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FROM JULY, 1872, TO JANUARY, 1873.




Entered, according to act of Congress, in the year eighteen hundred and seventy-three,

In the office of the Librarian of Congress, at Washington.

APR 20 1966



The Albany Law Journal.

complexity of commercial and financial affairs as tho basis of the many and various rights and duties aris

ing from delegated authority. ALBANY, JULY 6, 1872.

The relation of principal and agent, and its recog

nition by the law, is founded on the public good, as ON THE LIABILITY OF AN AGENT UPON A

promoted by the facilitation of business transactions WRITTEN INSTRUMENT CONNECTED

and the consequent ultimate increase of production, WITH THE SUBJECT OF HIS AGENCY.* and it is to this policy that the rules of action, as laid

It is a popular fallacy, and an annoying one to him down by the courts, are to conform. It is this policy who is disposed to regard legal science from a logical which has led to the abandonment of the civil law point of view, that the common law is composed of a doctrines in their harshness and illiberality, whereby series of irregular precedents, laid down from time to contracts made through the instrumentality of an time, according to the notions of this court or of that, agent did not in general bind the principals to each contradictory of each other in an eminent degree, and other. 1 Dom. Civ. Law, B. I, title 15, $ 3. Such destined to be overthrown whenever expediency shall laws are inconsistent with a spirit of trade and comrequire it - a system unsymmetrical, illogical and un- merce. It is a far broader and more comprehensive stable.

view to hold every transaction of the agent as that But it is, after all, in the results of judicial inquiry of his principal, when such conclusion shall be just which stand to-day as the rules of civil action, that the and reasonable toward all parties concerned. true value of the common law in its slow development Accordingly, the two great fundamental rules underis to be found; in so far as the principles advanced lying this subject are never to be lost sight of in ages ago it may be, by judges of very different mental discussing it, that the principal must answer to third habits, and under an infinite variety of circumstances, parties for all acts which he has authorized his agent unite to form a harmonious whole; in so far as the to perform, and also for those which such parties had rules applied in the ruder ages of society serve to-day just reason to believe were authorized by him. But in the far more complex system of affairs, so far must at these limits the protection of the agent ceases, and one recognize, beyond the uncouth formality and the beyond them a counter policy arises to restrain the clumsy fictions of the older law, that law in its sym- exercise of unwarrantable authority. metry as a science, advancing by self-evolution as all In discussing that branch of the general liability of science, slowly and irregularly, but none the less an agent, which forms the subject of our essay — his surely toward its ultimate perfection.

| liability on written instruments connected with the Nowhere, perhaps, are these principles more clearly subject matter of his agency - it will be proper to apparent than in the broad subject under discussion notice, first, the grounds of liability, and, second, the — that of agency -- not forming, it may be, in strict special cases in which that liabılity may arise. truth, a distinct department of the law, but rather a modifying element of all departments. The rules

SECTION I. governing it are in a high degree those of good sense

OF THE GROUNDS OF AN AGENT'S LIABILITY. and natural justice; first applied very many years ago as they were to a simple state of society, shut up

1. Where the agent has no authority, or where he has within itself, so to speak, by the international jealousy

exceeded his authority.It is obvious that, in the case of the times, yet, by their intrinsic force as rules of

of a total lack of authority on the part of the agent, positive law, they rest firmly to-day in the vast

any contract made by him with an innocent party

must be considered as being emphatically the contract * The following essay by John H. Inness, was awarded the of the agent himself, since there can be no resort to $100 prize at the recent commencement of the Columbia College Law School.

| the supposed principal. And it cannot affect the case

in this aspect, that the agent, supposing himself to been followed in numerous cases (see 3 Burr. 1921), possess the requisite power, has acted in the most but was narrowed down, so as to relieve the agent perfect good faith, for it is a rule which, under the from liability where the contracting party knew of equitable doctrines to which the courts more and the principal, or might have known of him, had he more incline, has almost attained the force of an | taken the trouble to inquire, as by examining the axiom in law, that one who asserts that which he books of the agent containing the written contract. does not know to be true is equally at fault with one Baring v. Corrie, 2 B. & Ald. 137; see, also, Morrison who asserts what he knows to be untrue; so that, v. Currie, 4 Duer, 79. The general liability of the where a person, in the absence of his friend, accepts agent in this class of cases is fully recognized in New a bill drawn upon him, without authority to do so, York under the doctrines both of law and of equity and merely to save the friend from future trouble, his (Mills v. Hunt, 20 Wend. 431; Mc Comb v. Wright, 4 laudable motives will not relieve him from liability to Johns. Ch. 659); and while the subsequent discovery an innocent indorsee of the bill. Polhill v. Walter, of the principal operates to give the contracting party 3 B. & Ad. 114.

an additional security, it can in no way divest the Nor can an agent who has exceeded his authority, agent of a liability thus acquired. Rossiter v. Rosfrom a misconstruction of the same, set that up as siter, 8 Wend. 494. discharging himself from liability, it being a mistake | It may be proper in this connection to note an of law, not available as a defense either at law or in apparent exception to the rules as just stated, but one equity. This rule, founded on already existing prin- which we cannot help thinking depends altogether ciples of the common law (and recently affirmed in upon the peculiar circumstances of the case in which England in Kilner v. Baxter, E. L. R., 2 C. P. 174), | it was presented. In The Bank of Rochester v. Monwas recognized at a very early period in the history teath, 1 Denio, 402, the members of a copartnership of the jurisprudence of this State in the case of had agreed that all their business in the city of Albany Dusenbury V. Ellis, 3 Johns. Cas. 70, where an should be carried on by their agent at that place in attorney, who, under a mistake as to the extent of his own name. An action being brought against the his powers, had signed a promissory note for his firm on several bills drawn upon the agent and accepted principal, was held liable as maker of the note. This by him, it was held that the partners were liable, and case has been followed by many others, prominent this upon the ground that the agent's name was the among which are Meech v. Smith, 7 Wend. 315, and partnership name for all the purposes of transacting Palmer v. Stephens, 1 Denio, 471, holding substantially the business of the firm at Albany; and the partners the same views, though in a late case in the court of could bind themselves by that name as well as by any appeals it was urged by Selden, J., that the liability other. This decision leads to the conclusion that the of the agent in such cases rested rather upon the agent had incurred no personal liability; yet, if under breach of an implied warranty of authority than the same state of facts the agent -- instead of being, upon the instrument itself. White v. Madison, 26 N. | as he was, a man of no financial credit whatever — Y. 117. This view seems unsatisfactory when ap had possessed large pecuniary resources, it would plied to the case of negotiable paper, and, certainly, certainly seem most unjust that an innocent contractought not to be admitted as affecting injuriously the ing party should be barred from resort to him in the rights of indorsees in good faith.

event of the insolvency of the copartnership; and 2. Where the principal is undisclosed. - In the case in such a case we think that this apparent exception of dealings by an agent in his own name, and with-would fail. out reference to his principal, there is a certain want 3. Where the agent acts for a foreign principal. -of fairness and candor toward the other contracting Where the principal resides in a foreign country, one party, which, independently of the agent's part in the who contracts with the agent cannot in general be contract itself, would seem to throw a liability upon supposed to have any accurate knowledge of the him. It is his duty to inform persons transacting financial standing of the principal, and on that account business with him of the subordinate position which | a presumption arises that credit must have been given he holds: “He must say plainly,” says Lord Ellen to the agent himself, which presumption the agent borough, “I am the mere scribe, or he will be liable.” | must rebut in order to escape liability. Paterson v. Leadbitter v. Farrow, 5 M. & S. 345. These prin- Gandasequi, 15 East, 62; Addison v. Gandasequi, 4 ciples became firmly settled in England by a series Taunt. 573. So it was held in the case of De Gaillou of cases toward the close of the last century, promi- | v. L'Aigle, 1 Bos, and P. 8 and 356, where a husband nent among which was that of George v. Clagett, 7 who resided out of England had given his wife in Term R. 359, where it was held by Lord Kenyon, that | London a power of attorney to transact his business, where an agent sold goods in his own name, and the pur that she was personally liable on her contracts, and chaser knew nothing of the principal, on the agent's be- | this, too, in spite of her coverture. And ratiScation coming bankrupt and the principal demanding the price by the principal in this case, as in all others, cannot of the goods from the purchaser, the latter might set off cut off the contracting party from any equities he a claim existing against the agent. This doctrine has I might have against the agent.


It seems to be the view that for the purpose just agent, and, accordingly, we find such execution noticed, the States of the Union are foreign to each linnited by a variety of restrictions, as, for example, other. Taintor v. Prendergast, 3 Hill, 72.

that it must be by virtue of a power of as high author4. Where the agent voluntarily incurs liability.- Anity as the instrument is itself to possess, that the covagent may, unquestionably, by giving to the other enants in the instrument must purport to be those party the support of his personal credit, become of the principal by his agent, and that none of the not only secondarily liable, as guarantor, but in some necessary minor formalities shall be omitted. See cases primarily so. Jones v. Littledale, 6 Ad. & El. Combe's Case, 9 Coke, 75. If these conditions 486; Tanner v. Christian, 29 Eng. L. and Eq. 103; have been complied with, it is universally admitted White v. Skinner, 13 Johns. 307. Still, in the case that the principal is liable, and he alone; if they have of an agent of a known principal acting within the not, the rule is as widely accepted that the principal bounds of his authority, the evidence must be very is discharged and the agent is responsible. clear that personal credit was given to the agent. But this very rigor of construction of which we rather than to the principal, since there is a pre- have spoken requires that, if the covenants are not sumption to the contrary, which must be rebutted by those of the principal — by reason of a defective the party who seeks to establish the agent's liability. execution or a lack of authority by the agent, or Nevertheless it seems to be the law in New York whatever the cause may be --- yet the agent shall that, when an action is brought against a principal only be held upon them, when the language used or upon a contract made by his agent, he may set up as the mode of signing may reasonably be considered to a defense the fact that exclusive credit had been given have the effect of making him a party to the instruto the agent. Meeker v. Claghorn, 44 N. Y. 349. | ment. Hopkins v. Mehaffy, 11 Serg. & R. 126;

5. Where there is no responsible principal. Where Stone v. Wood, 7 Cow. 453; White v. Skinner, 13 one representing an irresponsible person enters into Johns. 307. To go beyond this would be to trespass contracts as agent of that person, it is a just and upon the rule forbidding the introduction of parol equitable rule that such agent shall answer upon the evidence to vary a written contract; accordingly, in contract personally. A good illustration of this all cases not within the principle as just stated, the principle is found in the case of Turrell v. Collet, 1 remedy is to be found in an action of tort against the Esp. 320, where a father, to whom a business be- agent for damages sustained from his wrongful act. longed, had from old age become impaired in mind to Abbey v. Chase, 6 Cush. 56. such an extent that he was utterly incapable of at- ! 2. Written agreements not under seal. — Questions tending to his affairs. Here it was held, that his son, concerning the liability of an agent upon instruments who carried on the business for him, was, in reality, of this class are of extreme frequency, and the adjudiliable, and the proposition was laid down by Lord cated cases present a bewildering conflict of views. Kenyon, that it is upon the ostensible conductors of

| Yet it is believed that the diversity of opinion arises business that contracting parties have a right to rely. rather upon the nature of the liability than upon the Similar questions have arisen in the case of infants

fact of liability itself, and that the agent's responsiand lunatics, where substantialiy the same views have

| bility, in some form or another, is very generally cbtained. See Thacher v. Dinsmore, 5 Mass. 299; recognized by the courts in the various instances Forster v. Fuller, 6 id. 58. On like grounds, where

previously mentioned, such as lack of authority, undisparties entered into a contract in favor of a company closed principal, etc. The real point of discussion, not at the time incorporated, they were held person

| however, is, whether the agent is so responsible, ex ally liable. Kelner v. Baxter, Eng. L. R., 2 C. P. 174. contractu, upon the instrument itself, or in an action

on the case for damages. SECTION II.

There is a desire on the one hand that the contract

shall rather stand than fall, which has led to a very THE LIABILITY OF AN AGENT ON VARIOUS CLASSES OF

great liberality, to say the least, of construction, for WRITTEN INSTRUMENTS.

the purpose of bringing in the agent as a party when The various instruments upon which an agent may the principal cannot be held. This view prevailed incur liability may be grouped into three general generally in the earlier English cases, prominent among classes: 1. Sealed instruments; 2. Written agree which is that of Cass v. Rudele, in 1692, where the ments not under seal; and 3. Negotiable paper. court of chancery entertained a bill against an agent

1. Sealed instruments. — The importance attached who had entered into articles of agreement for the by the old common law to sealed instruments, arising, purchase of several houses in the island of Jamaica, as it did, from the solemnity attendant upon their and, aster performing the contract in part, refused to execution, led to a great degree of rigor in constru complete performance on the ground of having no ing them, and a jealous care that the requisite formal- effects of the principal in his hands. A decree for ities should be complied with. It is obvious, that this specific performance of the contract was given, and watchfulness was in no case likely to be more stringent this, though the houses had, pending the suit, been than in the execution of sealed instruments by an | destroyed by an earthquake. The decree was after

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