tenant that a wall
was fireproof) ; Sheppard Publish-
ing Co. v. Press Pub. Co., 10 Ont. L.
R. 243 (defendants' agent, in selling
trade annuals, falsely represented
that plaintiffs had sold out that
branch of their business); Binghamp-
ton Trust Co. v. Auten, 68 Ark. 299,
82 Am. St. Rep. 295 (president of de-
fendant bank induced plaintiff to dis-
count notes by fraudulently repre-
senting that defendant bank held
valuable warehouse receipts of the
maker) ; Thompson v. Barry, 184
Mass. 429 (defendant's agent to pur-
chase land of plaintiff made fraudu-
lent representations as to identity of
defendant) ; Wullenwaber v. Duni-
gan, 30 Neb. 877, 13 L. R. A. 811
(railroad agent soliciting subscrip-
tions made representations as to loca-
tion of station, etc.).
In Barwick v. English Joint Stock
Bank, L. R. 2 Ex. 259, defendant's
manager led plaintiff to go on fur-
nishing goods to a customer of his
and a debtor of the bank by promis-
ing to see that he was paid out of
the proceeds next after the bank's
claim, although the manager then
knew that the situation was such
that there could be no surplus and
that the bank would get the benefit of
whatever plaintiff supplied. Held, to
be a fraud on plaintiff, for which the
bank must be liable, the same as for
any other wrong committed by an
agent in the course of the principal's
business.
There is no distinction in principle
In these cases between the general or
the special agent; if in either case
the representation is deemed to be an
incident of the act authorized the
principal may be charged. Haskell v.
Starbird, 152 Mass. 117, 23 Am. St.
Rep. 809.
22 King v. Livingston Mfg. Co.,
Ala. , 60 So. 143; Matteson v. Rice,
116 Wis. 328; Sandford v. Handy, 23
Wend. (N. Y.) 268.
1555
1989]
THE LAW OF AGENCY
[BOOK IV
stances considered in a following paragraph), responsibility for them
will not attach to him. 28
A fortiori will there be no liability if there was no agency at all. 2 *
1989. Representations within apparent authority.
While in ordinary actions based upon the negligence or trespass of
an agent or servant, the question usually depends upon who was the
real principal or master,, and appearances are ordinarily immaterial,
it is nevertheless true that in actions based upon fraud or deceit in
contractual dealings the question of "apparent" authority may become
material. For if the principal causes or permits another to appear to
be his agent or to appear to be authorized to make a certain contract
or to perform a certain act, when he is not, responsibility for misrep-
resentations and deceit as part of the contract or act will attach on
the same grounds as responsibility for the contract or act itself. 25
23 See Lamm v. Port Deposit Home-
stead As-s'n, 49 Md. 233, 33 Am. Rep.
246 (an agent conducting a public
sale for the foreclosure of a mort-
gage, has no implied authority to
make representations as to when pos-
session will be given) ; Hamilton v.
Georgia R., 78 Ga. 328 (roadmaster
authorized to let the contract for the
construction of a station building has
no authority to assure a sub-contrac-
tor that he need not file his lien for
work done, as the company would not
settle with the contractor until all
the sub-contractors had been paid);
McDonald v. Cole, 46 W. Va. 186 (an
agent of a corporation appointed to
buy timber has no authority to rep-
resent that the company is a partner-
ship); Fogg v. Pew, 10 Gray (Mass.),
409, 71 Am. Dec. 662 (an insurance
agent, whose authority extends only
to the taking of applications, has no
authority to represent that the com-
pany's capital stock is paid in).
See also, Richardson v. Palmer, 36
Mo. App. 88; Thayer v. Schley, 137
N. Y. App. Div. 166.
In Hartford Life Ins. Co. v. Sher-
man, 223 111. 329, the court appears
to lay down a wider rule, and to hold
the defendant responsible for repre-
sentations which, it is submitted,
could not fairly be deemed to be
within the scope of the agent's au-
thority. The conclusion in the case,
however, was doubtless correct.
24 There can, of course, be no lia-
bility unless the person who made
the representations was actually or
apparently the defendant's agent. A
mere optionee or person having a
contract to buy property is not
thereby the agent of the owner so as
to charge him with the representa-
tions of the former. Alger v. Keith,
44 C. C. A. 371, 105 Fed. 105; Reeves
v. McCracken, 103 Tex. 416; Shepard
v. Pabst, 149 Wis. 35.
Where a wholesale dealer's agent,
as a condition of a contract of sale
between wholesaler and retailer, was
to help sell the goods bought of the
wholesaler, he is the retailer's agent,
and the wholesaler is not responsible
for misrepresentations made in retail
sales. Doylestown Agr. Co. v. Brack-
ett, Shaw & Lunt Co., 109 Me. 301, 84
Atl. 146, citing, Wyman v. Berry, 106
Me. 43, 20 Ann. Cas. 439; Coughlan
v. Cambridge, 166 Mass. 268; Clapp v.
Kemp, 122 Mass. 481.
25 In Griswold v. Gebbie, 126 Pa.
353, 12 Am. St. Rep. 878, it is said:
"The general rule that a principal is
responsible for the misrepresenta-
tions of his agent within his author-
ity, is beyond question, and the bet-
ter opinion is that as to third per-
sons affected by his acts or words, it
1556
CHAP. VJ LIABILITY OF PRINCIPAL TO THIRD PARTIES
[ 1990
1990.
Liability for representations not made for prin-
cipal's benefit. A principal would clearly not be liable ordinarily
for false representations ostensibly made for the agent's benefit only.
Whether he is liable for such representations really made to serve some
purpose of his own only, but ostensibly made in the course of his prin-
cipal's business and for the latter's benefit, is a question upon which
there is some difference of opinion. The English courts had seemed to
hold that the principal would not be liable in such a case, 26 but that
view has been now definitely discarded. 27 The American cases have
generally held the principal liable to innocent third persons where the
representation was made in the course of the principal's business and
apparently for his account and while the agent was acting within the
general scope of his authority, even though in the particular case he
was secretly abusing his authority and attempting to perpetrate a fraud
upon his principal or some other person for his own ultimate benefit. 28
is the apparent scope of his author-
ity, and not his actual instructions,
that must govern."
Same effect: Wachter v. Phoenix
Assur. Co., 132 Pa. 428, 19 Am. St.
Rep. 600; McNeile v. Cridland, 168
Pa. 16; Wilson v. Sale, 41 Pa. Super.
566; Crook v. International Trust
Co., 32 App. D. C. 490.
20 See British Mut. Banking Co. v.
Charnwood, etc., Ry. Co., 18 Q. B.
Div. 714; Barwick v. English Joint
Stock Bank, L. R. 2 Ex. 259; Malcolm
v. Waterhouse, 24 T. L. R. 854; Lloyd
v. Grace, [1911] 2 K. B. 489, over-
ruled in 1912.
27 The late case of Lloyd v. Grace,
11912] App. Cas. 716, Ann. Cas. 1913,
B. 819, in the House of Lords seems
to set this question at rest. Here it
was held that the principal is liable
for the fraud of his agent acting
within the scope of his authority,
whether the fraud is committed for
the benefit of the principal or is se-
cretly intended to enure to the ulti-
mate benefit of the agent. Here the
conveyancing clerk of defendants,
who were solicitors, by false repre-
sentations induced a client of defend-
ants to make conveyances of her
property to him (which he later dis-
honestly disposed of), under pretense
that they were rie'cessary to enable
a reinvestment of her money to be
made, which was the purpose for
which she went to the defendants.
zs Thus in Phillips v. Mercantile
Nat. Bank, 140 N. Y. 556, 37 Am. St.
Rep. 596, 23 L. R. A. 584, where a
bank cashier, who had authority to
draw checks as cashier upon the
bank's deposit in New York, fraudu-
lently drew such checks for his own
purposes to the order of certain per-
sons who had no knowledge of it and
then endorsed their names upon the
checks and procured the money upon
them from the New York bank, which
acted in good faith, it was held that
his bank was liable for it. "It may
be quite true," said the court, "that
the cashier was not the agent of the
bank to commit a forgery, or any
other fraud of such a nature; but he
was authorized to draw or check
upon the bank's funds. Tf he abused
his authority and robbed his bank, it
must suffer the loss." See also, West-
ern Maryland R. Co. v. Franklin
Bank, 60 Md. 36; Hambleton v.
Rhind, 84 Md. 456, 40 L. R. A. 216.
In McCord v. Western Union Tel.
Co., 39 Minn. 181, 12 Am. St. Rep.
636, 1 L. R. A. 143, where a telegraph
agent sent a message asking for
1557
I99 T > T 99 2 1 THE LAW OF AGENCY [BOOK iv
iggi. Representations concerning facts which condi-
tion authority. As has many, times been pointed out, representa-
tions by an agent concerning his own authority do not usually bind
the principal. The mere fact that one person makes another his agent
does not amount to a direction to third persons to make inquiries con-
cerning the agent's authority of the agent himself. But as has also
been seen, there is a considerable number of cases, notably in New
York, in which it is held, contrary to the view of the English and
several American courts, that where the rightfulness of the agent's
act under given conditions depends upon the existence of facts "nec-
essarily and peculiarly" within the agent's own knowledge, his under-
taking to act as though those facts did exist is a representation that
they do exist, upon which third persons dealing with him in good faith
may rely as against the principal. This question has been so fully con-
sidered in other places 20 that it is not necessary to repeat the discus-
sion here.
1992 It is essential, even to the New York view, that
the agent shall be one who would have authority to do the act or one
similar to it, under some circumstances. If the existence of some ex-
trinsic facts, "necessarily and peculiarly within the agent's knowledge"
would not bring the act within his authority, there is no room for any
representation concerning them, which forms the basis of the princi-
pal's liability. Thus where a clerk in the office of a corporation who
had no authority to issue new certificates even when old ones had been
surrendered, (though he regularly acted in the mere clerical capacity
of getting certificates ready for signature by the proper officers) ab-
stracted from the office safe certain endorsed certificates which had
been surrendered for cancellation but had through oversight or negli-
gence not been cancelled, and put them into circulation again through
a confederate for his own purposes, it was held that the corporation
was not liable under the rule here being discussed. 80
money purporting to be from a cer- " "The certificates were, at all
tain person, but really invented by times after their surrender and be-
the agent in order that he might get fore they were abstracted by Jurgens
the money, it was urged that the [the clerk] from the safe of the de-
company was not liable because the fendant, in the legal possession of
wrongful act and any representation the company. The company never
made by the agent was not for the placed them in the possession of Jur-
principal's benefit; but it was held gens or invested him with the indicia
that the company was liable. See of ownership. He had access to the
also, Bank of Palo Alto v. Pacific safe as the mere servant of the de-
Postal Tel. Co., 103 Fed. 841. fendant. The doctrine of implied
2 See ante, 759, 1800. agency is, we think, wholly inappli-
1.558
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES [ 1993
In a recent English case the defendant in South Africa, being about
to leave for England, signed two blank forms of promissory notes and
left them in the custody of his agent, to be held by him unless and
until the defendant should send him authority to fill them out for cer-
tain sums and issue them for the principal's account. Nevertheless the
agent, without any authority whatever, filled them up and negotiated
them, to a bona fide holder, for his own purposes. It was held that as
defendant had never authorized their issue under an^ circumstances,
and as the agent held the blank forms as custodian only, the defendant
was not estopped to deny their validity. 81
1993. Liability by ratification or adoption of act. But
even though it should be held that the representations were ones which
the agent was neither expressly nor by implication authorized to make,
the principal may nevertheless be charged with responsibility for them
if, after knowledge of their making, he voluntarily seeks to enforce or
to gain or retain benefits flowing from the act or contract which was
induced by such representation! The principal, in such a case, when
he learns of the unauthorized representations, may disaffirm the trans-
action and escape liability. But if he voluntarily takes the benefits of
the act or contract, he must ordinarily assume responsibility for the
instrumentalities by which it was brought about. 32 What the limita-
tions upon this doctrine are, has been considered in an earlier chapter. 33
cable to the circumstances of this Meyerhoff v. Daniels, 173 Pa. 555, 51
case." Knox v. Eden Musee Co., 148 Am. St. Rep. 782; Nelson v. Title &
N. Y. 441, 51 Am. St. Rep. 700, 31 L. Trust Co., 52 Wash. 258; Morse v.
R. A. 779. Ryan, 26 Wis. 356; Mclntyre v. Pryor,
Compare Western Md. R. Co. v. 173 TJ. S. 38, 43 L. Ed. 606; Conti
Franklin Bank, 60 Md. 36. nental Ins. Co. v. Insurance Co. of
si Smith v. Prosser, [1907] 2 K. B. Pa., 2 C. C. A. 525, 51 Fed. 884; Welch
735. v. Handcock, 7 N. S. Wales St. Rep.
See an*. 411; Wolfe v. Pugh, 404.
101 Ind. 293; Day v. Merrick, This doctrine has usually been ap-
lowa, , 138 N. W. 400; Busch v. plied in insurance cases where insur-
Wilcox, 82 Mich. 336, 21 Am. St. Rep. ance has been obtained by unauthor-
563; Presby v. Parker, 56 N. H. 409; ized false representations. See Kibbe
Bennett v. Judson, 21 N. Y. 238; El- v. Hamilton Ins. Co., 11 Gray
well v. Chamberlain, 31 N. Y. 611; (Mass.), 163. So in Mullin v. Ver-
Baker v. Union Mut. L. Ins. Co., 43 mont Mut. Ins. Co., 58 Vt. 113, where
N. Y. 28; Garner v. Mangam, 93 N. Y. the husband swore to a false inven-
642; Fairchild v. McMahon, 139 N. Y. tory made by the wife after a fire,
290, 36 Am. St. Rep. 701; Coleman v. he was held affected by the fraud.
Stark, 1 Oreg. 115; Mundorff v. Wick- But in Evans v. Crawford County Ins.
ersham, 63 Pa. 87, 3 Am. Rep. 531; Co., 130 Wis. 189, 118 Am. St. Rep.
as See ante, ' 436-439.
1559
I994> T 995] THE LAW OF AGENCY [BOOK iv
1994. Effect of misrepresentations Remedies. The question
of the effect of the misrepresentation of an agent or the remedies which
the other party may have therefor, is not a question of Agency but of
general law, being the same, where the principal is charged with re-
sponsibility, as though he had made the misrepresentation in person.
Thus it may be ground for the rescission of the transaction, and in
some states a purely innocent misrepresentation will so suffice. It
may be used as a defence to escape liability when pursued by the prin-
cipal upon the contract. Where the representation is made as part of
the contract, rather than as a mere inducement to it, any appropriate
contractual remedy may be had, even though in many cases a tort rem-
edy would be an alternative.
The diversity of views prevailing in many States as to what kinds of
untrue statements are to be regarded as fraudulent renders any ex-
tended discussion of the general question impracticable here.
1995. Action of deceit. Whether an innocent principal
can be held liable in an action of deceit for the false representations of
his agent has been much questioned. It has been held in -some cases
that such an action cannot be maintained, 3 * but the weight of modern
authority is to the effect that the action is maintainable. 35 Even though
1009, 9 L. R. A. (N. S.) 485, where party is a rescission or disaffirmance
the wife of an absent husband had of the contract. The most recent
made false proofs of loss acting as case is Reitman v. Fiorillo, 76 N. J.
the court held, as an agent ex neces- L. 815.
sitate, it was held that the husband See City Nat. Bank v. Dun, 51
was not affected by it in the absence Fed. 160; Hindman v. First Nat.
of some affirmative act of ratification. Bank, 50 C. C. A. 623, 112 Fed. 931,
The court thought that "the law is 57 L. R. A. 108; Haskell v. Starbird,
somewhat more tender of the inter- 152 Mass. 117, 23 Am. St. Rep. 809;
ests of a principal" in such a case. White v. Sawyer, 16 Gray (Mass.),
To same general effect is Metzger v. 586 (partners); Wheeler v. Baars, 33
Manchester F. Assur. Co., 102 Mich. Fla. 696; Wolfe v. Pugh, 101 Ind. 293;
334, though the grounds are not the Campbell v. Park, 128 Iowa, 181;
same. Grant, J., thought the princi- Rhoda v. Annis, 75 Me. 17, 46 Am.
pal affected by the fraud. Rep. 354; Peebles v. Guano Co., 77 N.
34 See Kennedy v. McKay, 43 N. J. Car. 233, 24 Am. Rep. 447 (a corpora-
L. 288, 39 Am. Rep. 581; White v. N. tion) ; Griswold v. Gebbie, 126 Pa.
Y., etc., R. Co., 68 N. J. L. 123; 353, 12 Am. St. Rep. 878; Smalley v.
Marsh v. Buchan, 46 N. J. Eq. 595; Morris, 157 Pa. 349; Wachter v.
Decker v. Fredericks, 47 N. J. L. 469; Phoenix Assur. Co., 132 Pa. 428, 19
Keen v. James, 39 N. J. Eq. 527, 51 Am. St. Rep. 600.
Am. Rep. 29; Freyer v. McCord, 165 Among the English cases, see Hern
Pa. 539; Keefe v. Sholl, 181 Pa. 90; v. Nichols, 1 Salk. 288. The much
Mayo v. Wahlgreen, 9 Colo. App. 506. criticized case of Cornfoot v. Fowke,
In the New Jersey cases it is held . 6 M. & W. 358, may perhaps be dis-
that the remedy of the defrauded tinguished upon the ground that the
1560
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES [ 1996
the principal may have had no guilty knowledge, the guilty knowledge
of the agent is said to be imputable to him. 36
igg6. 1 Upon this subject, it is said in Pollock on
Torts: 37 "Bearing in mind that reckless ignorance is equivalent to
guilty knowledge, we may state the alternatives to be considered as
follows :
(1) "The principal knows the representation to be false and au-
thorizes the making of it. Here the principal is clearly liable; the
agent is or is not liable according as he does or does not himself believe
the representation to be true.
(2) "The principal knows the contrary of the representation to be
true, and it is made by the agent in the general course of his employ-
ment but without specific authority. Here, if the agent does not be-
lieve his representation to be true, he commits a fraud in the course of
his employment and for the principal's purposes, and, according to
the general rule of liability for the acts and defaults of an agent, the
principal is liable. If the agent does believe the representation to be
true, there is difficulty ; for the agent has not done any wrong and the
principal has not authorized any. Yet the other party's damage is the
same. That he may rescind the contract, if he has been misled into a
contract, may now be taken as settled law. But what if there was not
arty contract, or rescission has become impossible? Has he a distinct
ground of action, and if so, how ? Shall we say that the agent had ap-
parent authority to pledge the belief of his principal, and therefore
the principal is liable? in other words, that the principal holds out
the agent as having not only authority but sufficient information to en-
able third persons to deal with the agent as they would with the prin-
cipal? Or shall we say, less artificially, that it is gross negligence to
withhold from the agent information so material that for want of it
he is likely to mislead third persons dealing with the principal through
question there was whether the guilty 38 Thus in Mayer v. Dean, 115 N. Y.
knowledge of the principal could be 556, 5 L. R. A. 540, it is said: "In an
tacked to the innocent representa- action between vendor and vendee,
tions of the agent. With respect of knowledge possessed by either the
Udell v. Atherton, 7 H. & N. 172, see principal or the agent is, respec-
Barwick v. English Joint Stock Bank, tively, imputable to each other, and
L. R. 2 Ex. 259; Western Bank of an agent, whose principal has knowl-
Scotland v. Addie, L. R. 1 H. L. (Sc.) edge of latent defects in property
145; Mackay v. Commercial Bank, L. proposed to be sold cannot honestly
R. 5 P. C. 394. represent to its intending purchaser
See also, Houldsworth v. Glasgow that it Is free from such defects."
Bank, 5 App. Cases, 317; Swire v. si 8th ed., p. 303.
Francis, 3 App. Cases, 106.
1561
1996]
THE LAW OF AGENCY
[BOOK iv
him, and such negligence is justly deemed equivalent to fraud? Such
a thing may certainly be done with fraudulent purpose, in the hope that
the agent will, by a statement imperfect or erroneous in that very par-
ticular, though not so to his knowledge, deceive the other party. Now
this would beyond question be actual fraud in the principal, with the
ordinary consequences. If the same thing happens by inadvertence, it
seems inconvenient to treat such inadvertence as venial, or exempt
it from the like consequences. We think, therefore, that an action lies
against the principal ; 38 whether properly to be described, under com-
mon law forms of pleading, as an action for deceit, or as an analogous
but special action on the case, there is no occasion to consider. 39 On
the other hand, an honest and prudent agent may say, 'To the best of
my own belief, such and such is the case,' adding in express terms or
by other clear indication, 'but I have no information from my princi-
pal.' Here there is no ground for complaint, the other party being
fairly put on inquiry.
(3) "If the principal does not expressly authorize the representa-
tion, and does not know the contrary to be true, but the agent does,
the representation being a matter within the general scope of his au-
thority, the principal is liable as he would be for any other wrongful
sa in the famous case of Cornfoot v.
Fowke, 6 M. & W. 358, an agent au-
thorized to let a dwelling house was
asked whether there was any objec-
tion to it. He replied that there was
none. He believed this to be true,
but in fact there was a brothel next
door as the principal knew. In an
action for rent the tenant pleaded
this alleged fraud as a defense. It
was held that his plea was bad. The
case has been much criticised. See
Fitzsimmons v. Joslin, 21 Vt. 129, 52
Am. Dec. 46; Ludgater v. Love, 44 L.
T. R. 694; National Exchange Co. v.
Drew, 2 Macq. 103.
In Barwick v. English Joint Stock
Bank, L. R. 2 Ex. 259, Willes, J.,
said: "I should be sorry to have it
supposed that Cornfoot v. Fowke
turned upon anything but a point of
pleading."
Sir Frederick Pollock says of it:
"It is difficult to suppose that as a
matter of fact the agent's assertion
can have been otherwise than reck-
less: what was actually decided was
that it was misdirection to tell the
jury without qualification 'that the
representation made by the agent
must have the same effect as if made
by the plaintiff [the principal] him-
self,' the defendant's plea averring
fraud without qualification."
In Fuller v. Wilson, 3 Q. B. (N. S.)
58, where the owner of a house em-
ployed an agent to sell it and the lat-
ter described it to a purchaser as be-
ing free from rates and taxes (which
he supposed was true), but it was in
fact subject to them (as the principal
knew), it was held that the pur-
chaser could maintain an action of
deceit against the principal. (Re-
versed on other grounds, 3 Q. B. (N.
S.) 1009.)
39 As to this point, it is said in the
note: "The decision of the House of
Lords in Derry v. Peek (1889), 14
App. Cas. 337, 58 L. J. Ch. 864, may
be thought to make this opinion less
probable; but see per Lord Halsbury
in S. Pearson & Son v. Dublin Cor-
poration, [1907] A. C. 351, 357."
1562
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES [ 1997, 1998
act of an agent about his business. And as this liability is not founded
on any personal default in the principal, it equally holds when the prin-
cipal is a corporation. *
(4) "The hardest case that can be put for the principal, and by no
means an impossible one, is that the principal authorizes a specific
statement which he believes to be true, and which at the time of giv-
ing the authority is true; before the agent has executed his authority
the facts are materially changed to the knowledge of the agent, but un-
known to the principal; the agent conceals this from the principal,
and makes the statement as originally authorized. But the case is no
harder than that of a manufacturer or carrier who finds himself ex-
posed to heavy damages at the suit of an utter stranger by reason of
the negligence of a servant, although he has used all diligence in choos-
ing his servants and providing for the careful direction of their work.
The necessary and sufficient condition of the master's responsibility is
that the act or default of the servant or agent belonged to the class of
acts which he was put in the master's place to do, and was committed
for the master's purposes. And 'no sensible distinction can be drawn
between the case of fraud and the case of any other wrong.' The au-
thority of Barwick v. English Joint Stock Bank 40 is believed, notwith-
standing the doubts still sometimes expressed, to be conclusive."
1997. Effect of fraud not avoided by recitals in contract that
there was none. Where the making of the contract has in fact been
induced by the agent's fraud, it is held that the results which follow
cannot be avoided by any recitals in the contract that no fraud or mis-
representation has been practiced. "In such case," it is said, "the
agent's fraud avoids the assent to this as well as to the other recitals
and stipulations of the contract which the buyer signs under the influ-
ence of such misrepresentation." 41
Such recitals may, however, be pertinent upon the question whether
any fraud was, in fact, practiced.
7. Liability for Penal or Criminal .Acts of Agent.
1998. What here involved. In previous subdivisions the ques-
tion of the liability of a principal or master for the negligent, the frau-
dulent, and the wilful or malicious acts of his servant or agent, has
been considered. It is proposed here to consider the liability of a prin-
cipal or master for the penal or criminal acts of his agent or servant.
This will involve two aspects: (a) The cizil liability of the principal
or master, and (b) His penal or criminal liability.
*> L. R. 2 Ex. 259. Shepard v. Pabst, 149 Wis. 35.
1563
1999] THE LAW OF AGENCY [BOOK iv
a. Civil Liability.
1999. Principal's civil liability for agent's criminal or penal act.
The principal's civil liability for his agent's criminal or penal act
rests upon the same considerations, and is, in many aspects, of the same
nature, as his liability for his agent's torts generally. The performance
of an act as a crime, unless expressly directed, or immediately partici-
pated in by the principal, could rarely be deemed to be within the scope
of the agent's authority, but inasmuch as most acts which are punished
as crimes have also a side from which they may be regarded merely as
torts, it may often happen that the same act, which may from one stand-
point be regarded and punished as a crime, may, from another, be re-
garded as a mere private tort ; and if from this standpoint the act would
impose liability upon the principal as an act done within the scope of
the employment, the fact that it might from another standpoint be
treated and punished as a crime would not affect the result. This is
still more clear in the cases in which the act would not ordinarily be
regarded as criminal even though in the particular case it may be pro-
hibited under a penalty.
Thus, as an illustration of that class of cases in which a criminal in-
tent is necessary to constitute the offense, the malicious assault of a
conductor upon a railway passenger may be adverted to. Here, as has
been seen, the principal is liable in a civil action by the person injured,
for damages occasioned by the trespass. At the same time the assault
is an offense against the state, which the state may and does punish as
such. As respects the individual injured the act is a tort; as respects
the state, it is a crime. 42
Many cases have already been referred to, when dealing with the
question of the master's liability for the wanton or wilful acts of his
servant, and it is not necessary to repeat that discussion here. As was
pointed out in a leading English case,* 3 "There is no distinction in
42 In Dyer v. Munday, [1895] 1 Q. only a tortious act, did not affect the
B. 742, the defendants' servant, while liability of the defendant for the act
acting in the scope of his employ- of his servant, and that the release
ment, namely, in endeavoring to re- of the servant, under 24 and 25 Viet,
take property sold by his master on c. 100, s. 45, from civil proceedings
the instalment plan, and on which for the assault, did not release the
the instalments were in arrears, had defendant from liability,
committed an assault on plaintiff. See also, that the master is respon-
For this he had been arrested, con- sible for acts that might also have
victed, fined, and paid the fine. Then been punished criminally. Marion v.
this action was commenced against Chicago, etc., Ry. Co., 64 Iowa, 568.
the master to recover damages. Dyer v. Munday, [1895] 1 Q. B.
Held, that the mere fact that the as- 742.
sault was a criminal offense, and not
1564
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES [ 2OOO
this respect between the effects of a tortious and criminal act, provided
such acts are done by the servant in the conduct of his employment and
in the interests of his master."
2000. Civil liability for statutory torts committed in course of
employment. But there is also another class of cases where the
liability is not dependent upon the intent, but upon the question of the
infraction. These are usually the subject of express statutory prohibi-
tion, based often upon the police power of the state, and making that,
which might under other circumstances be a thing innocent or indif-
ferent in itself, a wrong prohibited under a penalty, a malum prohib-
itum as distinguished from a malum in se. Of this class, the now com-
mon legislation providing for the recovery of penalties or damages for
the prohibited sale of intoxicating liquors, furnishes a well-recognized
illustration. In such cases, so far as the forbidden act can be regarded
as a mere statutory tort, or the penalty prescribed regarded as damages,
a civil action may be maintained against the principal.
Thus in an action to recover as damages a penalty fixed by law, al-
leged to be due by reason of the unlawful sale of intoxicating liquors
by an agent, the Supreme Court of Massachusetts said : "The action is
brought under a statute which makes that a tort which was not so be-
fore, and provides for the recovery of damages against the tort-feasor.
The tort consists in selling intoxicating liquor to one who has the habit
of using it to excess, after notice of his habit and a request from his
wife not to sell such liquor to him. The defendant engages in the busi-
ness of selling liquor voluntarily. He chooses to intrust the details of
the business to a servant. If he forbids the making of sales to the in-
temperate person, and his servant negligently, through forgetfulness of
the instruction given him, or through a failure to recognize the person,
continues to make sales to that person, there is no reason why the de-
fendant should not be responsible for the wrongful act. The sale is
his sale, made in the performance of his business, and is an act within
the general scope of the servant's employment." 4 * And the same re-
44 George v. Gobey, 128 Mass. 289, Gjorud, 82 Mich. 503; Austin v.
35 Am. Rep. 376. See also, Worley Davis, 7 Ont. App. 478; Southern Ex-
v. Spurgeon, 38 Iowa, 465; Peterson press Co. v. State, 1 Ga. App. 700.
v. Knoble, 35 Wis. 80; Smith v. Rey- And so where a servant unlawfully
nolds, 8 Hun (N. Y.), 128; Keedy v. sold to a minor. Comm. v. Stevens,
Howe, 72 111. 133; Walker v. Dailey, 155 Mass. 291.
101 111. App. 575; Kennedy Bros. v. See the same principle applied in
Sullivan, 136 111. 94; Skinner v. Buel v. New York Steamer, 17 La.
Hughes, 13 Mo. 440; Manning v. Mor- 541, under a penal statute against the
ris, 28 Tex. Civ. App. 502; Boos v. employment of slaves; Bryan v. Ad-
State, 11 Ind. App. 257; Gullikson v. ler, 97 Wis. 124, 65 Am St. R. 99, 41
2001]
THE LAW OF AGENCY
[BOOK iv
suit would, within the principles already considered, undoubtedly fol-
low though the act was wilful. 48
2001. No civil liability for acts not in course of employment.
But here, as in other cases, the principal is liable only while the agent
was acting within the scope of his employment. If the agent has gone
outside of that, to commit a criminal act, the principal is not liable.
Thus where an armed watchman, employed by the owners of a brewery
to guard their premises and preserve the peace pursued a person, who
had been acting on the premises in a drunken and disorderly manner,
and, while the latter was retreating and was off of the premises, killed
him, it was held that the proprietors of the brewery were not liable.
Without determining whether the principals would be liable in any
event for such an act, the court held that the fact that the deceased was
retreating from the brewery at the time he was shot, showed conclu-
sively that the shot was not fired either in the defense of the brewery
or in the line of the watchman's duty. 46 Other cases are cited in the
note.* 7
L. R. A. 658, a public restaurateur
was held liable for statutory damages
because one of his waiters violated a
statute giving equal rights in restau-
rants, etc., although the violation
was wilful, in direct violation of the
principal's orders, and neither ap-
proved at the time nor subsequently
ratified; City of Hammond v. New
York, etc., Ry. Co., 5 Ind. App. 526,
defendant held liable for a statutory
penalty, for the act of one of its lo-
comotive engineers in exceeding a
speed limitation; Zellers v. White,
208 111. 518, 100 Am. St. Rep. 243, ac-
tion, under a statute, to recover
money lost in gambling; Gulf, etc.,
Ry. Co. v. Reed, 80 Tex. 362, 26 Am.
St. Rep. 749, an action under a stat-
ute for polluting streams. In a great
variety of cases, the violation of stat-
utes and ordinances designed to pro-
mote the public safety is held to be
negligence. See 2 Thompson on Neg-
ligence, 1394 et seq.
Kreiter v. Nichols, 28 Mich. 496;
Kehrig v. Peters, 41 Mich. 475; Keedy
v. Howe, supra. His assent must be
shown. Commonwealth v. Putnam,
supra.
46 Golden v. Newbrand, 52 Iowa, 59,
35 Am. Rep. 257.
See also, Oxford v. Peter, 28 111.
434; Candiff v. Louisville, etc., Ry.
Co., 42 La. Ann. 477.
47 Thefts by agent or servant. In
a number of cases employers not
personally at fault have been held
not liable for thefts by their work-
men. Searle v. Parke, 68 N. H.
311 (decorators at work on a build-
ing); Cheshire v. Bailey, [1905] 1 K.
B. 237 (stable keepers who furnished
a driver to drive wagon used by jew-
elry salesman); Merchants Nat.
Bank v. Guilmartin, 88 Ga. 797, 17
L. R. A. 322 (bank was not liable
for the theft by its cashier of special
deposits); Foster v. Essex Bank, 17
Mass. 478, 9 Am. Dec. 168 (same) ;
Satterlee v. Groat, 1 Wend. (N. Y.)
272; Fay v. Slaughter, 194 111. 157,
88 Am. St. Rep. 148, 56 L. R. A. 564
(principal not liable for the forgery
and theft of certificates of stock and
the embezzlement of their proceeds).
On the other hand, where the prin-
cipal or master owes a special or ab-
solute duty of protection, as in the
case of innkeepers, common carriers
1566
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES
[ 2002
2002. Usury. The question of how far the principal is to be
subjected to the penalties imposed upon usury, where the loan was made
by an agent, is one of considerable difficulty owing to the varying forms
of the statutes upon the subject, and to the marked tendency of legis-
latures in many states to make that usury which would not be so, in
form at least, under ordinary statutes. In order to affect a principal
with the consequences of usury exacted by one said to be his agent,
it must first appear that the alleged agent was really such. The mere
fact that the borrower may have paid more than legal interest to ob-
tain the money does not necessarily present a case of usury under the
ordinary statute. 48 If the alleged agent was not the agent of the lender,
but of the borrower, commissions or fees charged by the borrower's
agent for his services in finding a lender cannot be imputed to the len-
der in order to make the loan usurious. 49 If the borrower has employed
of goods, carriers of passengers' bag-
gage, and the like, a liability for lar-
ceny or theft by servants or agents
would attach. See as to innkeepers.
Chamberlain v. Masterton, 26 Ala.
371; Pinkerton v. Woodward, 33 Gal.
557, 91 Am. Dec. 657; Weisenger v.
Taylor, 64 Ky. (1 Bush) 275, 89 Am.
Dec. 626; Lusk v. Belote, 22 Minn.
468; Epps v. Hinds, 27 Miss. 657, 61
Am. Dec. 528; Houser v. Tully, 62
Pa. 92, 1 Am. Rep. 390; Schultz v.
Wall, 134 Pa. 262, 19 Am. St Rep.
686, 8 L. R. A. 97; Cunningham v.
Bucky, 42 W. Va. 671, 57 Am. St.
Rep. 876, 35 L, R. A. 850; carriers
of goods: Rosenblum v. Weir, 113
N. Y. Supp. 520, aff'd no opinion, 132
N. Y. App. Div. 929; Hasbrouck v.
New York, etc., R. Co., 202 N. Y. 363,
35 L. R. A. (N. S.) 535, Ann. Cas.
1912 D. 1150; Watkinson v. Laugh-
ton, 8 Johns. (N. Y.) 213; Adams Ex-
press Co. v. Berry, 35 App. D. C. 208,
31 L. R. A. (N. S.) 309; Dougherty
v. Wells Fargo & Co., 7 Nev. 368;
passengers' baggage: Pullman, etc.,
Co. v. Martin, 95 Ga. 314, 29 L. R. A.
498; Illinois Cent. R. Co. v. Handy,
63 Miss. 609, 56 Am. Rep. 846; Levins
v. New York, etc., R. Co., 183 Mass.
175, 97 Am. St. Rep. 434; Lewis v.
New York, etc., Co., 143 Mass. 267,
58 Am. Rep. 135; Pullman, etc., Co.
v. Gavin, 93 Tenn. 53, 42 Am. St
Rep. 902, 21 L. R. A. 298. There are
many others.
48 in Ridgway v. Davenport, 37
Wash. 134, it was held that, under
the broad terms of the peculiar usury
statute in force, it was immaterial
that the agent did not act within the
scope of his authority. See also, in
Missouri, Western Storage Co. v.
Glasner, 169 Mo. 38.
Dagnall v. Wigley, 11 East, 43;
Dryfus v. Burnes, 53 Fed. 410; Holt
v. Kirby, 57 Ark. 251; Martin v.
Adams, 66 Ark. 10; Pottle v. Lowe,
99 Ga. 576, 59 Am. St. Rep. 246; West
v. Equitable Mfg. Co., 112 Ga. 377, 81
Am. St. Rep. 59; Polk Co. Savings
Bank v. Harding, 113 Iowa, 511;
Smith v. Wolf, 55 Iowa, 555; Secor
v. Patterson, 114 Mich. 37; Thomas
v. Miller, 39 Minn. 339; Davis v. Slo-
man, 27 Neb. 877; Leipziger v. Van
Saun, 64 N. J. Eq. 37; Coster v. Dil-
worth, 8 Cow. (N. Y.) 299; Crane v.
Hubbel, 7 Paige (N. Y.), 413; Guard-
ian Mut. L. Ins. Co. v. Kashaw, 66
N. Y. 544; Terminal Bank v. Dub-
roff, 66 Misc. 100; New England Mfg.
Security Co. v. Baxley, 44 S. C. 81;
Fay v. Lovejoy, 20 Wis. 407; Ottille v.
Waechter, 33 Wis. 252.
1567
2002]
THE LAW OF AGENCY
[COOK- iv
a broker, who is not the agent of the lender, to procure a loan for him,
the commissions paid to the broker cannot be charged against the len-
der to make the loan usurious. 50 In order to affect the lender, the agent
must be the lender's agent, and while of course the courts will look be-
hind devices or subterfuges designed to conceal the actual relation, 51 it
must still remain true that the lender can be charged with the penalties
of usury only when he made the loan in person or through his agent. 52
It must also 'appear, as in other cases, that what the agent has done
was within the scope of his authority, or has subsequently been ratified.
If the principal leaves the whole matter in charge of a general agent,
and the agent exacts commissions or allowances which make the rate
usurious, it is held in many cases that the principal may be chargeable
with it. 58 If the principal confides the loaning of the money to the
agent, but expressly or by implication requires the agent to get com-
pensation, for the services which he thus renders to the lender, out of
Where the intermediate party ob-
tains the money on his own credit
only or by adding his credit, and is
paid for doing so, there is no usury.
In re Holmes Lumber Co., 189 Fed.
178; Brown v. Harrison, 17 Ala. 774;
Jones v. Norton, 9 Ga. App. 333.
so Cox v. Mass. Mut. Ins. Co., 113
111. 382; Haldeman v. Mass. Mut. Ins.
Co., 120 111. 390; Secor v. Patterson,
114 Mich. 37; Thomas v. Miller, 39
Minn. 339.
siLukens v. Hazlett, 37 Minn. 441;
Sherwood v. Roundtree, 32 Fed. 113;
France v. Munro, 138 Iowa, 1, 19 L.
R. A. (N. S.) 391; McFarland v.
Carr, 16 Wis. 259. See Hare v. Win-
terer, 64 Neb. 551. At the same time,
as is pointed out in Merck v. Ameri-
can Mortg. Co., 79 Ga. 213, "Implica-
tions of agency are easily over-
strained, misapplied or otherwise
abused."
The borrower may pay an attorney
for services rendered in the way of
examining or clearing up his title,
removing incumbrances, etc., with-
out tainting the transaction with
usury, even though the attorney be
one selected by the lender. But the
courts will inquire into the transac-
tion, and if it is but a shield to cover
what is really a bonus for the loan,
the transaction will be held usurious.
Sanders v. Nicolson, 101 Ga. 739;
Gannon v. Scottish American Mfg.
Co.. 106 Ga. 510.
S-.ich charges may not be exacted
under the special statute in New
York. Section 314 of the Banking
Law of 1909. London Realty Co. v.
Riordan, 207 N. Y. 264.
52 In Scruggs v. Scottish Mfg. Co.,
54 Ark. 566, a loan company was held
not responsible where its agent, with-
out the authority of the company,
appointed a sub-agent who exacted a
commission for himself, which ren-
dered the loan usurious.
53 Stephens v. Olson, 62 Minn. 295.
See Hall v. Maudlin, 58 Minn. 137, 49
Am. St. Rep. 492; Horkan v. Nesbit,
58 Minn. 487; Western Storage Co.
v. Glasner, 169 Mo. 38; Austin v. Har-
rington, 28 Vt. 130; Rogers v. Buck-
ingham, 33 Conn. 81; Meers v. Stevens,
106 111. 549; France v. Munro, 138
Iowa, 1, 19 L. R. A. (N. S.) 391. But
so far as any of these cases hold that
an agent having general authority
to loan money, tout only at lawful
rates, affects his principal by de-
manding usurious rates, they are
contrary to the weight of authority,
as will be seen in the following sec-
tion.
I 5 68
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES
[ 2003
the charges which he makes to the borrower, and this charge makes the
rate usurious, it is held in many cases that the lender may be held re-
sponsible, even though he receives no portion of such commissions. 54
A fortiori would this be true where the principal requires the agent to
divide the commissions with him. 55
2003. But where an agent is authorized to loan for legal
interest only, and, without the knowldcge or consent of the principal,
exacts from the borrower a usurious interest for the agent's own pri-
vate benefit, and the principal does nothing subsequently to ratify the
act, it is held in many cases, largely influenced by the New York de-
cisions, that the usury will not affect the principal. 58 These cases pro-
ceed upon the theory that the employment of the agent in the particu-
lar case is to accomplish the result by legal methods only, and that
therefore the principal cannot be held responsible for an usurious ex-
action by his agent unless he has authorized or ratified it. As has been
seen in many cases, however, the principal is often held responsible
in other fields for the illegal acts of his agent, committed while acting
within the general scope of his authority, even though it may be eri-
.
** Thompson v. Ingram, 51 Ark. for his services is material upon the
546; Vahlberg v. Keaton, 51 Ark. 534,
14 Am. St. Rep. 73, 4 L. R. A. 462;
Clarke v. Havard, 111 Ga. 242, 51 L.
R. A. 499 (distinguishing McLean v.
Camak, post} ; Avery v. Creigh, 35
Minn. 456 (distinguishing Acheson v.
Chase, 28 Minn. 211); Kemmitt v.
Adamson, 44 Minn. 121; Hall v.
Maudlin, 58 Minn. 137, 49 Am. St.
Rep. 492; Horkan v. Nesbitt, 58 Minn.
487; Carpenter v. Lamphere, 70 Minn.
542; Fowler v. Equitable Trust Co.,
141 U. S. 384, 35 L. Ed. 786; Siegel-
man v. Jones, 103 Mo. App. 172;
France v. Munro, 138 Iowa, 1, 19 L.
R. A. (N. S.) 391; New England Mtg.
Security Co. v. Gay, 33 Fed. 636;
Hare v. Winterer, 64 Neb. 551; Meers
v. Stevens, 11 111. App. 138 (affirmed
in 106 111. 549); Payne v. Newcomb,
100 111. 611, 39 Am. Rep. 69; Am-
mondson v. Ryan, 111 111. 506; Texas
Loan Agency v. Hunter, 13 Tex. Civ.
App. 402; Brown v. Johnson,
Wash. , 134 Pac. 590. See also,
American Mtg. Co. v. Woodward, 83
S. Car. 521.
The fact that the principal knows
that he is paying bis agent nothing
question whether he did not expect
the agent to exact compensation from
the borrower. Western Storage Co.
v. Glasner, 169 Mo. 38; Little v.
Hooker Steam Pump Co., 122 Mo.
App. 620, 228 Mo. 673. To same ef-
fect: Hare v. Winterer, supra; Payne
v. Henderson, 106 Ky. 135.
BB Pottle v. Lowe, 99 Ga. 576, 59
Am. St. Rep. 246.
56 Rogers v. Buckingham, 33 Conn.
81; McCall v. Herrin, 118 Ga. 522;
Boardman v. Taylor, 66 Ga. 638; Mc-
Lean v. Camak, 97 Ga. 804; Cox v.
Life Ins. Co., 113 111. 382; Chicago
Fire Proofing Co. v. Park Nat. Bank,
145 111. 481; Boylston v. Bain, 90 111.
283; Mass. Mut. Life Ins. Co. v.
Boggs, 121 111. 119; Richards v.
Purdy, 90 Iowa, 502, 48 Am. .St. Rep.
458; Greenfield v. Monaghan, 85 Iowa,
211; Gokey v. Knapp, 44 Iowa, 32;
Brigham v. Myers, 51 Iowa, 397, 33
Am. Rep. 140; Acheson v. Chase, 28
Minn. 211; Jordan v. Humphrey, 31
Minn. 495; Stein v. Swensen, 44
Minn. 218; Mackey v. Winkler, 35
Minn. 513 (but see Robinson v.
Blaker, 85 Minn. 242, 89 Am. St. Rep.
99
1569
2004]
THE LAW OF AGENCY
[BOOK rv
tirely clear that the principal intended that lawful methods only should
be adopted, and some cases have applied that doctrine to this case. 157
2004. Liability by ratification. The question whether
the principal, by subsequently accepting the benefits of the loan, thereby
ratifies the usurious exaction made by his agent is one over which the
authorities are very much in conflict. As has been seen in an earlier
chapter, in order to establish a ratification it is generally held essential
that the agent in performing the act in question purported to act as
agent for the person whose ratification is in question. It is also ordi-
narily essential that the person sought to be charged by the ratification,
must at the time of the alleged ratification have had full knowledge of
all the material facts. Applying the rule first referred to, it is held in
a number of cases that if the agent, without the knowledge or consent
of his principal, exacts the sum alleged to make the loan usurious, in
his own name and on his own account, the conditions for ratification
are not present, and the fact that the principal takes the benefit and
seeks to enforce the contract of borrowing made as authorized, even
though he may then have learned of the unauthorized exaction, does
not amount to a ratification. Tins doctrine was early established in
r, ,-. n>
541); Muir v. Newark Savings Insti.,
1 C. E. Green (N. J.), Eq. 537; Man-
ning v. Young, 28 N. J. Eq. 568; Gray
v. Van Blarcom, 29 Id. 454; Nichols
v. Osborn, 41 Id. 92; Lane v. Wash-
ington L. I. Co., 46 Id. 316; Forbes v.
Baaden, 31 Id. 381; Condit v. Bald-
win, 21 N. Y. 219, 78 Am. Dec. 137;
Bell v. Day, 32 N. Y. 165; Fellows v.
Longyor, 91 N. Y. 324; Van Wyck
v. Watters, 81 N. Y. 352; Baldwin v.
Doying, 114 N. Y. 452; Lyon v. Simp-
son, 12 Daly (N. Y.), 56; Stillman v.
Northrup, 109 N. Y. 473; Silverman
v. Katz, 120 N. Y. Supp. 790; Barger
v. Taylor, 30 Ore. 228; Williams v.
Bryan, 68 Tex. 593; Baxter v. Buck,
10 Vt. 548; Franzen v. Hammond,
136 Wis. 239, 128 Am. St. Rep. 1079,
19 L. R.- A. (N. S.) 399; Whaley v.
American, etc., Co., 74 Fed. 73; Call
v. Palmer, 116 U. S. 98, 29 L. Ed. 559;
Eddy v. Badger, 8 Biss. (U. S. C. C.)
238, Fed. Gas. No. 4276.
57 Thus in Philo v. Butterfield, 3
Neb. 256, the court says: "It is a set-
tled rule of law which will not be
questioned, that in all cases where a
person employs another as his agent
to loan money for him, and places
the funds in the hands of the agent
for such purposes, the principal is
bound by the acts of his agent; and
if the agent charges the borrower of
such money unlawful interest, or
even demands and receives from the
borrower a bonus for such loan, and
appropriates it to his own individual
use, either with or without the
knowledge of his principal, the prin-
cipal is affected by the act of his
agent," and this doctrine is reaf-
firmed in later cases. Cheney v.
White, 5 Neb. 261, 25 Am. Rep. 487;
Cheney v. Woodruff, 6 Neb. 151; Olm-
stead v. New England Mortgage Se-
curity Co., 11 Neb. 487; Cheney v.
Eberhardt, 8 Neb. 423; Anderson v.
Vallery, 39 Neb. 626; Hare v. Hooper,
56 Neb. 480; Hare v. Winterer, 64
Neb. 551; Griswold v. Dugane, 148
Iowa, 504, seems to go upon this the-
ory. Robinson v. Blaker, 85 Minn.
242, 89 Am. St. Rep. 541, seems to be
in the same line, though the theory
of the case is not clear.
1570
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES
[ 2005
the Court of Appeals, in New York, and though in the first cases there
was very vigorous dissent, it seems to have become firmly established
there. 58 The same doctrine has also been adopted in other states. 59
2005. Where, however, a certain amount is loaned, but
the note or other security is taken for a larger amount, to include the
amount of the agent's commission, the principal's action upon the note
or other security to recover the amount thereof, after he knew that the
commission had been so included, has been held even in New York to
ss The leading case is Condit v.
Baldwin, 21 N. Y. 219, 78 Am. Dec.
137. There Baldwin, desiring a loan
of $400 upon his note with sureties,
ppplied to one M to see if he could
procure it for him and agreed to com-
pensate him for his services. M ap-
plied to W who was the general loan
agent of the plaintiff who resided in
New Jersey. W said he had the
money to loan but preferred to loan
upon bonds and mortgages because
in that event he could get a fee for
drawing the papers and investigating
the title. M thereupon said to W that
if W would make the loan in this
case he should have $25, as an attor-
ney fee. W consented and made the
loan and paid the $400 to M who there-
upon turned it over to defendant.
Defendant asked M how much his
charges were for procuring the
money and M replied $40, which
Baldwin paid. Of this M paid W $25.
The note was drawn at the highest
rate of lawful interest. Plaintiff did
not know that W had received the
$25 until she came to enforce the pay-
ment of the note when usury was
interposed as a defense. The major-
ity of the court held that there was
no authority to demand the $25 and
that the plaintiff by seeking to en-
force the note, did not ratify it. The
$25 was not demanded by W as the
plaintiff's agent but on his own per-
sonal account, and "when the agent
did not assume to act for another but
acted for himself and his own bene-
fit, a subsequent ratification does not
bind the principal." Comstock, C. J.,
delivered a dissenting opinion, with
which two judges concurred. His
contention was that the whole matter
constituted but one transaction. That
the agent said in substance: "I will
lend you the $400 if besides the legal
interest which you pay to my princi-
pal, you will pay me the sum of $25."
That this was all one entire contract
and that the plaintiff, if she adopted
any of it, must assume responsibility
for the whole. A substantially simi-
lar case was Bell v. Day, 32 N. Y. 165,
where Condit v. Baldwin was fol-
lowed by a divided court. Denio, J.,
who had dissented in Condit v. Bald-
win, now followed it on the ground
of stare decisis. Other New York
cases are: Estevez v. Purdy, 66 N. Y.
446; Stillman v. Northrup, 109 N. Y.
473; Jones v. Gay, 139 N. Y. Supp.
158.
5 See also, Call v. Palmer, 116 U.
S. 98, 29 L. Ed. 559; Hall v. Maudlin,
58 Minn. 137, 49 Am. St. Rep. 492;
Richards v. Bippus, 18 App. (D. C.)
293; Franzen v. Hammond, 136 Wis.
239, 128 Am. St. Rep. 1079, 19 L. R.
A. (N. S.) 399.
In Hall v. Maudlin, 58 Minn. 137,
49 Am. St. Rep. 492, the court said:
"It perhaps would have been more in
harmony with the principles of the
law of agency, and have more effec-
tually prevented evasions of the
usury laws, had the courts, at the
start, adopted the views of Comstock,
J., in his dissenting opinion in Con-
dit v. Baldwin, 21 N. Y. 219, and held
that where an agent exacts more than
the legal rate of interest the contract
is an entirety, and if the principal
adopts it he must adopt it as a whole,
with all its vices; that if the agent
has exceeded his authority the prin-
1571
2005]
TTM-: LAW OF AGKNCY [B(X)K IV
lie such a ratification or adoption as to make the principal responsible. 60
Where the added amount was exacted for the principal's benefit and
not for the agent's, the case is one which admits of ratification. 61 So
where the agent takes the security in his own name, as principal, upon
usurious interest, the borrower supposing him to be the principal, the
real principal, if he seeks to avail himself of the security, will be bound
by the usury. 6 *
.
cipal is not bound by it, but may re- by himself." Followed in Schwarz v.
Sweitzer, 202 N. Y. 8.
In Trimble v. Thorson, 80 Iowa,
246, it is said: "If the agent, without
authority, professes to take a bonus
in the name of his principal which is
in excess of the legal rate of interest,
and the principal accepts the benefits
of the agency, he makes the illegal
act .his own."
In Richards v. Bippus, 18 App. (D.
C.) 293, the plaintiff's husband, in
making a loan for her, took the high-
est legal interest and also a commis-
sion which was included in the note.
This amount the plaintiff agreed to
pay to her husband when collected.
The court held that she could not re-
cover on this note, as it included the
commission, and thereby gave notice
to the plaintiff that her agent had ex-
acted a bonus, which, being thus
taken by him with the knowledge of
the plaintiff, rendered the whole note
usurious. See also, Lewis v. Wil-
loughby, 43 Minn. 307.
6i In Stephens v. Olson, 62 Minn.
295, plaintiffs' cashier, against their
pudiate the whole, and recover back
his money, but that the principal
must either disavow the dealing, or
take all the consequences."
In Nye v. Swan, 49 Minn. 431, an
agent authorized to purchase land,
loaned the plaintiff, the owner of the
land, the money which had been in-
trusted to him for the purpose of pur-
chasing it. This loan was made with-
out the knowledge of his principal,
and was made at a usurious rate of
interest, and was secured by a deed
of conveyance, absolute in form, but
intended as security for the loan.
The plaintiff brought this action to
cancel the deed; but it was held that
since the defendant had never
claimed anything under it as a mort-
gage but only as an absolute deed, he
had not ratified the act, and could
avail himself of it as security for the
money actually loaned and legal in-
terest. Compare Leipziger v. Van
Saun, 64 N. J. Eq. 37. See also, Jor-
dan v. Humphrey, 31 Minn. 495.
eo Thus in Bliven v. Lydecker, 130
N. Y. 102, it is said, after referring
to Condit v. Baldwin, supra, "But
where, as in this case, an agent au-
thorized to lend, but not to take
usury, lends the money of his princi-
pal at a usurious rate and both the
sum lent and the usury exacted are
secured by the same instrument,
which the principal, knowing that it
is for a larger amount than the sum
loaned, without explanation accepts,
and has the benefit of, he adopts, rati-
fies, and is bound by the act of his
agent the same as if it had been done
instructions, exacted usurious inter-
est, and included such interest in the
note, taken in the plaintiffs' name.
The plaintiffs learned of this before
they brought suit on the note. Held,
that the notes were usurious in their
hands.
To same effect, see McNeely v.
Ford, 103 Iowa, 508, 64 Am. St. Rep.
195.
02 Erickson v. Bell, 53 Iowa, 627,
36 Am. Rep. 246; Click v. Bramer,
78 Iowa, 568.
I 57
.
CHAP. VJ LIABILITY OF PRINCIPAL TO THIRD PARTIES [ 2OC)6, 2OO7
b. Criminal or Penal Liability.
2006. Principal's criminal liability for agent's criminal or penal
acts. But it is not only in a civil action that the principal may be
made liable for the criminal or penal acts of his agent ; he may be held
criminally liable also under certain circumstances. Thus the principal
is unquestionably so liable, in greater or less degree, where he is pres-
ent and co-operates with the agent or encourages, aids or abets him;
or where, though not present, he expressly or impliedly commands, en-
courages or incites the doing of the act. 63 He would be so liable if
he directed the doing of an act which was in itself a crime, or which
necessarily involved or required the commission of a crime. 64 But as a
general rule he cannot be held criminally liable for the act of his agent
committed without his knowledge or consent. 85
2007. Penal acts.- There is, however, a class of cases, as has
been seen, where, by statutory enactment, the doing of a certain act
otherwise perhaps innocent or indifferent, or at the most not criminal,
is expressly prohibited under a penalty. Of this class are many of the
statutes in the nature of police regulations which impose penalties for
as See Bishop on Grim. Law, 649.
64 See Bishop on Crim. Law, 649-
651; State v. Smith, 78 Me. 260, 57
Am. Rep. 802.
In a number of cases in which un-
lawful sales of liquor, etc., have
been made by agents or servants with
the knowledge, connivance or co-
operation of the principal, he has
been held liable. See Lewis v. State,
21 Ark. 209; State v. Skinner, 34
Kan. 256; Loeb v. State, 6 Ga. App.
23; Cox v. State, 3 Old. Crim. Rep.
129; United States v. Burch, 1
Cranch (U. S. C. C.), 36, Fed. Cases,
No. 14,682; Kittrell v. State, 89 Miss.
666.
So where there was evidence that
the principal intended the sales to be
made, though he gave instructions
not to make them. Com. v. Cough-
lin, 182 Mass. 558.
The master is clearly responsible
criminally for a sale made by his com-
mand or authority. State v. Falk, 51
Kan. 298; State v. Skinner, 34 Kan.
256; State v. Wiggin, 20 N. H. 449;
Martin v. State, 30 Neb. 507; Collins
v. State, 34 Tex. Cr. 95.
65 Commonwealth v. Nichols, 10
Mete. (Mass.) 259, 43 Atn. Dec. 432;
Commonwealth v. Putnam, 4 Gray
(Mass.), 16; Somerset v. Hart, 12
Q. B. Div. 360; Patterson v. State, 21
Ala. 571; State v. Society for Preven-
tion of Cruelty, 47 N. J. L. 237; Gaioc-
chio v. State, 9 Tex. Cr. App. 387;
People v. Parks, 49 Mich. 333.
A principal cannot lawfully be ar-
rested under a statute permitting ar-
rest "where defendant has been guilty
of a fraud In contracting the debts"
for frauds committed without his
knowledge or authority by his agent
in purchasing goods for him. Hath-
away v. Johnson, 55 N. Y. 93, 14 Am.
Rep. 186. See also, Jaffray v. Jen-
nings, 101 Mich. 515, 25 L. R. A. 645.
Where an essential ingredient of
the statutory offense is keeping in-
toxicating liquor with intent to sell
contrary to law, the guilty intent of a
servant who sells in violation of the
instructions of his master, cannot be
imputed to the master. State v.
Hayes, 67 Iowa, 27.
1573
TTTF. LAW OF AGENCY [BOOK IV
their violation, often irrespective of the question of the intent to vio-
late them ; the purpose being to require a degree of diligence for the
protection of the public which shall render violation exceedingly im-
probable, if not impossible. 88 Similar to these statutes were many of
the well settled doctrines of the common law, as for example, the law
porting a slave on its steamboat,
though the persons in charge of its
business had ' no knowledge of the
fact. A case determined on the same
principle is Queen v. Bishop, 5 Q. B.
Div. 259. If one's business is the sale
of liquor, a sale made by his agent in
violation of the law is prima facie
evidence of his authority; Common-
wealth v. Nichols, 10 Met. 259, 43 Am.
Dec. 432; and in Illinois the princi-
pal is held liable though the sale by
his agent was in violation of instruc-
tions. Noecker v. People, 91 111/494.
In Connecticut it has been held no
defense, in a prosecution for selling
intoxicating liquor to a common
drunkard, that the seller did not
know him to be such. Barnes v.
State, 19 Conn. 398. It was held in
Faulks v. People, 39 Mich. 200, 33
Am. Rep. 374, under a former stat-
ute, that one should not be convicted
of the offense of selling liquors to a
minor who had reason to believe and
did believe he was of age; but I
doubt if we ought so to hold under
the statute of 1881, the purpose of
which very plainly is, as I think, to
compel every person who engages in
the sale of intoxicating drinks to
keep within the statute at his peril.
There are many cases in which it has
been held, under similar statutes,
that it was no defense that the seller
did not know or suppose the pur-
chaser to be a minor; State v. Hart-
flel, 24 Wis. 60; McCutcheon v. Peo-
ple, 69 111. 601; Farmer v. People, 77
111. 322; Ulrich v. Commonwealth, 6
Bush. 400; State v. Cain, 9 W. Va.
559; Commonwealth v. Emmons, 98
Mass. 6; Redmond v. State, 36 Ark.
58, 38 Am. Rep. 24; and in Common-
wealth v. Finnegan, 124 Mass. 324,
the seller was held liable, though the
minor had deceived him by falsely
a In People v. Roby, 52 Mich. 577,
50 Am. Rep. 270, Cooley, C. J., says:
"I agree that as a rule there can be
.no crime without a criminal intent;
but this is not by any means a uni-
versal rule. One may be guilty of
the high crime of manslaughter when
his only fault is gross negligence;
and there are many other cases where
mere neglect may be highly criminal.
Many statutes, which are in the na-
ture of police regulations, as this is,
impose criminal penalties irrespec-
tive of any intent to violate them;
the purpose being to require a degree
of diligence for the protection of the
public which shall render violation
impossible. Thus, in Massachusetts,
a person may be convicted of the
crime of selling intoxicating liquor
as a beverage, though he did not
know it to he intoxicating; Common-
wealth v. Bo.ynton, 2 Allen, 160; and
of the offense of selling adulterated
milk, though he was ignorant of its
being adulterated. Commonwealth v.
Farren, 9 Allen, 489; Commonwealth
v. Holbrook, 10 Allen, 200; Common-
wealth v. Waite, 11 Allen, 264, 87 Am.
Dec. 711; Commonwealth v. Smith,
103 Mass. 444. See State v. Smith, 10
R. I. 258. In Missouri a magistrate
may be liable to the penalty for per-
forming the marriage ceremony for
minors without the consent of par-
ents or guardians, though he may
suppose them to be of the proper age.
Beckham v. Nacke, 56 Mo. 546. When
the killing and sale of a calf under a
specified age is prohibited, there may
be a conviction though the party was
ignorant of the animal's age. Com-
monwealth v. Raymond, 97 Mass. 567.
See The King v. Dixon, 3 M. & S. 11.
In State v. Steamboat Co., 13 Md.
181, a common carrier was held lia-
ble to the statutory penalty for trans-
1574
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES [ 2OO8
of libels and nuisances. As to these, it is often said to be the duty of
the principal to see to it that such statutes are not violated by his agents
in the course of their employment. For what they may do outside of
the employment, he is, of course, not responsible ; 87 but if the prohibited
act be done by them in the course of their employment, he must respond.
This is particularly true in those cases where the principal confides, in
a greater or lesser degree, the conduct and management of his business
to his agents. He selects his own agents, it is argued, and has the
power, as well as the duty, to control them; and if, by reason of his
lack of oversight or their own carelessness or unfaithfulness, the pro-
hibited act is done, he should be held accountable. He therefore can-
not relieve himself from responsibility for the manner in which his pur-
poses are carried out, by turning over the management of his business
to agents.
2008. Illustrations. Instances of these principles may
be found in the case of the publication of libels, the smuggling of goods,
the sale of unwholesome or adulterated food, the erection or continu-
ance of nuisances, the transportation of forbidden goods, the transac-
tion of business without a license, and the like. Frequent illustrations
are also found in the statutes regulating the traffic in intoxicating liq-
uors.
Thus booksellers and publishers have been held criminally liable for
publications, issued from their establishment, in the regular course of
'4 ::-;,';
pretending he was sent for the liquor Cas. 1152, 31 L. R. A. (N. S.) 467, and
by another person. So a person has Com. v ; Sacks, 214 Mass. 72, 100 N.
been held liable to a penalty for E. 1019, 43 L. R. A. (N. S.) 1.
keeping naphtha for sale under an as- See also, City of Spokane v. Pat-
sumed name, without guilty knowl- terson, 46 Wash. 93, 123 Am. St. Rep.
edge, the statute not making such 921, 8 L. R. A. (N. S.) 1104; State v.
knowledge an ingredient of the of- Constantine, 43 Wash. 102, 117 Am.
fense. Commonwealth v. Wentworth, St. Rep. 1043; State v. Kittelle, 110
118 Mass. 441. Other cases might be N. Car. 560, 28 Am. St. Rep. 698, 15
cited, and there is nothing anomalous L. R. A. 694; City of Paducah v.
in these. A person may be criminally Jones, 126 Ky. 809; Redgate v.
liable for adultery with a woman he Haynes, 1 Q. B. Div. 89.
did not know to be married: Fox v. As to liability of principal for stat-
State, 3 Tex. App. 329, 30 Am. Rep. utory penalty under an automobile
144; or for carnal knowledge of a act, see Nicholas v. Kelley, 159 Mo.
female under ten years of age though App. 20.
he believed her to be older. Queen ^ Sales made by a mere caretaker
v. Prince, L. R. 2 Cr. Cas. 154; State who had no authority to sell at all
v. Newton, 44 Iowa, 45. And other are not punishable. Ollre v. State,
similar cases might be instanced." 57 Tex. Cr. App. 520.
There are similar enumerations in So of sales of liquors not kept for
Com. v. Mixer, 207 Mass. 141, 20 Ann. sale by one who had no authority to
1575
2008]
THE LAW OF AGENCY
[BOOK iv
business, although the particular act of sale or publication was done
without their knowledge ; * 8 a trader has been held liable to a penalty
for the illegal act of his agent in harboring and concealing smuggled
goods, although the principal was absent at the time ; fl9 a baker has
been held liable to a criminal charge for selling adulterated bread, al-
though the adulteration was put in by his servant, and although he
did not know that it was used in improper quantities ; 70 the directors
of a gas company have been held liable to an indictment for a nuisance
created by their superintendent, acting under a general authority to
manage the works, though they were personally ignorant of the partic-
ular plan adopted, and although it was a departure from the original
and understood method, which they supposed him to be following ; 71 a
saloonkeeper has been held criminally responsible for not keeping his
saloon closed upon Sunday, though it appeared that it was opened by
sell. Partridge v. State, 88 Ark. 267,
129 Am. St. Rep. 100, 20 L. R. A. (N.
S.) 321.
es Rex v. Walter, 3 Esp. 21; Rex
v. Gutch, 1 Moo. & M. 433. But see
Queen v. Holbrook, 3 Q. B. Div. 60,
as to the effect of the statutes limit-
ing such liability.
In State v. Armstrong, 106 Mo. 395,
27 Am. St. Rep. 361, 13 L. R. A. 419,
the principal was held liable in a
criminal prosecution for a publica-
tion by his agent, where it appeared
that he knew of and tacitly approved
the act.
9 Attorney General v. Bidden, 1
Cromp. & Jer. 220.
See also, Attorney General v. Rid-
dle, 2 Cromp. & Jer. 493.
Same rule applied in State v. Balti-
more, etc., S. Co., 13 Md. 181, under a
statute forbidding the transportation
of slaves.
70 Rex v. Dixon, 4 Camp. 12. Same,
under statute against adulterating
milk. Brown v. Foot, 66 L. T. (N.
S.) 649, 17 Cox's Cr. C. 509. Where
an agent sells oleomargarine for
dairy butter, in violation of statute,
the principal is liable although he
had instructed the agent to sell all
goods for just what they were, and
not to sell one thing as a substitute
for something else. Groff v. State,
1576
171 Ind. 547, 17 Ann. Gas. 133. See
also, Com. v. Warren, 160 Mass. 533.
A master was sued on a penal stat-
ute for selling skimmed milk. The
act was done by the defendant's serv-
ant, the defendant being present on
the farm at the time. Held, that
since the statute used the word
"knowingly" the defendant must have
authorized the sale to be liable, but
here the plaintiff, by the above facts,
had established a prima facie case
which defendant failed to rebut.
Verona Central Cheese Co. v. Mur-
taugh, 50 N. Y. 314. Where a servant
sold lard without the proper label In
violation of a statute, it was held in
a prosecution of the master that it
was error to exclude evidence that
he had expressly forbidden that act.
The master could only be held where
he had authorized the offense. Kear-
ley v. Tonge, 60 L. J. (Magist. Gas.)
159, 17 Cox's Cr. Gas. 328.
Master liable where his servant
gave "short weight" in violation of
statute. Com. v. Sacks, 214 Mass.
72, 43 L. R. A. (N. S.) 1.
71 Rex v. Medley, 6 C. & P. 292.
See also, Barnes v. Akroyd, L. R. 7
Q. B. 474 (a case of smoke nuisance).
Queen v. Stephens, L. R. 1 Q. B. 702
(a case of putting obstructions in a
stream).
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES
his clerk, without his knowledge or consent, but while he was on the
premises ; 72 for sales to minors and drunkards, 73 and, in a variety of
cases, depending- more or less upon the peculiarity of statutory phrase-
" People v. Roby, 52 Mich. 577, 50
Am. Rep. 270; People v. Kriesel, 136
Mich. 80, 4 Ann. Gas. 5; People v.
Lundell, 136 Mich. 303; Lehman v.
Dist. of Columbia, 19 App. Cases (D.
C.) 217; City of Paducah v. Jones,
126 Ky. 809. Likewise was the prin-
cipal liable for his servants keeping
open after hours although it was
done without the principal's knowl-
edge. Pulver v. State, 83 Neb. 446;
Reismier v. State, 148 Wis. 593.
The contrary view is held in Ar-
kansas. Beane v. State, 72 Ark. 368.
See also, People v. Utter, 44 Barb.
(N. Y.) 170; Moore v. State, 64 Neb.
557. Compare State v. Burke, 15 R.
I. 324.
TS In the following cases the statute
prohibiting the sale, read, "Any per-
son selling," etc. Carroll v. State,
G3 Md. 551 (in which the defendant
was held guilty of a sale made to a
minor by his agent without his
knowledge or authority). State v.
Shorten, 93 Mo. 123 (in which, under
similar circumstances, the defendant
was held not guilty of an unauthor-
ized sale made to a common drunk-
ard by his agent); see also, Lehman
v. District of Columbia, 19 App. Cases
(D. C.), 217 (a sale made on Sunday
by a servant). Under a statute, "No
person shall knowingly sell," the pro-
prietor of a saloon was held liable
for a sale made to an intoxicated
person without his knowledge and
during his absence from the saloon.
O'Donnell v. Commonwealth, 108 Va.
882.
In the following cases, the defend-
ant was held guilty under a broad
statute which provided for conviction
for a sale made by "any person, by
himself or another," or a statute of
similar effect. State v. McConnell, 90
Iowa, 197; McCutcheon v. People, 69
111. 606. See also, Noecker v. People,
91 111. 494 (a sale made by a servant
without a license); Loeb v. State, 75
Ga. 258; Snider v. State, 81 Ga. 753,
12 Am. St. Rep. 350; Van Valkin-
burgh v. State, 102 Ark. 16 (solicit-
ing orders in prohibition territory).
But see Johnson v. State, 83 Ga. 553.
In State v. McCance, 110 Mo. 398,
under a statute providing that the
act of the agent shall be deemed the
act of the master, it was held that
proof of a sale by a clerk only oper-
ated to shift to the defendant the
burden of proving the lack of knowl-
edge or authority. See also, State v.
Weher, 111 Mo. 204; State v. Reiley,
75 Mo. 521 (sales made without a li-
cense); State v. Fagan, 1 Boyce (24
Del.), 45. And apparently contra,
State v. McGinnis, 38 Mo. App. 15.
See also, People v. Parks, 49 Mich.
333, which limited such a statute to
cases where the master knew of or
authorized the sale; also, People v.
Hughes, 86 Mich. 180. But in People
v. Longwell, 120 Mich. 311, the court
distinguished the two preceding
cases on the ground that they were
decided on an earlier statute; and
construed a later statute (reading,
any person who "himself or by his
agent, clerk or employee," etc.) to
impose a liability on the master for
sales made by such agent, clerk or
employee, regardless of the fact
whether he knew of such sale or had
authorized it.
In Reismier v. State, 148 Wis. 593,
a proprietor was held on an instruc-
tion to the jury as follows: "the per-
son who takes out a license to run a
saloon business assumes all respon-
sibility for having it run according
to law; that if any one, who is found
acting contrary to law, is not their
representative, the court views it that
that is an affirmative defense that
the defense should make should
show that the person was an inter-
loper and not a representative of the
owner of the place."
1577
2008]
THE LAW OF AGENCY
[BOOK iv
ology, for other acts done by his servants or agents in violation of the
statutory, prohibitions; 74 a master carrying on operations involving
blasting has been held liable to the penalties imposed by a statute, where
blasting is done by his servants without taking prescribed precautions,
even though the failure to comply with the statute was in direct viola-
In re Berger, 84 Neb. 128, held that
the principal was liable unless he
could affirmatively show that the
sales (to minors) were made con-
trary to his express commands.
But in State v. Crawford, 151 Mo.
App. 402, it was held that the princi-
pal, to rebut a prima facie case, need
not show that the act was contrary
to express commands but need show
only non-assent to the act of the
agent, where the act was permitting
liquor to be drunk on the premises
of a drug store.
In several statutes, the sale by the
party or "by his servant or agent" is
expressly forbidden. Thus Com. v.
Sacks, 214 Mass. 72, 100 N. E. 1019,
43 L. R. A. (N. S.) 1; Com. v. War-
ren, 160 Mass. 533; People v. Long-
well, supra.
74 For cases, generally, holding the
principal liable for unlawful sales
made by his servant, without his
knowledge or authority, and even
against his express instructions, see
Mogler v. State, 47 Ark. 109; Edgar
v. State, 45 Ark. 356; Waller v. State,
38 Ark. 656 (sale made by co-part-
ner) ; Walters v. State, 174 Ind. 545;
State v. Anderson, 127 La. 1041; Peo-
ple v. Longwell, 120 Mich. 311; State
v. Kittelle, 110 N. C. 560, 28 Am. St.
Rep. 698, 15 L. R. A. 694 (but see
State v. Neal, 133 N. C. 689; Cumber-
ledge v. State, 7 Okla. Cr. 102; State
v. Weiss, 62 Oreg. , 128 Pac. 448;
State v. Gilmore, 80 Vt. 514, 16 L. R.
A. (N. S.) 786, 13 Ann. Gas. 321;
State v. Nichols, 67 W. Va. 659, 33 L.
R. A. (N. S.) 419; State v. Constan-
tine, 43 Wash. 102, 117 Am. St. Rep.
1043; Olson v. State, 143 Wis. 413;
Comm'rs of Police v. Cartman, [1896]
1 Q. B. 655. Same, under statute
against so distributing samples of
medicine that children might get
them. State v. Cray, 85 Vt. 99, 36 L.
R. A. (N. S.) 630.
For cases holding the contrary doc-
trine on the same point, see Barnes
v. State, 19 Conn. 398; Lathrope v.
State, 51 Ind. 192; Hipp v. State, 5
Blackf. (Ind.) 149, 33 Am. Dec. 463;
Thompson v. State, 45 Ind. 495;
Comm. v. Briant, 142 Mass. 463, 56
Am. Rep. 707; Comm. v. Stevens, 153
Mass. 421, 25 Am. St. Rep. 647, 11 L.
R. A. 357; Comm. v. Joslin, 158 Mass.
482, 21 L. R. A. 449; State v. Baker,
71 Mo. 475; State v. McGrath, 73 Mo.
181; State v. Shortell, 93 Mo. 123;
Kittrell v. State, 89 Miss. 666; Moore
v. State, 64 Neb. 557.
For cases holding than an innocent
principal is not liable to the penalty
prescribed by a statute for selling
liquor without a license, or liquor to
be consumed on the premises or in
small quantities, and the like, the sale
being made without his knowledge or
consent, see Siebert v. State, 40 Ala.
60; Wreidt v. State, 48 Ind. 579;
Comm. v. Hayes, 145 Mass. 289; State
v. McGrath, 73 Mo. 181; State v. Neal,
133 N. C. 689; Comm. v. Nichols, 10
Mete. (Mass.) 259, 43 Am. Dec. 432
(followed in Comm. v. Wachendorf,
141 Mass. 270, a case of sale after
hours). Contra: Riley v. State, 43
Miss. 397; State v. Denoon, 31 W. Va.
122; State v. Dow, 21 Vt. 484: See
also, Noecker v. People, 91 111. 494;
State v. Reiley, 75 Mo. 521.
It is held, in some jurisdictions,
that proof of a sale made by a clerk
in a saloon owned by the defendant,
raises a presumption, or as sometimes
put, "makes a prima facie case," of
the defendant's guilt, but it is compe-
tent for him to show that such sale
was forbidden. Comm. v. Nichols, 10
1578
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES [ 2OOO,
tion of his directions ; T5 a principal causing samples of medicine to be
distributed has been held responsible for the violation of a statute for-
bidding doing so under such circumstances that children might become
possessed of them, even though the act was done in violation of his
specific instructions. 76
2009. Contrary holdings. On the other hand, the prin-
cipal has, in a variety of cases, been held not liable in the absence of
anything to show his own personal default. Thus, where a master was
sued in debt on a penal statute for cutting timber, and it was shown
that the master had cautioned his servants not to cut on any other per-
son's land, he was held not liable. The court said that in order to
charge the master it must be proved that he wilfully caused the act to
be done. 77 This holding was followed in a later case. 78 In another
case a master was prosecuted for having given credit to a student at
Yale College in violation of a statute. It appeared that the credit had
been extended by the defendant's barkeeper in direct disregard of de-
fendant's instructions. The defendant was acquitted in spite of 'the
fact that he had subsequently ratified his servant's act. 79 Again, under
Mete. (Mass.) 259, 43 Am. Dec. 432;
State v. McCance, 110 Mo. 398; State
v. Stamper, 159 Mo. App. 382; Kirk-
wood v. Autenreith, 21 Mo. App. 73;
State v. Wentworth, 65 Me. 234, 20
Am. Rep. 688; Comm. v. Perry, 148
Mass. 160; Pullwood v. State, 67
Miss. 554; Anderson v. State, 22 Ohio,
305; Rooney v. Augusta, 117 Ga. 709.
Compare Parker v. State, 4 Ohio St.
564. But see, to effect that one sale
will not raise such a presumption,
State v. Mahoney, 23 Minn. 181.
75 Spokane v. Patterson, 46 Wash.
93, 123 Am. St. Rep. 921, 8 L. R. A.
(N. S.) 1104.
Principal may be convicted for act
of his agent in giving an unstamped
receipt for money (received by the
agent for his principal) in violation
of a stamp' act. Ex parte Turnbull, 21
New South Wales L. R. 414.
76 State v. Cray, 85 Vt. 99, 36 L. R.
A. (N. S.) 630.
Corporations. The question of the
penal liability of corporations for the
acts of their servants and agents has
arisen in many cases, some of which,
though outside the general scope of
this work, may be referred to for il-
lustration. Thus, see New York Cen-
tral, etc., R. Co. v. United States, 212
U. S. 481, 53 L. Ed. 613 (prosecution
for giving rebates) ; Commonwealth
v. Pulaski Agr., etc., Ass'n, 92 Ky.
197 (permitting gambling); Stand-
ard Oil Co. v. Commonwealth (Ky.),
55 S. W. 8 (peddling without a li-
cense); State v. White Oak R. Co.,
Ill N. Car. 661 (obstructing stream
by felling timber into it) ; State v.
Passaic Agr. Society, 54 N. J. L. 260
(keeping disorderly house) ; Com-
monwealth v. New Bedford Bridge, 68
Mass. (2 Gray) 339 (obstructing nav-
igable stream); State v. Portland, 74
Me. 268, 43 Am. Rep. 586 (polluting
stream); State v. Security Bank, 2
S. Dak. 538 (usury); State v. Atchi-
son, 71 Tenn. (3 Lea) 729, 31 Am.
Rep. 663 (libel); State v. Baltimore,
etc., R. Co., 15 W. Va, 362, 36 Am.
Rep. 803 (Sabbath breaking). There
are many others.
77 State v. Bacon, 40 Vt. 456.
78 Commonwealth v. Junkin, 170
Pa. 194, 31 L. R. A. 124.
7 Hall v. Norfolk & W. R. Co., 44
W. Va. 36, 67 Am. St. Rep. 757, 41 L.
R. A. 669.
1579
2010, 201 1] T&E LAW OF AGENCY [BOOK IV
an ordinance prohibiting the driving of wagons on the sidewalk, an
employer was held not liable criminally, where his teamster, who was
a competent man, drove the employer's team on the sidewalk to enable
himself to more easily unload his wagon in the prosecution of his mas-
ter's service, the master having no knowledge that the servant intended
to, or did, so violate the ordinance. 80 So where bankers Were indicted
under a statute forbidding the receipt of deposits while a bank was in-
solvent,, the money having been taken in by the cashier, an instruction
that evidence tending to show that the defendants were ignorant of
that fact and had prohibited such action was immaterial, was held to
be error. 81 So it has been held that a railroad company is not liable for
the statutory penalty for an overcharge in freight or passenger rates,
where the charge was made by a conductor and the act was neither au-
thorized nor approved by the company. 82
8. Matters relating to Procedure.
2010. Joinder of principal and agent in one action. Although
the principal or master may be liable for the torts of his servant or
agent within the rules laid down in the preceding sections, it is also
true, as has been seen in a previous chapter, 83 that the agent or servant
is himself liable, in a great variety of cases, to the person injured by his
misconduct. Whether these two liabilities can be enforced in a joint
action depends upon a variety of considerations. If the principal or
master is present or participating in the wrongful act, he and his serv-
ant or agent may undoubtedly be joined as wrongdoers. The same
would doubtless be true also where, though not personally present, he
directs the particular act or subsequently ratifies it.
201 1. Weight of authority permits joinder. Where,
however, . there was no direction, ratification or participation on the
part of the principal, and it is sought to charge him simply upon the
doctrine of respondeat superior, the question whether a joint action can
be maintained against the principal and the agent to recover for the
agent's negligence is involved in some dispute. It is held in some cases
that a joint action cannot be maintained. 84 The liability of the agent is
But compare City of Hammond v. si Satterfield v. Western Union Tel.
New York, etc., Ry. Co., 5 Ind. App. Co., 23 111. App. 446.
526, cited supra, in 2000. 82 Morse v. State, 6 Conn. 9.
so Gushing v. Dill, 2 Scam. (111.) ss See ante, 1452 et seq.
460. s* Bailey v. Bussing, 37 Conn. 349;
See also, Smith v. Causey, 22 Ala. McNemar v. Cohn, 115 111. App. 31;
568; Williams v. Hendricks, 115 Ala. Campbell v. Portland Sugar Co., 62
277, 67 Am. St. Rep. 32, 41 L. R. A. Me. 552, 16 Am. Rep. 503; Parsons v.
650. Winchell, 5 Cush. (Mass.) 592, 52 Am.
1580
CHAP. VJ LIABILITY OF PRINCIPAL TO THIRD PARTIES [ 2OI2
based upon his actual wrongdoing : the liability of the principal arises
merely from the policy of the law. Liabilities based upon such radi-
cally different theories as these cannot, it is held in these cases, be en-
forced in one action. The weight of authority, however, is clearly the
other way, and permits the principal and the agent to be joined in the
same action at the option of the plaintiff. 85
2012. Master cannot be held if servant not liable.
Where the master is joined with the servant in an action based wholly
upon the servant's negligence or misconduct, the master cannot be held
unless there is a cause of action against the servant, and the acquittal
Dec. 745; Mulchey v. Methodist So-
ciety, 125 Mass. 487; Clark v. Fry, 8
Ohio St. 358, 72 Am. Dec. 590.
Case for deceit in the nature of a
conspiracy cannot be maintained
against principal and agent jointly,
for the unauthorized fraudulent acts
of the agent alone. Page v. Parker,
40 N. H. 47.
85 Southern Ry. Co. v. Reynolds,
126 Ga. 657; Southern Ry. Co. v. Griz-
zle, 124 Ga. 735, 110 Am. St. Rep. 191;
Shearer v. Evans, 89 Ind. 400; In-
diana Nitroglycerin Co. v. Lip-
pincott Glass Co. (Ind. App.), 72
N. E. 183; Dowell v. Chicago, etc.,
Ry. Co., 83 Kan. 562; New Ellerslie
Fishing Club v. Stewart, 123 Ky. 8, 9
L. R. A. (N. S.) 475; Illinois Cent.
Ry. Co. v. Coley, 121 Ky. 385, 1 L. R.
A. (N. S.) 370; Illinois Cent. Ry. Co.
v. Houchins, 121 Ky. 526, 123 Am. St.
Rep. 205, 1 L. R. A. (N. S.) 375;
Hewett v. Swift, 3 Allen (Mass.),
420; Mayberry v. Nor. Pac. Ry. Co.,
100 Minn. 79, 10 Ann. Gas. 754, 12 L.
R. A. (N. S.) 675; McGinnis v. Chi-
cago, etc., Ry. Co., 200 Mo. 347, 118
Am. St. Rep. 661, 9 Ann. Cas. 656, 9
L. R. A. (N. S.) 880; Gardner v.
Southern Ry. Co., 65 S. C. 341;
Schumpert v. Southern Ry. Co., 65 S.
C. 332, 95 Am. St. Rep. 802; Able v.
Southern Ry. Co., 73 S. C. 173; Parlin
v. Miller, 25 Tex. Civ. App. 190;
Howe v. Northern Pac. Ry. Co., 30
Wash. 569, 60 L. R. A. 949; McHugh
v. Northern Pac. Ry. Co., 32 Wash.
30; Melse v. Alaska Comm. Co., 42
Wash. 356; same case, affirmed in 207
U. S. 583; Lightner v. Brooks, 2
Cliff. (U. S. C. C.) 287 (Mass.), Fed.
Cas. No. 8,344.
Principal and agent can be joined
in tort action for agent's misrepre-
sentations. Willard v. Key, 83 Neb.
850.
The question whether the master,
for example a railroad company, sued
jointly with its servant for the lat-
ter's negligence, can remove the case
from a state to a federal court, has
been involved in many cases, and
more or less conflicting decisions
have been rendered. The rule laid
down by the Supreme Court of the
United States, which is of course the
final arbiter in the matter, seems to
be that in the absence of proof of
fraudulent or collusive joinder in or-
der to prevent removal, the cause
cannot be removed where the plead-
ings, upon their face, at the time the
application for removal is made, state
a joint cause of action, even though
upon the trial the plaintiff may not
be able to establish such a cause of
action. Alabama Great Southern Ry.
Co. v. Thompson, 200 U. S. 206;
Wecker v. Nat'l Enameling, etc., Co.,
204 U. S. 176, 51 L. Ed. 430; Chesa-
peake & Ohio Ry. Co. v. Dixon, 179
U. S. 131, 45 L. Ed. 121; Offner v.
Chicago & E. Ry. Co., 148 Fed. 201;
Mclntyre v. Southern Ry. Co., 131
Fed. 985; Shaffer v. Union Brick Co.,
128 Fed. 97; Helms v. Northern Pac.
Ry. Co., 120 Fed. 389; Warax v. Cin-
cinnati, etc., Ry. Co., 72 Fed. 637;
Beuttel v. Chicago, etc., Ry. Co., 26
581
'2013,2014] THE LAW OF AGENC* tfTIJ [BOOK IV
of the servant must lead to the discharge of the master also. 88 So,
where the master is sued alone in such a case, he may show in justifi-
cation that the servant could not have been held liable, and in that event
the master would ordinarily be exonerated. 87 And after a judgment
upon the merits in favor of the agent, the principal can not be held. 88
2013. The measure of damages against the principal Compen-
sation. Where the principal or master is found to be liable for the
wrongful act of his agent or servant, the measure of damages is ordi-
narily full compensation for the injury inflicted. This will include not
only compensation for loss of property or property rights, for expenses
incurred or disbursements made, and compensation for physical pain
and suffering, but also compensation for mental suffering, pain of
mind, humiliation and disgrace.
2014. Exemplary damages. When such compensation
has been awarded, it would seem that the injured party had recovered
all the compensation to which he could justly and equitably be entitled.
In some states, however, juries are permitted to award, in addition to
this compensation, what are commonly called exemplary or punitive
damages, in cases in which the injury was inflicted under circumstances
indicating malice, wantonness or oppression. It is freely conceded that
these circumstances may properly be taken into consideration in deter-
rriining the extent of the actual injury received, and no objection can
be found to allowing compensation for the additional injury so inflicted.
When, however, it is suggested that, after this full compensation has
been awarded, additional sums may be assessed against the defendant,
by way of punishment or example, and that these added sums may be
given to the plaintiff, who by the hypothesis has already been awarded
full compensation for the injury that has been done him, a question is
raised upon which members of both the bench and the bar have been
Fed. 50; Southern Ry. Co. v. Grizzle, Horgan v. Boston El. Ry. Co., 208
124 Ga. 735, 110 Am. St. Rep. 191; II- Mass. 287.
linois Cent. Ry. Co. v. Coley, 121 Ky. See Lake Shore, etc., Ry. Co. v.
385, 1 L. R. A. (N. S.) 370; Illinois Goldberg, 2 111. App. 228; Anderson
Cent. Ry. Co. v. Houchins, 121 Ky. v. West Chicago St. R. Co., 200 111.
526, 123 Am. St. Rep. 205, 1 L. R. A, 329; Emery v. Fowler, 39 Me. 326, 63
(N. S.) 375; Able v. Southern Ry. Am. Dec. 627; Chicago, etc., R. Co. v.
Co., 73 S. C. 173. Hutchins, 34 111. 108; Castle v. Noyes,
se Bradley v. Rosenthal, 154 Cal. 14 N. Y. 329.
420, 129 Am. St. Rep. 171; McGinnis See also, Phillips v. Jamieson, 51
v. Chicago, etc., R. Co., 200 Mo. 347, Mich. 153; Moore v. Richardson, 100
118 Am. St. Rep. 661; Doremus v. 111. App. 134; American Exp. Co. v.
Root, 23 Wash. 710, 54 L. R. A. 649. Des Moines Nat. Bank, 146 Iowa, 448;
87 New Orleans, etc., R. Co. v. Bridges v. McAlister, 106 Ky. 791.
Jopes, 142 U. S. 18, 35 L. Ed. 919;
1582
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES [ 2OI5
sharply in conflict, and it is believed to be the better opinion that ex-
emplary damages as thus denned are indefensible in legal principle. 89
It is freely to be conceded, however, that many courts award them.
If they are to be awarded at all, it would seem that, however much
they may be justified against the guilty servant or agent himself, they
should not be awarded against the principal or master unless it can be
shown that in some way he also has been guilty of the wrongful mo-
tives upon which such damages are based. It seems hard enough
against an innocent principal or master that he should be compelled
to pay compensatory damages for the wrongful act of his servant or
agent, without adding thereto punishment for that of which he is in
fact actually innocent, and the cases which are believed to be the best
considered have adopted this view.
2015. Exemplary damages not allowed. The rule of
these cases was well stated by Church, C. J., of the New York Court
of Appeals, as follows : "For injuries, by the negligence of a servant
while engaged in the business of the master, within the scope of his
employment, the latter is liable for compensatory damages; but for
such negligence, however gross or culpable, he is not liable to be pun-
ished in punitive damages unless he is also chargeable with gross mis-
conduct. Such misconduct may be established by showing that the
act of the servant was authorized or ratified, or that the master em-
ployed or retained the servant, knowing that he was incompetent, or,
from bad habits, unfit for the position he occupied. Something more
than ordinary negligence is requisite ; it must be reckless and of a crim-
inal nature, and clearly established. Corporations may incur this lia-
bility as well as private persons. If a railroad company, for instance,
knowingly and wantonly employs a drunken engineer, or switchman, or
retains one after knowledge of his habits is clearly brought home to the
company, or to a superintending agent authorized to employ and dis-
charge him, and injury occurs by reason of such habits, the company
may and ought to be amenable to the severest rule of damages ; but I
am not aware of any principle which permits a jury to award exem-
plary damages in a case which does not come up to this standard, or to
graduate the amount of such damages by their views of the propriety of
the conduct of the defendant, unless such conduct is of the character
before specified." 90
so One of the recent cases, in which (589. See also, Greeley, etc., R. R.
may be found the arguments on both Co. v. Yeager, 11 Colo. 345.
sides of this question, is Spokane Cleghorn v. New York Cent. R.
Truck & Dray Co. v. Hoefer, 2 Wash. R. Co., 56 N. Y. 44, 15 Am. Rep. 375.
45, 26 Am. St. Rep. 842, 11 L. R. A. "The rule is," says Somerville,
2015]
THE LAW OF AGENCY
[BOOK TV
This view and this language were approved by the Supreme Court
of the United States, in a later case, which has since been regarded as
the leading case on this side of the question. 91
It has been thought in some cases that the award of exemplary dam-
ages might be justified in actions against a corporate master or prin-
J., in Burns v. Campbell, 71 Ala. 271,
292, "that, where several defendants
are sued in tort for damages, the mal-
ice or other evil motive of one can
not be matter of aggravation, or
ground for vindictive damages
against the other. Wood's Mayne on
Damages, p. 594, 624. Hence, prin-
cipals are not generally held liable
for such damages by reason of the
evil motive of an agent, unless the
act of the agent was fully ratified
with a knowledge of its malicious,
aggravating, or grossly negligent
character; or these matters of ag-
gravation were probably consequent
on the doing of the wrongful act or-
dered by the principal; or unless the
agent was employed with a knowl-
edge of his incompetency. Lienkauf
v. Morris, 66 Ala. 406, 415; Pollock
v. Gantt, 69 Ala. 373, 44 Am. Rep.
519; Kirksey v. Jones, 7 Ala. 622;
Field's Law Damages, 86, 87;
Wood's Mayne on Dam., p. 57, 48;
Carmichael v. W. and L. Railway Co.,
13 Ir. L. R. 313."
i Lake Shore, etc., Ry. Co. v. Pren-
tice, 147 U. S. 101, 37 L. Ed. 97.
To same effect: see Norfolk, etc.,
Co. v. Miller, 98 C. C. A. 453,
174 Fed. 607; Pollock v. Gantt,
69 Ala. 373, 44 Am. Rep. 519;
Mendelsohn v. Anaheim Lighter
Co., 40 Cal. 657; Turner v. North
Beach, etc., R. R. Co., 34 Cal. 594;
Page v. Yool, 28 Colo. 464; Maisen-
backer v. Concordia Society, 71 Conn.
369, 71 Am. St. Rep. 213; Hay wood v.
Hamm, 77 Conn. 158; Woodward v.
Ragland, 5 App. D. C. 220; Branti-
gam v. While, 73 111. 561; but see
Fentz v. Meadows, 72 111. 540; Becker
v. Dupree, 75 111. 167; Patterson v.
Waldman, 20 Ky. L. Rep. 514; Keene
v. Lizardi, 8 La, 26; Rouse v. Metro-
politan St. Ry. Co., 41 Mo. App. 298;
f
Ackerson v. Erie R. Co., 32 N. J. L.
254; Fisher v. Metropolitan El. R.
Co., 34 Hun (N. Y.), 433. Compare,
Crane v. Bennett, 177 N. Y. 106, 101
Am. St. Rep. 722; Moore v. Atchison,
etc., Ry. Co., 26 Okla. 682; Chicago,
etc., Ry. Co. v. Newburn, 27 Okla. 9,
30 L. R. A. (N. S.) 432; Oliver v.
North Pac. Transp. Co., 3 Ore. 84;
Sullivan v. Oregon R., etc., Co., 12
Ore. 392, 53 Am. Rep. 364; Hogan v.
Providence, etc., R. R. Co., 3 R. I. 88,
62 Am. Dec. 377; Staples v. Schmid.
18 R. I. 224, 19 L. R. A. 824; Nash-
ville, etc., R. R. Co. v. Starnes, 9
Heisk. (Tenn.) 52, 24 Am. Rep. 296;
Hays v. Houston, etc., R. R. Co., 46
Tex. 272; Houston, etc., Ry. Co. v.
Cowser, 57 Tex. 293; Texas Trunk R.
Co. v. Johnson, 75 Tex. 158; Western
Union Tel. Co. v. Brown, 58 Tex. 170,
44 Am. Rep. 610; Willis & Bros. v.
McNeill, 57 Tex. 465; Ricketts v.
Chesapeake, etc., R. Co., 33 W. Va.
433, 25 Am. St. Rep. 901, 7 L. R. A.
354; Eviston v. Cramer, 57 Wis. 570;
Craker v. Chicago, etc., Ry. Co., 36
Wis. 657, 17 Am. Rep. 504.
Exemplary damages may be had
where the principal later with knowl-
edge approved the conduct. Kilpat-
rick v. Haley, 13 C. C. A. 480, 66 Fed.
133.
As to whether knowingly retaining
the agent in service after the wrong-
ful act will be a ratification, see New
Orleans, etc., R. R. Co. v. Burke, 53
Miss. 200, 24 Am. Rep. 689; Bass v.
Chicago, etc., Ry. Co., 42 Wis. 654, 24
Am. Rep. 437; Perkins v. Missouri,
etc., R. R. Co., 55 Mo. 201; Ricketts v.
Chesapeake, etc., R. Co., 33 W. Va.
433, 25 Am. St. Rep. 901, 7 L. R. A.
354.
That retention in service aggra-
vates the damage, see Gasway v. At-
lanta, etc., Ry. Co., 58 Ga. 216.
584
CHAP. V] LIABILITY OF PRINCIPAL TO THIRD PARTIES
[ 2Ol6
cipal when they could not be in the case of an individual. 92 But the
cases above referred to have repudiated such a distinction.
2016. Exemplary damages allowed. As has been al-
ready pointed out, however, there is a large and apparently growing
list of cases in which the distinction above referred to has not pre-
vailed, and in which the principal or master, and especially a corporate
principal or master, has been held subject to exemplary damages for
the wilful, wanton or malicious acts of the servant or agent, even
though the principal or master was personally free from fault. 98
.8102 3
2 See for example, this list does
not purport to be exhaustive Jeffer-
son County Savings Bank v. Eborn,
84 Ala. 529; Mobile, etc., R. R. v.
Seales, 100 Ala. 368; Citizens' Street
Ry. v. Steen, 42 Ark. 321; Western,
etc., Tel. Co. v. Eyser, 2 Colo. 141;
Ford v. Charles Warner Co., 1 Marvel
(Del.), 88; Flannery v. Baltfmore,
etc., R. R. Co., 4 Mack. (Dist. of C.)
Ill (case of assault while plaintiff
was a passenger on the defendant's
train); Singer Mfg. Co. v. Holdfodt,
86 111. 455, 29 Am. Rep. 43; Jefferson-
ville, etc., Co. v. Rogers, 38 Ind. 116,
10 Am. Rep. 103 (where a conductor
assaulted a passenger on the defend-
ant's train); Wheeler, etc., Co. v.
Boyce, 36 Kan. 350, 59 Am. Rep. 571;
Louisville, etc., R. R. Co. v. Kelly's
Administratrix, 100 Ky. 421 (by stat-
ute); Lexington Ry. Co. v. Cozine,
23 Ky. L. Rep. 1137 (where conductor
assaulted a passenger on defendant's
train); Goddard v. Grand Trunk Ry.
Co., 57 Me. 202, 2 Am. Rep. 39 (where
the plaintiff, a passenger, was as-
saulted by the defendant's brake-
man; there was an implied ratifica-
tion of the act in this case) ; Peter-
sen v. Western U. Tel. Co., 75 Minn.
368, 74 Am. St. Rep. 502, 43 L. R. A.
581; Perkins v. Missouri, etc., R. R.,
55 Mo. 201 (where P, a passenger,
was assaulted by one of defendant's
servants); Haehl v. Wabash E. R.
Co., 119 Mo. 325; Atlantic, etc.,. Co. v.
Dunn, 19 Ohio St. 162, 2 Am. Rep.
382 (where defendant's conductor as-
saulted the plaintiff, a passenger);
Western U. Tel. Co. v. Smith, 64
Ohio St. 106; Quinn v. South Caro-
lina Ry. Co., 29 S. C. 381, 1 L. R. A.
682; Davis v. Chesapeake, etc., Ry.
Co., 61 W. Va. 246, 9 L. R. A. (N. S.)
993.
93 See for example (this list does
not purport to be exhaustive) : Citi-
zens' St. R. Co. v. Steen, 42 Ark. 321;
Gasway v. Atlanta, etc., R. Co., 58
Ga. 216; St. Louis, etc., R. Co. v.
Dalby, 19 111. 352; Singer Mfg. Co.
v. Holdfodt, 86 111. 455, 29 Am. Rep.
43; Wabash, etc., Ry. Co. v. Rector,
104 111. 296; Jeffersonville R. R. Co.
v. Rogers, 38 Ind. 116, 10 Am. Rep.
103; Wheeler, etc., Mfg. Co. v. Boyce,
36 Kan. 350, 59 Am. Rep. 571; Louis-
ville, etc., R. Co. v. Ballard, 85 Ky.
307, 7 Am. St. Rep. 600; Chesapeake,
etc., R. Co. v. Dodge, 23 Ky. L. Rep.
1959, 66 S. W. 606; City Transfer Co.
v. Robinson, 12 Ky. L. Rep. 555;
Hawkins & Co. v. Riley, 17 B. Monroe
(Ky.), 101; Hanson v. European,
etc., Ry. Co., 62 Me. 84, 16 Am. Rep.
404; Goddard v. Grand Trunk Ry.
Co., 57 Me. 202, 2 Am. Rep. 39; Bal-
timore, etc., Turnpike Road v. Boone,
45 Md. 344; Phila., etc., R. Co. v.
Larkin, 47 Md. 155, 28 Am. Rep. 442;
New Orleans, etc., R. Co. v. Hurst, 36
Miss. 660, 74 Am. Dec. 785; Chicago,
etc., R. R. Co. v. Scurr, 59 Miss. 456,
42 Am. Rep. 373; Southern Express
Co. v. Brown, 67 Miss. 260, 19 Am.
St. Rep. 306; New Orleans, etc., R. R.
Co. v. Burke, 53 Miss. 200, 24 Am.
Rep. 689; Porsee v. Alabama, etc.,
R. R. Co., 63 Miss. 66, 56 Am. Rep.
801; Doss v. Missouri, etc., R. R. Co.,
59 Mo. 27, 21 Am. Rep. 371; Travers
100
1585
2017, 2Ol8] THE LAW OF AGENCY [BOOK IV
2017. Unsatisfied judgment against agent no bar to action
against principal. It is the general rule in the United States that
an unsatisfied judgment against one of two wrongdoers, is not a bar
to obtaining a judgment for the same wrong against the other. 9 * In
accordance with this rule, a judgment obtained against an agent for
a fraud committed by him while acting within the scope of his agency,
and which remains wholly unpaid, is held to be no bar to an action by
the same plaintiff against the agent's principal to recover damages for
the same fraud. 95
2018. Principal or master liable although other's negligence
also contributed. And finally, the principal or master may, in ac-
cordance with well-settled rules, be held liable for the actionable mis-
conduct of his servant or agent, although the negligence of third per-
sons or the agents or servants of third persons also contributed to cause
the injury. 96
v. Kansas Pac. R. R. Co., 63 Mo. 421; Haley v. Mobile R. Co., 7 Baxter
Canfleld v. C. R. I. & P. Ry. Co., 59 (Tenn.), 239; Louisville, etc., R. R.
Mo. App. 354; Atlantic, etc., Ry. Co. Co. v. Garrett, 8 Lea (Tenn.), 438,
v. Dunn, 19 Ohio St. 162, 2 Am. Rep. 41 Am. Rep. 640; Fell v. Northern
382; Hazard v. Israel, 1 Binney Pac. R. R. Co., 44 Fed. 248; Cowen v ;
(Pa.), 240, 2 Am. Dec. 438; Phila. Winters, 37 C. C. A. 628, 96 Fed. 929
Traction Co. v. Orbaun, 119 Pa. 37; (affirming 90 Fed. 99).
Palmer v. Railroad, 3 S. C. 580, 16 94 See discussion of the general
Am. Rep. 750; Spellman v. Rich- question in Note in 58 L. R. A. 410
mond, etc., R. R. Co., 35 S. C. 475, 28 et seq.
Am. St. Rep. 858; Samuels v. Rich- Maple v. Railroad Co., 40 Ohio
mond, etc., R. R. Co., 35 S. C. 493, 28 St. 313, 48 Am. Rep. 685.
Am. St. Rep. 883; Rucker v. Smoke, 86 See Firor v. Taylor, 116 Md. 69.
37 S. C. 377, 34 Am. St. Rep. 758;
I 5 86
. i i
OOI
ffiqbnhq ni
'
.
!
THE DUTIES AND LIABILITIES OF THIRD PERSONS TO THE AGENT.
CHAPTER VI.
'
2019. What here involved. 2038.
2020.
I. IN CONTRACT.
In general Right of action
in principal alone.
2021. . Considerations affect- 2039.
ing this rule.
2022. How cases may be classified. 2040.
2023. Agent may sue when princi-
pal has clothed him with 2041,
title or authority for that
purpose.
2024. Agent may sue on contract 2043.
made with him personally.
2025. . Undisclosed principal. 2044.
2026. . Disclosed principal.
2027. When agent only can sue.
2028. Statutes requiring suit by 2045.
real party in interest.
2029. . Assignees of bankrupt 2046.
agent. 2047.
2030-2032. Illustrations of rule per- 2048.
mitting agent to sue.
2033. Agent may sue when he has
a beneficial interest. 2049.
2034. . What meant by rule.
2035. 2036. . What interest suf- 2050.
fices.
2037. Although agent may thus
sue, principal may usually
sue or control action.
'
2019. What here involved. The questions relating to the
rights of agents against third persons are chiefly of two general kinds,
namely, r. the right of the agent to enforce contracts, and 2. to sue
for torts. They will be separately considered under those two headings.
1587
Action on sealed contract, ne-
gotiable instrument, or con-
tract made with agent per-
sonally must be in agent's
name.
Agent's rights depend upon
the contract.
Right of assumed agent to
show himself principal.
2042. . 1. Where he con-
tracted for a named princi-
pal.
. 2. Where he contracted
for an unnamed principal.
Agent may recover money
paid by him under mistake
or illegal contract.
What defenses open to third
person.
. Set-off.
. Admissions Discovery.
What damages agent may re-
cover on contract.
II. IN TORT.
Agent may sue for personal
trespass.
When agent may sue for in-
juries to principal's prop-
erty.
2020]
THE LAW OF AGENCY
[BOOK iv
I. IN CONTRACT.
2020. In general Right of action in principal alone. Tt is or-
dinarily the function and the duty of an agent in his contractual deal-
ings for his principal, to act not only for and on account of his princi-
pal, but in the principal's name. Where the contract is express and
formal, and particularly where it is in writing, there is ordinarily no
difficulty in determining whether this requirement has been complied
with. Even though the dealings are not express and formal, the func-
tion and the duty of the agent are still the same, and there is a constant
presumption that a known agent, acting as such, intends to impose the
obligations of the contract upon the principal and secure its advantages
to him. The effect of the proper discharge of the agent's duty in such
cases, therefore, is to invest the principal with the right to all the bene-
fits and advantages which result from it, to invest him with the legal in-
terest in the contract, and to clothe him with the power to bring all
necessary actions to enforce the contract. As a general rule, therefore,
where the contract is thus made for and on account of the principal
and in his name, and the agent has no beneficial interest in the con-
tract, the right of action upon the contract is in the principal alone and
the agent cannot sue upon it. 1
i Evans v. Evans, 3 Ad. & El. 132;
Buckbee v. Brown, 21 Wend. (N. Y.)
110; Garland v. Reynolds, 20 Me. 45;
Commercial Bank v. French, 21 Pick.
(Mass.) 486, 32 Am. Dec. 280; Med-
way Cotton Manufactory v. Adams, 10
Mass. 360; Gunn v. Cantine, 10 Johns.
(N. Y.) 387; Chin Kem You v. Ah
Joan, 75 Cal. 124; Moses v. Ingram,
99 Ala. 483; Chamberlain v. Ainter,
1 Colo. App. 13; Fay v. Walsh, 190
Mass. 374; Morton v. Stone, 39 Minn.
275; Denver Produce Co. v. Taylor,
73 Miss. 702; Whitehead v. Potter, 26
N. Car. 257; Davenport v. Ash, 121
La. 209; Hearshy v. Hichox, 12 Ark.
125; United States v. Burrell Const.
Co., 3 U. S. Dist. Hawaii, 332; Oil-
man v. German Lith. Stone Co.,
Ky. , 153 S. W. 996; Wurzburg v.
Webb, 19 Nov. Sco. 414; Abbott v.
Atlantic Refin. Co., 4 Ont. L. R. 701
(a good case).
"Prime facie," says Blackburn, J.,
in Fisher v. Marsh, 6 B. & S. 411
"when an agent makes a contract for
a person named, the principal and
not the agent is considered as mak-
ing the contract."
An agent who ships by the carload
the goods of several principals to a
foreign commission merchant for
sale, with the understanding that
the proceeds of each owner's goods,
less the commissions, shall be re-
mitted directly to him, the names
and quantities received from each
owner being separately entered on
the shipping bill, and each owner's
goods also being marked in his own
name, cannot maintain an action in
his own name against the commis-
sion merchant for damages caused by
delay in selling the goods, even
though the shipment was made in the
agent's name. The contract is not
to be found in the mere act of ship-
ment, but from all the facts and cir-
cumstances of the case. So consid-
ered, it was held that the contract
was not made either in the name of
the agent as principal or as the rep-
CHAP. Vl] LIABILITY OF THIRD PERSONS TO AGENT [ 2O2I
All common-law rules respecting the party who may maintain an ac-
tion, however, must now be considered in the light of the statutory pro-
visions now found in a large number of the states that every action
shall be prosecuted by the real party in interest, subject to such excep-
tions as the particular statute may make.
2021. Considerations affecting this rule. But it has
been seen that, notwithstanding the fact that the agent has authority,
and is expected to bind the third person with whom he deals, to the
principal, yet, through failure to disclose his principal, or to use apt
and appropriate language or, from a deliberate intention to deal with
the agent exclusively, the result of the negotiation may be that the third
person has assumed obligations, either prima facie or exclusively, to
the agent alone. It may thus happen that the legal interest in the con-
tract will be, or will appear to be, in the agent alone, and, in accordance
with the well-settled rule that an action upon a contract is to be brought
in the name of the party in whom the legal interest in the contract is
vested, the right of action may be either in the agent alone, or it may
be subject to an action by the agent or the principal. This question as
to the agent's right of action may arise under a variety of circum-
stances. Thus the contract may be (a) an unwritten one, or it may
be (b) a written contract, and if in writing, it may be (c} under seal.
So in his negotiation the agent may have acted (a) as the agent of a
known principal, or (b) he may have disclosed the fact of his agency,
resentative of undisclosed principals. ett (Tex. Civil App.), 145 S. W,
Denver Produce & Commission Co. v. 1046.
Taylor, 73 Miss. 702. After termination of the agency.
Where goods sold by the principal Where an agent had deposited his
are shipped to an agent merely to principal's money in a bank in the
deliver them, the agent cannot sue name of "A. J. Miller, Agent," it was
in his own name for the price. Phil- held that, whether he could or could
lips v. Henshaw, 5 Cal. 509. not have sued for it while his agency
A person who has made a demand continued, he certainly could not do
upon a railroad, as agent for prospec- so after his agency had been ter-
tive passengers, that the railroad minated by the principal's bank-
shall furnish them with a train, can- ruptcy. Miller v. State Bank, 57
not maintain an action for the rail- Minn. 319.
road's refusal to furnish the train. Where an order is declared to be
Atchison, etc., Ry. Co. v. Tiedt, 116 given by a principal through an
C. C. A. 168, 196 Fed. 348, 40 L. R. A. agent, the contract is with the prin-
(N. S.) 848. cipal, and the agent cannot sue.
A mere broker who has simply Goldschmldt v. MacDonald, 9 N. S.
quoted a price for goods and thus Wales, State R. 693.
led to a purchase directly from the A mere clerk or agent who sells his
principal, can not sue on the con- principal's goods in the ordinary way
tract. San Jacinto Rice Co. v. Lock- cannot sue for the price. Hearshey
v. Hichox, 12 Ark. 125.
1589
2O22, 2O23] THE LAW OP AGENCY [BOOK IV
but concealed the name of his principal, or (c) he may have bargained
as the real principal. In doing so, he may have acted (a) with the ex-
press or implied authority of his principal to keep the principal con-
cealed, or (&) against the principal's express or implied desire. So
the contract upon which the question arises may be (a) fully executed,
or (6) partially executed, or (c) wholly executory. There may, of
course, also be cases in which, though the contract was not originally
made with the agent at all, the principal may since have clothed the
agent with an authority or a title to sue.
2022. How cases may be classified. Four classes of cases are
r ;
thus suggested :
First. The ordinary case in which as the result of formal or informal
dealings the contract has been made on the account and in the name of
the principal. Here, as has just been seen, the principal alone may or-
dinarily sue.
Second. Cases in which although the agent acted as such, and in
behalf of the principal, the contract was made in the agent's own name.
Here, as will be presently seen, either the agent or the principal may
ordinarily sue (sealed and negotiable instruments ordinarily excepted)
though the principal's right to sue is usually paramount.
Third. Cases in which the agent in the given case did not act as
agent at all, but as principal. Here he is the only party to the contract
on his side and he only and not the principal may sue.
Fourth. Cases in which the principal has attempted to vest the agent
with a power to sue, irrespective of how the right of action arose.
Each of these cases may justify consideration.
2023. Agent may sue when principal has clothed him with title
or authority for that purpose. In the first place it may be noticed
that the power of the agent to sue is not necessarily confined to the
cases in which the agent was originally a party to the contract. If
the principal, having contract rights, assign the contract to the agent
in such a way as to vest in him 'the legal title, 2 in a state wherein the
assignee of a chose in action may sue in his own name; or if the prin-
cipal, having bonds or notes or other negotiable instruments, endorse
2 Where a judgment paid by a to an agent for collection. Cottle v.
surety is assigned to an agent for Cole, 20 Iowa, 481. Where an ac-
collection, the agent is the real party count is assigned for collection the
in interest and can collect the judg- assignee can sue in his own name
ment. Searing v. Berry, 58 Iowa, 20. under the New York code. Sheridan
Likewise where one in whose favor v. Mayor, 68 N. Y. 30; Contra: Brown
judgment has been rendered assigns v. Ginn, 66 Ohio St 316.
1590
CHAP. VI ]
LIABILITY OF THIRD PERSONS TO AGENT
[ 2023
and deliver them to the agent so as to vest in him the legal title, 3 the
agent may sue in his own name. The test of the sufficiency of the
agent's right to sue in such cases seems to be whether his title is suffi-
cient to protect the other party in responding to the agent's claim. 4
The fact that the agent's recovery is to be for the benefit of the princi-
pal, and that therefore the principal is the real party in interest would
not ordinarily defeat the agent's action, under the ordinary statutes re-
quiring the action to be brought in the name of the real party in in-
terest since most of the statutes contain exceptions which are deemed
3 The cases upon the subject cannot
all be reconciled. In Bell v. Tilden,
16 Hun (N. Y.), 346, where a draft
endorsed in blank to the principals
was sent to an agent for collection it
was held that this did not pass the
legal title and the agent could not
sue. Iselin v. Rowlands, 30 Hun (N.
Y.), 488, is similar. Hays v. Hat-
horn, 74 N. Y. 486, held that mere
possession of note endorsed in blank
was not sufficient to enable agent to
sue. He must have the right of pos-
session, and ordinarily be the legal
owner. But where it is clear that the
legal title has passed though for the
purpose of collection, the agent can
sue. Hunter v. Allen, 106 N. Y. App.
Div. 557. In Leach v. Hill, 106 Iowa,
171, where a check had been en-
dorsed to a bank and a guaranty
made by third persons that it would
be paid, the cashier, as such, was al-
lowed to sue upon the contract under
the Iowa code. Note endorsed in
blank for collection passes sufficient
legal title to enable agent to sue.
Boyd v. Corbitt, 37 Mich. 52; O'Brien
v. Smith, 1 Black (66 U. S.), 99, 17
L. Ed. 64; Abell Note Co. v. Hurd, 85
Iowa, 559; Second Nat. Bank v. Bank
of Alma, 99 Ark. 386; White v. Stan-
ley, 29 Ohio St. 423; Smith v. Bayer,
46 Ore. 143, 114 Am. St. Rep. 858 (un-
der a statute) ; Spofford v. Norton, 126
Mass. 533; Roberts v. Parrish, 17
Ore. 583; Wintermute v. Torrent, 83
Mich. 555; Brigham v. Gurney, 1
Mich. 349; Watkins v. Plummer, 93
Mich. 215; Benjamin v. Early, 123
Mtch. 93; Cummings v. Kohn, 12 Mo.
App. 585; Wilson v. Tolson, 79 Ga.
137; Mauron v. Lamb, 7 Cow. 174.
Where municipal bonds, transferable
by delivery, are handed over to an
agent to collect, he may sue in his
own name. Village of Kent v. Dana,
100 Fed. 56; Salmon v. Rural Ind.
School Dist., 125 Fed. 235.
Where the paper is not negotiable,
the rule would not apply. Mitchell v.
St. Mary, 148 Ind. 111.
It seems that in North Carolina a
mere transferee for collection can not
sue. Abrams v. Cureton, 74 N. C.
523; Boykin v. Bank of Fayetteville,
118 N. C. 566; Martin v. Mask, 158
N. C. 436, 41 L. R. A. (N. S.) 641.
On the other hand in Massachu-
setts it is said: "It is not necessary
that the plaintiff in a suit upon a
promissory note should have the legal
title or beneficial interest in the note,
nor indeed that he should have any
title or interest in it." National Pem-
berton Bank v. Porter, 125 Mass. 333,
28 Am. Rep. 235.
A bank to which a draft with bill
of lading attached has been made
payable for collection, may sue in its
own name its correspondent bank for
the latter's default which causes lia-
bility on part of plaintiff bank to the
owner of the draft. Second Nat.
Bank v. Bank of Alma, 99 Ark. 386.
* In Sheridan v. Mayor, 68 N. Y. 30,
supra, the court said: "It is enough
if the plaintiff has the legal title to
the demand, and the defendant would
be protected in a payment to or re-
covery by the assignee." Same state-
ment in Hunter v. Allen, supra.
1591
2O24] THE LAW OF AGENCY (BOOK IV
to cover such a case. 5 A mere agent for collection, however, not hav-
ing been vested with the legal title, would have no right to sue in a
state wherein the action must be in the name of the real party in in-
terest. 6
It has, nevertheless, been held in several cases, statutes requiring
action by the real party in interest not being involved that the prin-
cipal may confer authority upon an agent to sue for and recover claims
belonging to the principal in the agent's own name. 7
2024. Agent may sue on contract made with him personally.
Where the contract is made with the agent as such but in such form
as to appear to be made with him personally, whether as a result of an
omission to disclose the fact of the agency or the name of the princi-
pal, or of a failure to use apt and sufficient language to bind the princi-
pal, the agent is, as has been seen, personally liable upon the contract,
even though the principal also may in many cases be liable upon it.
And this obligation is reciprocal, the other party is bound to the
agent, and in the latter vests a legal interest in the contract, and, con-
sequently, a right of action upon it, though his recovery is, of course,
ordinarily for the benefit of his principal. It is, therefore, a general
rule that where a contract, whether written or unwritten, entered into
on account of the principal, is, in its terms, made with the agent per-
'
s See Cottle v. Cole, 20 Iowa, 481; In his own name would have the
Village of Kent v. Dana, 100 Fed. 56; same effect as res adjudicate, as
Leach v. Hill, 106 Iowa, 171: Abell though the action had been brought
Note Co. v. Kurd, 85 Iowa, 559; Sal- in the name of the principal. In
mon v. Rural Ind. School Dist., and Frazier v. Willcox, 4 Rob. (La.) 517,
other cases, supra. the same holding was made. The
Some of the cases hold that the one court said : "A power to sue, to col-
who has the legal title is for this lect a debt, to give an acquittance,
purpose the real party in interest; may be deputed, an and action may
others treat him as the trustee of an be maintained in the name of the
express trust within that exception. agent as well as in that of the prin-
See Bell v. Tilden; Iselin v. Row- cipal when power is given to that ef-
lands; Hays v. Hathorn, supra; feet. The debtor will be protected if
Barkley v. Wolfskehl, 25 N. Y. Misc. the power to receive is sufficient."
420; Brown v. Ginn, 66 Ohio St. 316. In Varney v. Hawes, 68 Me. 442, the
7 In Eggleston v. Coif ax, 4 Martin court said : "We know of no rule of
(La.), N. S. 481, an agent authorized law which prohibits a man from
to collect a claim due to his principal mortgaging to an agent in order to
was held entitled under the power of procure credit from his principal, or
attorney filed with the petition, but which should prevent the agent to
not given in the report, to maintain whom such mortgage was given from
an action in his own name. The enforcing the same as the trustee of
court held there was no objection to his principal." To same effect: Close
his maintaining the action in his ca- v. Hodges, 44 Minn. 204.
pacity as agent, and that a judgment
1592
CHAP. Vl]
LIABILITY OF THIRD PERSONS TO AGENT
[ 2025
sonally, the agent may sue upon it at law. 8 At the same time, as will
be seen hereafter, by what are, in many cases, wholly anomalous rules,
the principal (who is the real party in interest although not named as
such) has also a right of action upon the contract which usually is par-
amount to that of the agent, so that if the principal sues the agent may
not.
The cause of action is alternative and not joint, and it is therefore
not ordinarily proper for the principal and agent to join as plaintiffs. 9
2025. Undisclosed principal. This rule is of frequent
application in the case of the agent of an undisclosed principal. 10 In
s Fisher v. Marsh, 6 B. & S. 411;
Kennedy v. Gouveia, 3 Dowl. & R.
503; Parker v. Winlow, 7 El. & Bl.
942; Button v. Marsh, L. R. 6 Q. B.
361; Grisby v. Nance, 3 Ala. 347; Bird
v. Daniel, 9 Ala. 302; Goodman v.
Walker, 30 Ala. 482, 68 Am. Dec. 134;
Shelby v. Burrow, 76 Ark. 558, 6 Ann.
Cas. 554, 1 L. R. A. (N. S.) 303; Pot-
ter v. Yale College, 8 Conn. 51; Sharp
v. Jones, 18 Ind. 314, 81 Am. Dec. 359;
Brown v. Sharkey, 93 Iowa, 157;
United States Tel. Co. v. Gildersleve,
29 Md. 232, 96 Am. Dec. 519; Colburn
v. Phillips, 13 Gray (Mass.), 64; Buf-
fum v. Chadwick, 8 Mass. 103; Bor-
rowscale v. Boswarth, 99 Mass. 378;
Van Staphorst v. Pearce, 4 Mass.
258; Harp v. Osgood, 2 Hill (N. Y.),
216; Ludwig v. Gillespie, 105 N. Y.
653; Alsop v. Caines, 10 Johns. (N.
Y.) 396; Albany & Rensselaer Co. v.
Lundberg, 121 U. S. 451, 30 L. Ed.
982; Doe v. Thompson, 22 N. H. 217.
In Rowe v. Rand, 111 Ind. 206,
Niblack, J., lays down the rule as fol-
lows: "An agent may sue in his own
name: First, When the contract is in
writing, and is expressly made with
him, although he may have been
known to act as agent. Secondly,
When the agent is the only known
or ostensible principal and is, there-
fore, in contemplation of law the real
contracting party. Thirdly, When, by
the usage of trade, he is authorized to
act as owner or as a principal con-
tracting party, notwithstanding his
well known position as agent only.
But this right of an agent to bring
an action, in certain cases in his own
name, is subordinate to the rights of
the principal, who may, unless in
particular cases, where the agent has
a lien or some other vested right,
bring suit himself, and thus suspend
or extinguish the right of the agent."
In Short v. Spackman, 2 B. & Ad.
962, the plaintiffs, brokers, bought
goods of defendant, on account of and
by the authority of H. The purchase
was made in their own names, but the
defendant was notified that there was
an unnamed principal. The plaintiffs
afterwards, under a general authority
from H, contracted in their own
names for a resale of the goods. H
repudiated the whole tranasction, in
which plaintiffs acquiesced. Held,
H's repudiation was no objection to
plaintiff's recovery for the damages
sustained by not being able to carry
out their contract of resale.
In Equity. Under the general
equitable rule that actions shall be
prosecuted by the real parties in in-
terest, a mere agent having only a
legal interest, could not sue. See
Fry on Specific Performance, 264;
Morton v. Stone, 39 Minn. 275. Other-
wise, where he has a beneficial inter-
est. Hills v. McMunn, 232 111. 488.
See also, Thweatt v. Jones, 30 C. C.
A. 636, 87 Fed. 268.
9 Stephens v. First Nat. Bank,
Tex. Civ. App. , 146 S. W. 620; Ab-
bott v. Atlantic Refining Co., 4 Ont.
L. R. 701.
10 Sims v. Bond, 5 B. & Ad. 389;
Lapham v. Green, 9 Vt. 407; Colburn
2O26,2O27] THE LAW OF AGENCY [iJOOK IV
1833, Denman, C. J., said : "It is a well established rule of law that
where a contract, not under seal, is made with an agent in his own
name for an undisclosed principal, either the agent or the principal
may sue upon it." " In such a case the agent is the ostensible party to
the contract ; the other party may hold him liable upon it, although, as
has been seen, the principal may also usually be held liable when dis-
covered ; and, as such ostensible party, the agent may enforce the con-
tract, subject in most cases, as will be seen, to a paramount right in the
principal to enforce it himself if he so prefers.
2026. Disclosed principal. But the rule may also ap-
ply although both the fact of the agency and the name of the principal
were disclosed. If the fact that the agent acts as such appears, but the
name of the principal does not appear, the action as has been seen may
be sustained in the name of the agent as the only party disclosed to
whom the promise is made. 12 And so, although the name of the prin-
cipal appears, this fact is not conclusive of the absence of the agent's
power to sue. The contract may nevertheless in legal effect be one in
terms with the agent. The question here, as in the cases that have been
considered, is, are the words used in respect to the principal descriptive
of the agent merely, or do they declare that the promise runs to the
principal directly. 13
The contract in these cases having, by the hypothesis, been made by
the .agent as such, the principal will also ordinarily have a right to sue,
which is paramount to that of the agent.
2027. When agent only can sue. But where the effect of the
transaction is such that the contract is made with the agent not as agent
v. Phillips, 13 Gray (Mass.) 64 (cit- "Clap v. Day, 2 Greenl. (Me.) 305,
ing many cases) ; Buffington v. Me- 11 Am. Dec. 99; Cocke v. Dickens, 4
Nally, 192 Mass. 198; Alsop v. Caines, Yerger (12 Tenn.), 29, 26 Am. Dec.
10 Johns. (N. Y.) 396; Ludwig v. 214; Buffum v. Chadwick, 8 Mass.
Gillespie, 105 N. Y. 653; Gray v. Pub. 103.
Co., 2 N. Y. Misc. 260; Manett v. An equitable action for specific per-
Simpson, 61 Hun (N. Y.), 620; formance of the contract cannot be
United States Tel. Co. v. Gildersleve, maintained by the agent. Morton v.
29 Md. 232, 96 Am. Dec. 519; Stock- Stone, 39 Minn. 275, except where he
barger v. Sain, 69 111. App. 436; Hew- has a beneficial interest. Hills v.
itt v. Torson, 124 111. App. 375; Stew- McMunn, 232 111. 488.
art v. Gregory, 9 N. Dak. 618; Na- is See Considerant v. Brisbane, 22
tional Bank v. Molting, 94 Va. 263; N. Y. 389; Albany & Rensselaer Co. v.
Neal v. Andrews (Tex. Civ. App.), 60 Lundberg, 121 U. S. 451, 30 L. Ed.
S. W. 459. 892, and cases cited; Leach v. Hill,
In Simmons v. Wittmann, 113 Mo. 106 Iowa, 171. But a mere broker
App. 357, the court put the decision contracting for a disclosed principal
on both common law and statute. cannot sue upon the contract. Fairlie
11 In Sims v. Bond, supra. v. Fenton, L. R. 5 Ex. 169.
1594
CHAP. VI]
LIABILITY OF THIRD PERSONS TO AGENT
[ 2028
but as principal and as the only principal, there the agent alone may
sue. 13a
So, though the name of a principal may have been disclosed, but
such principal is, by reason of legal incapacity, legal nonexistence, and
the like, unable to sue, the action may be maintained by the agent
whenever he can be deemed to be a party to the contract.
Actions upon sealed and negotiable instruments must also, as will be
seen, be brought in the name of the agent.
2028. Statutes requiring suit by real party in interest.
The agent's right to sue in these cases is not usually defeated by the
statutory provisions found in many of the states that actions shall be
brought in the name of the real party in interest ; since these statutes
either contain express exceptions, or, under the right of a trustee of
an express trust to sue, provide such comprehensive definitions of such
a trustee as to include an agent who has made a contract for his prin-
cipal. 14
'
isaElbinger Actien-Gesellschaft v. Close v. Hodges, 44 Minn. 204; Hud-
Claye, L. R. 8 Q. B. 313.
i* The 'New York statute provides
as follows: "Every action must be
prosecuted in the name of the real
party in interest. ... A trustee
of an express trust . . . may sue
without joining with him the person
for whose benefit the action is
brought. A person with whom, or
for whom, or in whose name a con-
tract is made for the benefit of an-
other, is a trustee of an express trust,
within the meaning of this section."
The statutes in the other states are
substantially similar. Under these
statutes it is held that the agent may
sue. Hollingsworth v. Moulton, 53
Hun, 91; Coffin v. Grand Rapids Co.,
61 N. Y. Super. Ct. 51; Gray v. Jour-
nal of Finance Pub. Co., 2 Misc. 260;
Melcher v. Kreiser, 28 N. Y. App. Div.
362; Schipper v. Milton, 51 N. Y. App.
Div. 522; Crouch v. Wagner, 63 N. Y.
App. Div. 526; Considerant v. Bris-
bane, 22 N. Y. 389; Simons v. Witt-
mann, 113 Mo. App. 357; Still-
well v. Hamm, 97 Mo. 579; Wolfe
v. Mo. Pac. Ry. Co., 97 Mo. 473,
10 Am. St. Rep. 331, 3 L. R. A. 539;
Simon v. Trummer, 57 Ore. 153;
Cremer v. Wimmer, 40 Minn. 511; '
son v. Archer, 4 S. D. 128; Brannon
v. White Lake Tp., 17 S. D. 83; Abell
Note Co. v. Kurd, 85 Iowa, 559;
Owen v. Harriott, 47 Ind. App. 359;
Faust v. Goodnow, 4 Colo. App. 352;
Jenkins v. Wilkinson, 113 N. C. 532;
McLaughlin v. First Nat. Bank, 6
Dak. 406; Braithwaite v. Power, 1
N. D. 455. The rule in the federal
courts is the same as in the state
where the statute prevails. Albany
& Rensselaer Co. v. Lundberg, 121 U.
S. 451, 30 L. Ed. 982. In the follow-
ing cases the court rested its decision
both on the common law and on the
statute. McLaughlin v. First Nat.
Bk. of Deadwood, 6 Dak. 406; Con-
siderant v. Brisbane, 22 N. Y. 389;
Melcher v. Kreiser, 28 N. Y. App. Div.
362. In Ward v. Ryba, 58 Kan. 741,
it was held that such a statute did
not authorize an action of replevin
by an agent in his own name, to re-
cover possession of his principal's
goods taken from his possession,
there being no allegation of any spe-
cial interest or right to possession in
the agent.
Under the Idaho statute, see Law-
yer v. Post, 47 C. C. A. 491, 109 Fed.
512.
1595
2029, 2030] THE LAW OF AGENCY [BOOK IV
2029. Assignees of bankrupt agent. Where, though
the contract was made in his name so that he may sue upon it, the
agent has no beneficial interest of his own in the subject matter, his
right to sue does not, upon his bankruptcy, pass to his assignees, and
the agent may still sue in his own name. 15
2030. Illustrations of rule permitting agent to sue. These
principles under which the agent is permitted to sue are of frequent
application to the case of commercial paper. Thus upon a note or bill
payable to "A. B., agent," or to "A. B., agent of C. D.,". or to "A. B.,
trustee," or to "A. B., executor," etc., that is to say where the promise,
under established rules, 18 is deemed to be made to A. B. personally,
that which follows his name being regarded as mere descriptio per-
sona or to "A. B., for the use of C. D.," the action may be maintained
in the name of A. B. 17
The same rule applies to a promise made to "A. B., cashier," or "A.
B., president of C. D. Company." In such cases the action may be
brought in the name of the officer, although it is now generally held
that the corporation also may sue. 18
But where the promise is made to the "agent of C. D.," or the "cash-
ier of the E. Bank," or to the "treasurer of the F. Co.," and the like,
the name of the agent or officer not being disclosed, it is usually re-
garded as made to the principal directly. 19
In the case of banks, at least, it is also usually so regarded although
the officer's name appears, followed by his official title.
.
Tn North Carolina, in order to be v. Laffan, 2 Spears (S. C.), 424, 42
regarded as the trustee of an express Am. Dec. 376; Alston v. Heartman, 2
trust, the agent must show that the Ala. 699; Luster v. Robinson, 76 Ark.
contract was made in his name, by 255; Horah v. Long, 4 Dev. & Bat.
the authority of the principal, and (N. C.) 274, 34 Am. Dec. 378.
for the benefit of the latter. Martin is Pairfield v. Adams, 16 Pick.
v. Mask, 158 N. C. 436, 41 L. R. A. (Mass.) 381; Johnson v. Catlin, 27
(N. S.) 641. Vt. 87, 62 Am. Dec. 622. That princi-
15 Rhoades v. Blackiston, 106 Mass. pal also may sue, see Baldwin v.
334, 8 Am. Rep. 332. Bank of Newbury, 1 Wall. (U. S.)
is See ante, 1145. 234, 17 L. Ed. 534; First Nat. Bank
IT Clap v. Day, 2 Greenl. (Me.) 305, v. Hall, 44 N. Y. 395, 4 Am. Rep. 698;
11 Am. Dec. 99; Buffum v. Chadwick, Garton v. Union City Bank, 34 Mich.
8 Mass. 103; Goodman v. Walker, 30 279; Barney v. Newcomb, 9 Gush.
Ala. 482, 68 Am. Dec. 134; Pierce v. (Mass.) 46; Rutland, etc., R. R. Co.
Robie, 39 Me. 205, 63 Am. Dec. 614; v. Cole, 24 Vt. 33.
Rutland, etc., R. R. Co. v. Cole, 24 is Commercial Bank v. French, 21
Vt 33; Cocke v. Dickens, 4 Yerg. Pick. (Mass.) 486, 32 Am. Dec. 280;
(Tenn.) 29, 26 Am. Dec. 214; Van Ewing v. Medlock, 5 Port. (Ala.) 82;
Staphorst v. Pearce, 4 Mass. 258; Alston v. Heartman, 2 Ala. 699; Har-
Shepherd v. Evans, 9 Ind. 260; Rose .per v. Ragan, 2 Blackf. (Ind.) 39;
1596
CHAP. Vl]
LIABILITY OF THIRD PERSONS TO AGENT
[ 2031
2031. Further illustrations. So where an agent carries
on business for his principal and appears to be the proprietor and sells
goods as the apparent owner, he can sustain an action in his own name
for the price. 20 And where the principal carries on business in the
name of the agent, actions may be sustained in the name of the agent
upon contracts made to him in that name. 21 So where an agent ships
goods, taking the bill of lading in his own name, he may sue upon the
contract of carriage for damages arising from a breach of it. 22 So one
who describes himself as agent, acting for a named principal, but who
personally makes the covenants, may maintain an action in his own
name against the other party upon the covenants. 23 And a broker may
in his own name maintain an action against a telegraph company for
a breach of contract to transmit an order, made in his own name,
though on behalf of his principal, for the purchase or sale of goods ; 24
an agent who, having sold his principal's land, remits the money by
express, under a contract made in his own name, may maintain an ac-
tion against the express company for a loss of the money through its
Crawford v. Dean, 6 Id. 181; Vermont
Central R. R. Co. v. Clayes, 21 Vt. 30;
Pigott v. Thompson, 3 Bos. & P. 147.
20 Gardiner v. Davis, 2 Car. & P.
49; Dancer v. Hastings, 4 Bing. 2.
21 Alsop v. Caines, 10 Johns. (N.
Y.) 396.
22 Dunlap v. Lambert, 6 Cl. & P.
600; Joseph v. Knox, 3 Camp. 320;
Blanchard v. Page, 8 Gray (Mass.),
281; Hooper v. Chicago, etc., Ry. Co.,
27 Wis. 81, 9 Am. Rep. 439; South-
ern Express Co. v. Craft, 49 Miss. 480,
19 Am. Rep. 4; Finn v. Western R. R.
Co., 112 Mass. 524, 17 Am. Rep. 128;
Carter v. Sou. Ry. Co., Ill Ga. 38,
50 L. R. A. 354; Richmond, etc., D.
R. Co. v. Bedell, 88 Ga. 591; St. Louis,
etc., Ry. Co. v. Cumbie, 101 Ark. 172;
Cantwell v. Pacific Express Co., 58
Ark. 487. An agent who has made
a contract in his own name for the
receipt of goods and their shipment
from a certain place and with whom
the carrier has dealt as owner may
maintain an action against the car-
rier upon the contract. Georgia S. &
F. Ry. Co. v. Marchman, 121 Ga. 235.
But a mere agent of the consignee,
not a party to the contract, cannot
sue. Thompson v. Fargo, 49 N. Y.
188, 10 Am. Rep. 342; Krulder v.
Ellison, 47 N. Y. 36, 7 Am. Rep. 402.
23 Potts v. Rider, 3 Ohio 70. 17 Am.
Dec. 581. This was an action of cov-
enant. Upon a written but unsealed
contract made between "Gustaf Lund-
berg, agent for N. M. Hoglund's Sons
& Co.," and "Albany and Rensselaer
Iron & Steel Co.," signed "Gustaf
Lundberg," "Albany and Rensselaer
Iron & Steel Co.," Lundberg may sue
in his own name, at least under the
New York code. Albany & Rensselaer
Co. v. Lundberg, 121 U. S. 451, 30 L.
Ed. 982; (citing Kennedy v. Gouveia,
3 D. & R. 503; Parker v. Winlow, 7
E. & B. 942; Dutton v. Marsh, L. R.
6 Q. B. 361; Buffum v. Chadwick, 8
Mass. 103; Packard v. Nye, 2 Mete.
(Mass.) 47; distinguishing Gadd v.
Houghton, 1 Ex. Div. 357; and Oel-
ricks v. Ford, 23 How. (U. S.) 49, 16
L. Ed. 534.]
24 United States Tel. Co. v. Gilder-
sieve, 29 Md. 232, 96 Am. Dec. 519.
1597
2032]
THE LAW OF AGENCY
[BOOK IV
negligence ; 2B and one who has insured property as agent may sue in
his own name to recover upon the policies. 26
2032. Further illustrations. An agent who sells his
principal's goods, not merely as agent but in his own name as prin-
cipal, may sue the purchaser for the price, 27 or for refusing to per-
form the contract. 28 Upon a contract for the shipment of goods made
by the agent in his own name, the agent may sue to recover dam-
ages for the carrier's failure to carry the goods at the agreed rate. 29
An agent who has in his own name leased land for his principal may
sue to recover the rent reserved. 30 An agent who has performed
services for another, e. g. the threshing of grain, in pursuance of a
contract made in his own name, may sue to recover the agreed com-
pensation. 81 An agent entrusted with the control and management
of money for the purpose of loaning it and who has made a loan
and taken securities in his own name, may sue in his own name to
recover the money and enforce the securities. 32 An agent who has
25 Snider v. Adams Express Co., 77
Mo. 523. The court said he was a
trustee under an express trust.
26 The Hamburg-Bremen Fire Ins.
Co. v. Lewis, 4 App. D. C. 66; Marine
Ins. Co. v. Walsh-Upstill Coal Co., 23
Ohio Cir. Ct. R. 191; Western, etc.,
Pipe Lines v. Home Ins. Co., 145
Pa. 346, 27 Am. St. Rep. 703; Rob-
erts v. Fireman's Ins. Co., 165 Pa.
55, 44 Am. St. Rep. 642; Deitz v. Ins.
Co:, 31 W. Va. 851, 13 Am. St. Rep.
909; Murdock v. Ins. Co., 33 W. Va.
407, 7 L. R. A. 572; Home Ins. Co. v.
Baltimore Warehouse Co., 93 U. S.
527, 23 L. Ed. 868; California Ins.
Co. v. Union Compress Co., 133 U. S.
387, 42 L. Ed. 198; Provincial Ins. Co.
v. Leduc, L. R. 6 Priv. Coun. 224;
Hagedorn v. Oliverson, 2 M. & S. 485.
See also, Lloyds v. Harper, 16 Ch.
Div. 290.
Where he has a special property in
the goods, he has a sufficient interest;
but even where he has not, he may
recover on showing the principal's
interest and that the contract was
made for him, if there be nothing op-
posed to that in the terms of the pol-
icy. Hamburg-Bremen F. Ins. Co. v.
Lewis, supra; Deitz v. Insurance Co.,
supra.
27 Keown v. Vogel, 25 Mo. App. 35;
Stockbarger v. Sain, 69 111. App. 436;
Coggburn v. Simpson, 22 Mo. 351;
Cunningham v. Bennett, 11 W. Aus.
L. R. 133.
Same effect: Owen v. Harriott, 47
Ind. App. 359, where husband carry-
ing on business as wife's agent, and
having sold goods for her and taken
a note and mortgage in his own
name, was held to be entitled to sue
in his own name to collect on the
note and mortgage.
2s Davis v. Harness, 38 Ohio St.
397; Tustin Fruit Ass'n v. Earl Fruit
Co. (Cal.), 53 Pac. 693.
2 Colburn v. Phillips, 13 Gray
(Mass.), 64.
30 Manette v. Simpson, 15 N. Y.
Supp. 448; Spence v. Wilson, 102 Ga.
762; Stott v. Rutherford, 92 U. S.
107, 23 L. Ed. 486; or bring action to
recover possession. Bedford v. Kelly,
61 Pa. 491; or sue upon an injunction
bond running to him. Simon v.
Trummer, 57 Ore. 153.
si Hewitt v. Torson, 124 111. App.
375.
32 Dawson v. Burrus, 73 Ala. 111.
They are trustees of an express trust.
1598
CHAP. Vl]
LIABILITY OF THIRD PERSONS TO AGENT
[ 2033
deposited his principal's money in a bank in his own name may main-
tain an action in his own name to recover it. 33 And an agent who has
made a contract in his own name for the purchase of land may main-
tain an action against the seller to recover damages for his refusal to
convey. 34
2033. Agent may sue when he has a beneficial interest. Mr.
Chitty lays down the rule 35 which has often been cited, that "when
an agent has any beneficial interest in the performance of the contract,
as for commission, etc., or a special property or interest in the subject
matter of the agreement, he may support an action in his own name
upon the contract, 36 as in the case of a factor or a broker, 37 or a ware-
houseman or carrier, 38 an auctioneer, 39 a policy broker whose name is
on the policy, 40 or the captain of a ship for freight." 41 So in another
English book, 42 in which, in conformity with the rule of the preced-
ing section, it is laid down that an agent may sue in his own name on
contracts made by him on behalf of his principal, where the agent con-
tracts personally, an additional class of cases is also mentioned in which
the agent may sue, viz., "where, as in the case of factors and auction-
ss National Bank of Va. v. Nolting,
94 Va. 263; Goodfellow v. First Nat.
Bank, Wash. , 129 Pac. 90
(trustee of an express trust).
s* Cremer v. Wimmer, 40 Minn. 511.
Under the Minnesota code, if he is
not the trustee of an express trust,
he is a person with whom a contract
has been made for the benefit of an-
other.
sal Chitty on Pleading, 8 (16 Am.
Ed.).
ss Citing (in the Am. Ed.) Porter v.
Raymond, 53 N. H. 519; Treat v.
Stanton, 14 Conn. 445; Barnes v. Ins.
Co., 45 N. H. 21; Underbill v. Gibson,
2 N. H. 352, 9 Am. Dec. 82; Tankers-
ley v. Graham, 8 Ala. 196; Butts v.
Collins, 13 Wend. (N. Y.) 139; Col-
burn v. Phillips, 13 Gray (Mass.), 64;
Borrowscale v. Bosworth, 99 Mass.
378, 383.
37 Citing Grove v. Dubois, 1 T. R.
112; Atkyns v. Amber, 2 Esp. 493;
Williams v. Millington, 1 H. Bl. 81;
George v. Clagett, 7 T. R. 359; John-
son v. Hudson, 11 East, 180; Sadler
v. Leigh, 4 Camp. 195: Morris v.
Cleasby, 1 M. & S. 576; Sailly v.
Cleveland, 10 Wend. (N. Y.) 156.
ss Citing Lord Ellenborough in
Martini v. Coles, 1 M. & S. 140.
3 Citing Williams v. Millington, 1
H. Bl. 81; Coppin v. Craig, 2 Marsh.
501; Farebrother v. Simmons, 5 B. &
Aid. 333; Grice v. Kenrick, L. R. 5
Q. B. 340.
* Citing Park on Ins. 403; Grove
v. Dubois, 1 T. R. 112; Hagedorn v.
Oliverson, 2 M. & S. 485; Garrett v.
Handley, 4 B. & C. 664; Gumming v.
Forester, 1 M. & S. 494; Mellish v.
Bell, 15 East, 4; Ward v. Wood, 13
Mass. 539; Lazarus v. Commonwealth
Ins. Co., 5 Pick. (Mass.) 76; Farrow
v. Commonwealth Ins. Co., 18 Id. 53,
29 Am. Dec. 564; Rider v. Ocean Ins.
Co., 20 Id. 259; Williams v. Ocean
Ins. Co., 2 Mete. (Mass.) 303; Somes
v. Equitable Ins. Co., 12 Gray
(Mass.), 531.
41 Citing Shields v. Davis, 6 Taunt.
65; Brown v. Hodgson, 4 Taunt. 189.
12 Bowstead on Agency, 3 Ed., 400-
401.
1599
2034]
THE LAW OF AGENCY YT1
[BOOK IV
eers, he has a special property in, or a lien upon the subject matter of
the contract, or has a beneficial interest in the completion thereof."
2034. What meant by rule. Just how much is meant
by the rule in either case is not entirely clear. If the contract has been
made with the agent personally, he needs no additional reason to en-
able him to sue. No case has been found which holds that where the
contract is made in the principal's name, the agent may sue upon the
contract merely because he has an interest in its performance, except
perhaps where he sues because of the loss of incidental benefits per-
sonal to himself. 43 On a contract made for his benefit, but to which he
was not a party, he might or might not be able to sue according to
the state in which the question arose. If the action were in tort a spe-
cial property might sustain an action, but the question here involves
actions of contract only. The rule might very well mean that, in de-
termining whether the contract was made with the principal or the
agent, under the doctrine laid down in section 2024, above, the fact that
the agent had an interest may show that the contract was made with
him ; ** or that in applying the rule that the action must be brought in
43 In Bleecker v. Franklin, 2 E. D.
Smith (N. Y.), 93, it was held that
where the terms of a sale made by an
auctioneer provided that his fees
shall be paid to him by the pur-
chaser, he may maintain an action
f($r thrri against the purchaser, in
his own name. "This was a promise
made exclusively for his benefit. He
was a party to the consideration, in
that he rendered his services upon
that condition." So, in Livermore v.
Crane, 26 Wash. 529, 57 L. R. A. 401,
it was held that a real estate broker,
who, in pursuance of a contract made
Moith him, by a prospective purchaser
to buy, procured a contract of sale to
be entered into between the owner of
land and such prospective purchaser,
may maintain an action for damages
against the purchaser for the loss of
his commissions caused by the lat-
ter's failure to carry out such agree-
ment, although he had agreed to look
to the vendor for his commissions.
The cases of Cavender v. Wadding-
ham, 2 Mo. App. 551; and Atkinson
v. Pack, 114 N. C. 597, were relied
upon. In Evrit v. Bancroft, 22 Ohio
State, 172, plaintiff, an agent to sell
his principal's farm and receive as
commission all money over a certain
price, and who had entered into a
contract in his own name with de-
fendant, to sell the land to him at a
profit, was not allowed to recover the
amount he would have received had
defendant performed. "In this case
it appears from the proof that the
farm was of greater value than the
contract price; hence the damages
could have been only nominal if the
principal had sued, or if the plaintiff
had owned the farm he contracted to
sell." The loss of plaintiff's compen-
sation under his contract with the
owner was not a natural and proxi-
mate result of the breach of defend-
ant's contract with plaintiff. In Tins-
ley v. Dowell, 87 Tex. 23, plaintiff,
who was to get a commission from his
principal out of the purchase price
of land, was not allowed to recover
against the purchaser for the latter's
breach of contract to purchase from
the principal.
*4 This idea, that a nominal party
may become the real party by reason
of some special interest, seems to un-
derlie many of the cases. Thus in
1600
CHAP. Vl]
LIABILITY OF THIRD PERSONS TO AGENT
; 2034
the name of the real party in interest, the fact that the agent has an in-
terest would enable him to sue where an agent without interest might
not be allowed to sue, although the contract was nominally made with
him.* 5 In practically all of the cases in which this rule was originally
laid* down, the contracts had either been made in the agent's name or
involved the dealings of an agent like a factor, who is impliedly au-
thorized to sell in his own name and is therefore given the right to re-
cover the price, or who had come under some obligation to the princi-
pal, like the factor who sells under a del credere commission or ,the
auctioneer who has given credit for the price without authority, and
who is given the right of action for the price in order that he may re-
coup himself.* 6 All these cases seem in fact to be referable to the rule
Porter v. Raymond, 53 N. H. 519, 526,
the court says, "The authorities seem
uniform that, where the nominal
promisee is an agent and has a bene-
ficial interest in the performance of
the contract or a special property in
the subject-matter of the agreement,
the legal interest and right of action
is In him."
Thus, for example, in New York,
where there are many cases holding
that a mere agent, having no interest
and not within the statute as the
trustee of an express trust, cannot
sue (see Barkley v. Wolfskehl, 25
Misc. 420; Bell v. Tilden, 16 Hun,
346; Iselin v. Rowlands, 30 Hun, 488;
Hays v. Hathorn, 74 N. Y. 486), it is
also held that an auctioneer has such
a special property or interest in the
subject-matter of the sale that he
may sue in his own name. Minturn
v. Main, 7 N. Y. 220.
4 The case most frequently cited to
sustain this proposition is Williams
v. Millington, 1 H. Bl. 81. In this
case 
