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CHAPTER 25

THE APPOINTMENT OF THE AGENT

A. Authorization by act of party.

B. Authority conferred by law.

A. Authorization by Act of Party.

§197. In general.

§ 198. Formalities required in appointment of agent. § 199. Elements essential in appointment of agent.

§ 197. (Agency, Sec. 13.) In general.

Case 202. Central Trust Co. v. Bridges, 57 Federal Reports, 753.

Facts: Proceedings to foreclose a mortgage on railroad property. Petitions filed in the proceedings by certain creditors to establish and enforce mechanic's liens against the property involved, under a statute giving principal contractors mechanic's liens. To come within the benefit of this statute, it is necessary for the creditors to show that they were main contractors, not subcontractors, that is, that they contracted directly with the railroad (acting through its agents) and not with those who as independent contractors had contracts with the railroad. That is to say, the petitioner Bridges must show that when he contracted with Eager, with whom he dealt, Eager was acting as an agent of the railroad company, for if Eager was simply a general or independent contractor, then Bridges' contract was with Eager and not with the railroad company, and Bridges was a subcontractor and not a main contractor.

Point Involved: That one will not be deemed as the principal of another in the other's contracts with third persons, except upon facts showing, either that he had

actually conferred authority upon the person acting as agent or has apparently done so.

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TAFT, J.: The theory upon which the master and the learned Court below held that all the intervening petitioners dealt directly with the Knoxville Southern Railroad Company as principal contractors was that Eager was an agent of the railroad company in making the contracts. One may be liable for the acts of another as his agent on one of two grounds: first, because by his conduct or statements he has held the other out as his agent; or, second, because he has actually conferred authority on the other to act as such. The master reported to the Court below that in no case did Eager, under or in the name of the Knoxville Southern Railroad Company, make any contract with any one doing work or furnishing material for the road; that the men who contracted with Eager knew very little of Eager, saw him only occasionally, made no inquiry into his real relation to the company, what interest he had in it, or how he obtained money to carry on the work. In substance, the master reported that the intervening petitioners believed they were dealing with Eager as principal contractor. The proof fully sustains this conclusion.

"It follows, necessarily, that Eager was not the agent of the company in contracting with the petitioners for the construction of the road unless the company had in fact conferred authority upon him to act as its agent in the matter. An agency is created-authority is actually conferred-very much as a contract is made, i. e., by an agreement between the principal and agent that such a relation shall exist. The minds of the parties must meet in establishing the agency. The principal must intend that the agent shall act for him, and the agent must intend to accept the authority and act on it, and the intention of the parties must find expression either in words or conduct between them.

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In the case at bar, the master fully admits there was no holding out of agency in Eager by the com

pany. His finding that an agency in fact existed rests simply on the influence which Eager had over the company and not in the intention of either that Eager should act as its agent in the construction of the road, and his conclusion is reached in the face of the fact which he fully admits, that they both intended Eager to be an independent contractor. The master's conclusion cannot be supported.

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Question 202: What would it have been necessary for the claimants to show in this case in order to establish that Eager could bind the company as its agent?

(Note: We will notice hereafter that the actual conferring of the authority may be done by previous appointment or by ratification. But in either case the authority of the agent must be in some way traced back to the principal's acts or statements.)

§ 198. (Agency, Sec. 14.) Formalities required for appointment of agent.

(a) As required by statute of frauds.

(b) To execute instruments under seal.

(Note:

(a) As Required by Statute of Frauds.

The 4th and 17th Sections of the Statute of Frauds made contracts of various sorts unenforceable unless there was evidence in writing signed by the party sought to be charged or by his agent thereunto lawfully authorized. The memorandum and the signature could be by agent and it was not necessary that the authority of the agent be in writing. If P appointed A to make a contract with C, which was covered by the statute of frauds, it was a defense if P sued C, or if C sued P, that the plaintiff had no sufficient written evidence signed by the defendant (or his agent), but it was no defense that the agent's authority was not in writing. This is still the law unless, by local statute, certain forms of authority must be in writing, as for instance, in Illinois, that a contract to sell real estate is not enforceable against the seller unless not only there is written evidence of the contract but written authority to the agent.)

(b) To execute Instruments Under Seal.

Case 203. Hanford v. McNair, 9 Wend. (N. Y.) 54. Facts: This case is a suit brought on a contract under seal executed in the principal's name by an agent whose authority to make the contract was not under seal.

Point Involved: Whether an agent having authority to bind his principal on a contract under seal must for that reason have his authority under seal.

SUTHERLAND, J.: "It is an insuperable objection to the plaintiff's recovery in this action, that no competent authority from the defendant to Bush is shown to execute the covenant on which the suit is found. An agent cannot bind his principal by deed [instrument under seal] unless he has authority by deed to do so. The only exception to the rule that the authority to execute a deed must be by deed, is where the agent or attorney fixes the seal of the principal in his presence and by his direction.

Question 203: What was the rule as announced in this case (being the common law rule as to the requisite character of an authority to execute an instrument under seal)?

(Note: This rule would not apply in states in which the character of an instrument under seal has been destroyed by legislation. Many modern cases also hold that where an agent is appointed by appointment not under seal to execute a contract not under seal, his addition of a seal may be treated as a superfluity and the contract regarded as an unsealed agreement.

An agent need not have authority in writing to execute a contract in writing, unless in some particular cases, the local statute requires it.)

(Note: The suggestion in the case that if the agent or attorney fixes the seal of the principal in the principal's presence and by his direction the authority need not be under seal, is based upon the law that a person who in the presence and at the direction of another merely does some manual act, he is not really that person's agent but a "mere mechanical aid or instrument" or "a mere tool." (Mechem on Agency, 2nd Ed., Sec. 63.)

§ 199. (Agency, Sec. 15.) Elements essential in appointment of agent.

(Note: An agency is generally, but not necessarily contractual, as between principal and agent. There need be no consideration. A friend of mine may act as my agent gratuitously. To be a binding agreement between principal and agent, there must of course be the elements of contract.)

B. Authority Conferred by Law.

$200. In general.

§201. Authority of wife to bind husband.

§ 202. Authority of child to bind parent.

§ 203. Statutory liability for family expenses.

§ 200. (Agency, Sec. 16.) In general.

(Note: Where the one person has a legal power to bind another on contracts by reason of a legal relationship existing, the situation is not one of true agency. In this connection, one should keep in mind the distinction between the power conferred by law, and the power that may exist in fact. Thus a wife has a certain power, conferred by law, to bind her husband for the price of necessaries procured by her. But this same wife might have other authority or apparent authority than the authority conferred by law.)

§201. (Agency, Sec. 17.) Authority of wife to bind

husband.

(Note: By common law, a wife may bind the husband for her necessaries. If the husband is supplying, the articles although of the sort that would otherwise be necessaries, are not necessaries. The husband cannot deprive his wife of this authority; although she loses it by living apart from him by her own fault. The merchant must take the risk as to whether she is actually supplied.)

§ 202. (Agency, Sec. 18.) Authority of child to

bind parent.

Case 204. Hunt v. Thompson, 3 Scammon's Illinois Reports, 179, 36 American Decisions, 538.

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