r:KWKKtiW#oQ?i agent is a general or special one, is a question of fact to be decided by the jury (5 Pa., 333). The extent of the authority delegated may be shown by evidence of the course of dealing between the parties (108 Pa., i), by declarations made by the principal to the agent (45 Pa., 96), by custom (95 Pa., 348), or by the testimony of the principal himself (112 Pa., 118). Professional Agency. A professional agency is one the duties of which are performed by a professional agent. A profes- 10 PRINCIPLES OF PENNSYLVANIA LAW sional agent is one whom special training has particu- larly fitted for the performance of certain duties and whom the law will hold responsible for lack of the requisite skill in the performance of those duties. The principal professional agents are (a) Factors, (b) Brokers, (c) Auctioneers, (d) Bank Cashiers, (e) Ship-masters, (f) Attorneys. Factors. Definition and Nature of a Factor. — A factor or commission merchant is an agent to whom goods are consigned for sale. He is intrusted with the pos- session and apparent ownership of the goods, sells in his own name and receives a commission for selling from his principal (i6 W. N. C, 478). A factor may be a simple commission merchant or he may be a del credere commission merchant. In the former case he sells simply for a commission. In the latter case he guarantees a price to the principal, and also the collection of that price. For this he may or may not receive an increased commission. Lien. — It is usual for the factor to advance money to the consignor. He, therefore, has a gen- eral lien on the consigned goods in his possession ( 1 ) for any money advanced or negotiable security given by him on the faith of such consignment, or (2) for any money advanced or negotiable security received for the use of the factor, by the person in whose name such merchandise was shipped. But the factor will not have a lien, if he be aware of the fact that the con- signor was not the owner of the goods. If the fac- tor should pledge the goods in his possession without disclosing the real owner to the party advancing the CLASSES OF AGEJICY II money, suph party would acquire the same lien upon the property as if the factor were the real owner thereof. The consignee under all circumstances has a lien for expenses and charges attending the ship- ment and care of merchandise consigned or intrusted to him. The owner may also, in case of insolvency, always recover goods not pledged from the factor or his assignees. Even if the goods l;iave been pledged, the owner may redeem them and recover the overplus of the proceeds. (Act April 14, 1834, P. L., 375.) Scope of Authority. — A factor is bound to pay exact obedience to the orders of his employers and is liable for any damages suffered from his failure to do so. He can never act contrary to his principal's ex- press instructions on the mere ground of opinion (15 Pa., 229). However, it seems that he may do so under the demands of reasonable necessity or as a matter of protection to himself for advancements made. A factor must exercise that degree of care in the management of the goods intrusted in his keep- ing, which a reasonably prudent man would take of his own property. He should see that it is protected by insurance, and sold for cash or to those whose credit is good. The principal is liable for all contracts made by the factor within the scope of his authority, and, as we have seen under the statute, even when the factor pledges or barters the goods for his own benefit. Brokers. Definition and Nature of a Broker. — A broker is an agent, who, for a commission, negotiates 12 PRINCIPLES OF PENNSYLVANIA LAW contracts relating to property for another or others. He does not usually settle the terms of the contract, but acts as middleman between the principals. A broker differs from a factor in two essential particu- lars. First, A broker should buy and sell in the name of his principal, while a factor may buy and sell for his principal in his own name (Kent's Comm., vol. Ill, page 622). Second, But the important distinc- tion lies in the fact that the factor .has possession of the goods and a special property in and lien on them; while a broker has neither actual nor constructive pos- session of the goods, nor has he any special property in them (11 W. N. C, 448). There are various kinds of brokers: (a) Stock brokers, who buy and sell- stocks and other securities; (b) Exchange and bill brokers, who buy and sell negotiable paper; (c) Real estate brokers, who buy, sell, rent or mortgage real estate; (d) Insurance brokers, who negotiate insur- ance; (e) Merchandise brokers, who negotiate the sale of merchandise between others. All brokers are required (i) to take out a license — granted by the County Treasurer — (2) to be registered at the State Department, (3) to make under oath an annual return of the receipts from commissions, discounts, and all profits arising from the business during the year, and (4) to pay a tax of three per cent, upon such receipts (Act May 15, 1850, P. L., 773). While a broker can not use more than one place of business, yet the same person may be licensed as stock, exchange and bill broker (Act May 27, 1841, P. L., 397)- Scope of Authority. — A broker is the agent of but one of the parties at the beginning of the neo-o- CLASSES OF AGENCY 1 3 tiations, but after the terms of the contract have been definitely settled he becomes the agent of both par- ties. The broker's authority is much narrower than that of a factor or commission merchant. He has no authority to sell the goods in his own name (14 W. N. C, 108), or to pledge them when no advances have been made or when the advances have been repaid (153 Pa., 19, but see 13 Lane. Bar., 61), or to receive the money in payment of them (16 Phila., 200), or to employ sub-agents at the expense of the principal (20 W. N. C, 65). Auctioneers. Definition and Nature of an Auctioneer. — An auctioneer is an agent authorized by law to sell the goods of others at public sale. Until the fall of the hammer he is the agent of the seller, after that he is the agent of both. Like a broker an auctioneer must obtain a license from the Treasurer of the County and pay for the privilege a similar tax (Act June 26, 1873, P- L., 332 — 14, Phila., 667). However, before such license will be granted, the person seeking it must pay into the state treasury the sum of two thousand dollars if he lives in Philadelphia, fifteen hundred dollars if he lives in Allegheny county, five hundred if he lives in Lancaster or most any of the other towns and counties of the state, and give bonds in the sum of five thousand dollars with two or more sufficient securities (Act April 9, 1859, P. L., 435) for the faithful performance of the duties as auction- eer, for the payment of all duties and taxes which may become due to the state (Act April 2, 1822, 7, S. M. 593), and for the security of his customers (3 Yeates, 14 PRINCIPLES OF PENNSYLVANIA LAW 335). It is a general rule that in case different suits are brought on the bond of an auctioneer, the per- son who first brings suit is entitled to priority of pay- ment (i Binn, 370). The commission of the auc- tioneer under the Acts of April 2, 1822, and April 9, 1859, does not necessarily expire at the end of one year, but may continue for three years without a renewal of his bond (75 Pa., 331). Moreover, as in the case of a broker, an auctioneer can have but one auction store. He must report to the auditor-general of the state the amount of sales made during each quarter, and must also file with the recorder of deeds his place of business and names of partners (Act April 9, 1859, P. L., 436). An auctioneer can not be a pawnbroker, i. e., he can not advance money on goods and charge commissions without a pawn- broker's license (35 Pa., 277). It should be added that, under certain stated exceptions, sales by auction are prohibited in the counties of Northampton, Dauphin and Lehigh (Act April 7, 1832, P. L., 365). Scope of Authority. — Like any other agent the auctioneer must obey the instructions of his principal (11 S. & R., 86). He should disclose the name of the owner of the property at the time of the sale, and for failure to do so he makes himself personally liable for the completion of the contract. He has a lien on the goods for all charges of the sale and for his com- mission. He should sell for cash only and receive such payment at the time of sale as the conditions of sale specify, and may sue in his own name to recover such purchase money (5 S. & R., 19). He has no implied authority to warrant the quality of the goods sold (5 S. & R., 45, see also, 9 Gray, Mass., 197), and CLASSES OF AGENCY I 5 is personally liable for any credit, which he extends to a buyer in disregard to the conditions of the sale (2 Kent's Comra., 536). Bank Cashiers. Definition and Nature of a Bank Cashier. — A bank cashier is the general executive officer of a bank. He manages its business in all things not peculiarly committed to the directors by the charter (3 W. & S., 376). He must give a bond in an amount to be determined by the directors (Act May 7, 1855, P. L., 508). The teller and other subor- dinate officers of the bank are under his direction. Under certain prescribed penalties, cashiers of state banks are not permitted to engage in any other occupation (Act April 16, 1850, P. L., 481). Hence, a sale of stock (65 Pa., 496) by a cashier, or a con- tract made in the course of any other outside business, may be avoided by the other party (6 Phila., 184). But this does not mean that a cashier is to be dis- qualified from inheriting or receiving by gift a mer- cantile, mechanical, or manufacturing business (Act April 18, 1855, P. L., 258), nor does it apply to the cashiers of national banks (119 Pa., 192). Scope of Authority. — It is the cashier's duty (i) to receive and pay out the moneys of the bank, (2) to collect and pay its debts, and (3) to receive and transfer its commercial securities. He has an author- ity implied from the nature of his agency ( i W. & S., 106), and is the agent of the corporation, not of the directors (2 P. & W., 271). But if he carries into execution a lawful contract entered into by the direc- tors, the bank will be bound by his acts (i Pars., l6 PRINCIPLES OF PENNSYLVANIA LAW 1 80). Like in any other agency, the bank will be bound for all acts done by the cashier within the scope of his authority. Thus, notice to the cashier in the line of his duty is notice to the bank (169 Pa., 574). A bank may also become liable by ratification of an unauthorized act, or of an act done without the scope of the cashier's duties (no Pa., 428). Ship Masters. Definition and Nature of a Shipmaster. — The master or captain of a ship is the one to whom the full management and government of a ship upon a voyage is entrusted. It is his duty to care for the preservation of the health and comfort of the crew, as also for the safety of the ship and cargo (4 Clark, 350). He must follow as closely as possible the route marked out by the owners (9 Pa., 390), and strictly obey their instructions (4 Binn, 391 and 2 Dal., 51). Scope of Authority. — He is an agent not only for the owner, but also of the insurers, the passen- gers (5 Phila., 257), and all whose property is aboard the vessel (3 Clark, 173). His authority at sea is absolute, both as regards the navigation of the vessel and discipline of the seamen (4 Clark, 103). The wilful abuse of this authority, which will not render a sea captain liable to one of his seamen, may, on the other hand, render him liable to a passenger (4 Clark, 103). In case of necessity, he has authority to make contracts (3 Watts, 68), to sell perishable freight or a wrecked ship and cargo, to borrow money on the ship or cargo, or, if the necessity demands it, to even sell the ship and cargo (38 Pa., 176, and 4 Clark, 350). CLASSES OF AGENCY 1 7 Attorneys. Definition and Nature of an Attorney. — An attorney is one who acts for another by appointment of the latter. Attorneys are of two kinds, (a) attor- neys-in-fact and (b) attorneys-at-law. An attorney- in-fact is not strictly a professional agent. Any per- son who is specially authorized to do some particular act for another — usually the signing of the name and affixing the seal of the principal — is an attorney-in- fact. He acts under a special authority in writing and under seal, called a power of attorney. This power of attorney must be proved by two or more wit- nesses (Act 1705, I Sm., 69). All persons capa- ble of acting for themselves or of ordinary capacity may act as attorneys-in-fact for others. An attorney-at-law is an officer of the court, who is employed by his principal to represent him in any legal proceedings. Before one can be an attorney-at- law he must have pursued a regular course of profes- sional study for a specified number of years — usually three, he must have satisfactorily passed an exami- nation testing his knowledge of the general principles of law, he must have been admitted to practice by the court, and have taken the oath to faithfully discharge his duties (Act April 14, 1834, P. L., 354). ' Scope of Authority. — The attorney-at-law must be true to the court and to his client. He must manage the business of his client with care, skill and integrity, and will be liable to his client for negligence in the management of the business (161 Pa., 605). He must keep his client informed as to the state of his business, and is privileged from disclosing any secrets which , his client might have confided to him. 1 8 PRINCIPLES OF PENNSYLVANIA LAW In general, any act within the scope of his employ- ment will bind his client, such as to amend the record (i Binn, 75), or to refer a cause (i Dall., 164). But without special authority he has no authority to com- promise the claim of his client (i P. & W., 264), or to purchase lands for a client at Sherifif's sale (2 S. & R., 21). A client, however, may subsequently ratify a compromise, or any other act of his attorney (165 Pa, 571). . IV. LEGAL EFFECT OF RELATION OF AGENCY. The formation of the relation of agency majr affect three different parties, (a) the principal, (b) the agent, or (c) third parties. Hence, in consider- ing the subject of the effect of the relation, it should be treated from three points of view — A, The effect as between principal and agent. B, The effect as- between principal and third parties. C, The effect as- between agent and third parties. A.— BETWEEN PRINCIPAL AND AGENT. As in any other contract, a contract of agency, as between principal and agent, imposes mutual obli- gations. What these obligations are will be outlined under the general heads of (i) the obligations of the principal to the agent, and (2) the obligations of the agent to the principal. Obligations of Principal to Agent. The law obligates the principal to the performance of three distinct duties towards his agent, (a) He LEGAL EFFECT OF RELATION OF AGENCY 1 9 must compensate, (b) he must reimburse, and (c) he must indemnify the agent. Compensation. — The agent has a right to expect compensation for the services which he has rendered, and has a special lien in the subject matter of the agency as security for the compensation due (5 Binn, 538). A sub-agent may recover compensation, if he was appointed by an agent having authority; but he can not recover if he was appointed without the knowledge of the principal and by an agent without authority to make such appointment (2 Walk., 85). Where there is an express agreement, this will fix defi- nitely the amount which the agent can recover (29 Pa, 184). Where there is no such agreement the prin- cipal must pay whatever the services are reasonably worth, if there was present an intention to compen- sate (24 Pa., 514). Whether or not there was such an intention is to be determined by the circumstances of each case. These same rules apply also in the case of an unauthorized act which is subsequently ratified. Thus, A does an act without authority from B, but which B subsequently adopts as his own and accepts the benefits therefrom. A can recover in the same way and to the same extent as if the act had been orig- inally authorized (7 Pa., 543). Where the compen- sation depends upon the performance of certain stipu- lated conditions, these conditions must be performed before he will be entitled to his compensation (146 Pa., 460). When the agency has been revoked by the princi- pal, and through no cause or fault of the agent, the agent is entitled to the compensation already earned and also to damages for the breach. In computing 20 PRINCIPLES OF PENNSYLVANIA LAW the damages the principal may show what the agent might have earned elsewhere. But although the agent is bound to seek other employment, he is not bound to accept a different employment (65 Pa., 459), or in a different locality (*2 Denio, N. Y., 609), or, possibly with an objectionable employer (*64 Ala., 299). When the agent himself renounces the agency he can recover nothing, not even for the services already performed (8 W. & S., 367). Of course, if the contract is severable, the agent can recover for the instalments due, or on the part capable of separation. Unknown to the contracting principals, an agent can not act for both vendor and vendee (136 Pa., 439), nor may he receive compensation for merely bringing the parties together (71 Pa., 256). But if both parties were aware of the double agency he may recover compensation from each (71 Pa., 256, and 113 Mass., 133). Thus, A acts as agent for both B and C in a transaction between them. He may recover compensation, if both B and C were aware that A was the agent of each. But A could not recover compensa- tion, if either B or C was ignorant of the double agency; and if either B or'C has given compensation he may recover it back again (142 Pa., 25 ) . Of course, an agent can not recover compensation for illegal ser- vices. Reimbursement. — A principal must reimburse his agent for all expenses incurred in the course of the agency and for all moneys paid by the agent for the *No Pennsylvania case can be found sustaining these proposi- tions. But that such is the law see A. & E. Ency. Law, vol. i, page 1 106, and authorities there cited. LEGAL EFFECT OF RELATION OF AGENCY 21 principal's benefit (152 Pa., 433, see also 79 Pa., 491). These expenditures and expenses must be reasonably necessary and not unreasonable in amount. They must be authorized (84 Pa., 26), but it does not matter whether or not the agent disclosed the principal's name when the money was paid or the expense created (112 Pa., 230, and 86 Pa., 120). It should be added that to enforce the right of reimburse- ment, the agent has a right of lien to whatever property of the principal that might be in his possession (2 W. & S., 392, and 5 Binn, 538). Indemnity. — The principal must indemnify his agent against all damages that are incurred without the agent's fault in the management of the principal's business (5 Binn, 441). This rule does not extend to the agent's illegal acts, if the agent knew that the acts were illegal. But it seems that the rule applies if the acts were not in fact contrary to public policy or good morals, and if the agent did not know of the illegality of his acts. Thus, an auctioneer who sells goods for a principal, which belong to another, is entitled to indemnity in case he must respond to the true owner for conversion (79 Pa., 491, see also 14 N. Y., 329). As in the case of reimbursement, the right of indemnity carries with it the right of lien against the principal's property. Obligations of Agent to Principal. There are five principal obligations of the agent to his principal. First, The agent must obey the instruc- tions of his principal. Second, He must follow the principal's instructions with that care and skill which is characteristic of a prudent man. Third, He must 22 PRIN'CIPLES OF PENNSYLVANIA LAW follow the instructions and manage the business with the highest good faith. Fourth, He must account fully for all the proceeds and profits of the agency. Fifth, He must act in person, except where authority is given him to appoint sub-agents. (Huff cut on Agency, page 82.) Obedience. — An agent must carry out strictly the instructions of his principal, and any failure to do so renders him liable for the deviation (9 Pa., 148). In disobeying the express instructions of his principal, it is no excuse that he acted in conformity with the previous course of dealing between them (129 Pa., 8), or that he acted in good faith (84 Pa., 26), or that it was a gratuitous agency (6 Binn, 308), or that the deviation was immaterial — if the principal con- siders it material (26 Pa., 393). But urgent neces- sity or the happening of an unforeseen event may warrant an agent in departing from his instructions (4 Binn, 461). Prudence. — An agent must discharge the duties of his agency with such skill, care and diligence that a reasonably prudent man would observe in a similar undertaking or under similar circumstances (i Grant, 355 and 90 Pa., 38). Thus, an agent authorized to purchase a plow must show that judgment which most prudent purchasers of plows display; while an agent authorized to select a valuable and intricate machine must display the skill and caution of an expert machinist. So a country physician can not be expected to exercise the same skill in surgery as a physician in a large manufacturing community. An agent is liable for losses" which his principal may sustain through the former's negligence, as when LEGAL EFFECT OF RELATION OF AGENCY 23 a loan of money is made without due care or prudence (17 W. N. C, 547, but see 147 Pa., 523 and 146 Pa., 63), or when an agent accepts anything other than money in payment of a claim placed in his hands for collection (123 Pa., 212), or handles the collection without reasonable care or skill (38 Pa., 135). Good Faith. — The principal relies upon the fidel- ity of his agent, and the law, in demanding loyalty to the trust imposed, requires the strictest good faith on the part of the agent in dealing with his principal (11 Phila., 183), and will give damages for breach of ■duty (125 Pa., 123). Thus, an agent can not act for lioth parties to the same transaction without their consent. He can not sell or lease to himself (66 Pa., 332) or to one of his employes (159 Pa., 153) property which has been intrusted to him to sell or lease. He can not acquire any rights or interests that are antagonistic to those of his principal — as one who is the landlord's agent can not become the pur- chaser of lands at a sale for taxes, without a previous explicit renunciation of the agency (7 Watts, 472). In general, he can not in any way use his author- ity for his own benefit. Good faith also requires that the agent keep his principal informed of the state of the interests in- trusted to him. For any failure to do this he will be liable in damages for dereliction of duty (4 W. & S., 305)- Accounting. — The agent must keep accounts of all moneys and property received by him in the dis- charge of his agency and render a true account of the same to his principal (9 Watts, 130). If the money of the principal becomes commingled with that of the 24 PRINCIPLES OF PENNSYLVANIA LAW agent and can not be separated, the whole mass must be surrendered to the principal (21 Pa., 362, and 37 Pa., 164), and any loss must be borne by the agent alone (but see 79 Pa., 228). Where the com- mingled mass consists in goods and the agent sells certain pieces, the principal has a right to the pos- session of a like number of pieces of similar goods of the agent (24 Pa., 246). In rendering an account, an agent may claim the right of set off for money due the agent from his prin- cipal. But an agent can not, without the consent of the principal, apply money collected by him for his principal to a claim of his own against the principal (2 P. & W., 525) . Nor will the agent be permitted to enforce his claim in direct violation of his duty as agent (108 Pa., 273). Thus, A authorizes B to col- lect certain rents and to apply the proceeds to pay off certain debts due C. B instead used the proceeds to pay off a mortgage which he held against A. It was ruled by the court that this could not be done. Appointment of Sub-Agents. — It is a general rule that an agent must act in person, except when he is permitted to appoint a sub-agent. The question as to when he may appoint a sub-agent involves the further considerations as to when he may transfer (a) his duties, and when (b) his obligations. Generally, an agent can not delegate any duty which involves discretion, as in the buying and selling of land. But there are two exceptions to this general rule ; ( i ) cus- tom, or (2) necessity, may give to the agent the right to delegate the performance of even discretion- ary duties to another (6 S. & R., 386). Thus, a bank entrusted with the collection of a commercial note, pay- LEGAL EFFECT OF RELATION OF AGENCY 2$ able at a distance, has authority to employ a sub-agent at the place of payment and also to make such sub- agent the agent of the principal (109 Pa., 422, see also JT, Pa., 124). But no consideration will prevent an agent from delegating his duties to another, when those duties are merely mechanical, ministerial, or executive in their nature. He has full power to delegate the performance of any duty which does not involve dis- cretion (172 Pa., 443). We have seen that it is a strict rule of law that one can not, by his own act, release himself from his con- tractual obligations. Hence, without the consent of his principal an agent can not assign to a sub-agent obligations which he himself has promised to per- form, and thus exonerate himself from further lia- bility. B.— BETWEEN PRINCIPAL AND THIRD PARTIES. The main object of agency is to bririg the principal into contractual relations with third persons. In bringing this about, the agent may or may not dis- close his principal; he may make declarations or receive notice of facts which affect his principal's in- terests; or he may be guilty of fraud or other tort. Hence it is that the consideration of the legal effect of the relation of agency between principal and third parties logically divides itself into six general topics. First, Contract of agent in behalf of a disclosed prin- cipal. Second, Contract of agent in behalf of an undis- closed principal. Third, Admissions and declarations by the agent. Fourth, Notice to the agent. Fifth, Torts by the agent. Sixth, Liability of third parties to the principal. 26 PRINCIPLES OF PENNSYLVANIA LAW Contract for Disclosed Principal. It is a general rule that the principal is responsible for and bound by all acts of his agent done within the actual (5 Binn, 195) or apparent scope (100 Pa., 159) of his authority. An agent acts within the actual scope of his authority when the principal actually authorized the making of the particular con- tract. Apparent scope of authority is such authority as a reasonably prudent man in like circumstances with X — and with like means of knowledge and information would naturally infer the agent to pos- sess. There are several elements which combine to make up this apparent scope of the agent's authority— (a) the powers actually conferred, (b) the powers necessarily or reasonably incidental to those actually conferred, (c) the powers annexed by custom to those actually conferred, (d) the powers which the principal's conduct has led third persons reasonably to believe that his agent possesses (Hufifcut on Agency, pages 102-106). Powers Actually Conferred. — While the principal, is bound by what he expressly authorizes, yet he is not bound by what he does not authorize, if the third party was fully aware of the terms of the agent's authority (5 W. & S., 548, and 2 S. & R. 197). Thus, a power of attorney given by A to sell lands of A in X county could not be construed to apply to land of A in Y county. ^ It should be added that third parties must, as a general rule, ascertain the agent's real authority (72 Pa., 351). Powers Incidental to Those Conferred. When powers have been expressly conferred 'the agent will have the right to exercise such powers as LEGAL EFFECT OF RELATION OF AGENCY 2^ are also reasonably necessary to the accomplishment of the object of the agency (30 Pa., 291, and 124 Pa., 291). What is reasonably necessary is a mixed question of law and fact to be determined by the cir- cumstances of each case. Thus, an agent, employed to travel and sell goods, has the implied power to hire a horse for that purpose. So also, an agent, author- ized to sell goods, has an implied power to warrant the goods in such manner as is- usual. So also, the manager of a shop has an implied authority to buy the goods that are necessary to keep it irl running order. Powers Annexed by Custom. — Custom and ■usage may aid in determining the scope of the agent's authority (95 Pa., 398), for it is presumed that the principal intended that such customs or usages should govern the agency. Thus, a factor or commission merchant may sell on credit, a cashier may borrow money, and a customer is bound by the customs of the stock market. But the custom must be reasonable, well established, generally known, and not contrary to public policy or positive law. Powers Inferred from Conduct of Princi- pal. — The principal may conduct himself in such a manner as to lead prudent men to believe that his agent possesses certain powers. But this has been considered before under the head of the doctrine of estoppel. (Page 6.) Contract for Undisclosed Principal. It is a general rule that when a single contract is made by a duly authorized agent, without disclosing his principal, such undisclosed principal may both sue 28 PRINCIPLES OF PENNSYLVANIA LAW and be sued on the contract thus entered into (3 Whart., 521 and 66 Pa., 341), so long as the agent deals within the scope of the agency. Thus, A hav- ing declined to sell to B, the latter engaged C to pur- chase. A expressly stated that he would not sell to B, and C assured A that he was buying for himself. A was nevertheless permitted to maintain an action against B for the price. So also B could have sued A for the price. Exceptions. — But there are certain well defined exceptions to this rule. First, An undisclosed princi- pal will not be personally liable, if, in the meantime, he has in good faith paid the agent or has made such change in the state of the accounts between the agent and himself that he would suffer loss by being made personally liable (*96 N. Y., 284). Second, The third party after discovering the true principal may elect to hold either principal or agent responsible. When he regards the agent as the sole contracting party, he can not afterwards proceed against the prin- cipal (79 Pa., 298). But what constitutes an elec- tion will depend upon the particular circumstances of each case to be decided by the jury as a question of •fact. Third, It is a common law doctrine that when a contract is made by an instrument under seal no per- son but a party to the instrument can be sued upon it. Hence, if the principal was not disclosed in the con- tract under seal, he can neither sue nor be sued upon it (5 S. & R., 427, and 7 Watts, 121). Thus, A, under a power of attorney from B to convey real * No cases illustrative of this exception can be found in Pennsyl- vania. See, however, A. & E. Ency. Law, vol. i, page 1142, and the Text Books of Story and Huflcut on Agency. LEGAL EFFECT OF RELATION OF AGENCY 29 estate, makes the deed to C in his own name as grantor. This deed will not bind B even though A in the body of the deed (82 Pa., 267), or in the signa- - ture (83 Pa., 450), or in both (12 Pa., 292) describe himself as the agent of B. Moreover, if the sealed instrument executed in such a manner be of such a character as to expose the maker to any liability, as a bond, such liability must be borne by the agent (12 Pa., 292). Fourth, Persons dealing with negotiable contracts are presumed to take them on the credit of the parties whose names appear upon them. Hence, unless the principal's name appears on the instrument as the obligor or payee, he can not be sued or sue upon it (5 North. Co., 391, see also 61 Pa., 69, 98 Pa., 179, and 4 W. & S., 346). Rule as to Parol Evidence. — The rule as to the admission of parol evidence to vary a written contract in the case of an undisclosed principal is an exception to the general rules, (i) that parol evidence is not admissible to introduce into a sealed or negotiable instrument a party not named or described in the instrument; (2) and that parol evidence is not admissible to discharge the agent from liability on a contract made in his name. It is generally held that parol evidence is admissible to show that a written contract made in the name of the agent was in fact made in behalf of an undisclosed or unnamed princi- pal (5 Whart, 313, I S. & R., 32, and 5 W. & S., 164). Admissions by the Agent. It is a fixed general principle of evidence that the ' admissions or declarations of an agent will not be 30 PRINCIPLES OF PENNSYLVANIA LAW received in evidence, either to establish the fact of the agency or to define the nature or extent of the author- ity. But there is one exception to this general rule. It is when the admission or declaration forms a, part of the res gestae, i. e., forms a part of the transaction in which the agent acted for his principal (2 S. & R., 197). Thus, if an engineer should admit, just as his train crashed into another, or was derailed, that his neglect caused the accident, such admission would be admitted in evidence. The limitations placed upon the admission of such evidence are these. First, The fact of the agency must be established. Second, The admission or declaration must refer to some matter within the scope of the agent's authority. Third, It must constitute a part of the transaction, i. e., the admission or declaration must be made contemporane- ous with the formation of the contract (24 Pa., 217), and spontaneously and without design at the moment of the commission of the tort (55 Pa., 396). The peculiar circumstances of each case must determine whether the admissions or declarations were made before, or after, or contemporaneous with the trans- action. Fourth, The declaration should unfold the character of the main act. (See subject of Evidence.) Notice to the Agent. As a broad general principle of law, notice to an agent is notice to the principal (3 P. & W., 67). There are three limitations to this rule. First, The notice must relate to business in which the agent is engaged by authority of his principal (23 Pa., 445), Thus, notice to an insurance agent, through whom an insurance is effected, of facts materially affecting such LEGAL EFFECT OF RELATION OF AGENCY 3 1 insurance, constitutes notice to the insurance com- pany (53 Pa., 353). So notice to a cashier, as to all matters within the sphere of his business, is notice to the bank (3 W. & S., ^7z)- But notice to a stock- holder in regard to the business of the corporation is not notice to the corporation (4 W. & S., 393, see 15 Pa., 151). Second, The notice must be of important facts, i. e., of facts material to the transaction. The agent is not bound to convey to his principal, nor will the lat- ter be affected by rumors, or unreliable or unimpor- tant information (2 Watts, 75). Third, The notice must be given to the agent dur- ing the continuance of his agency. The rule seems to be settled in Pennsylvania that notice to an agent prior to the agency or after the termination of the agency is ineffective and will not bind the principal (27 Pa., 508). Notice given to a sub-agent will also bind the princi- pal, if the agent had power to appoint such sub-agent; but if the agent had not the power to appoint, then notice to the sub-agent is not notice to the principal (91 U. S., 308, see also 97 Pa., 238). Exceptions to Rule that Notice to the Agent is Notice to the Principal. — There are two circumstances when notice to the agent will not be presumed as notice to the principal. First, When it is not the duty of the agent to communicate the knowl- edge, or when it would be unlawful for him to do so. Thus, an attorney-at-Iaw does not have to inform a principal of facts which he learned from a former client in a prior transaction (8 Watts, 489). Second, When the agent acts for himself in his own interest 32 PRINCIPLES OF PENNSYLVANIA LAW and adversely to that of the principal, or when the agent colludes with a third party, notice to the agent will not be binding on the principal (2 W. & S., 314)- Torts by the Agent. A tort is an actionable- wrong independent of con- tract. (See subject of Torts.) It is the commission or omission of an act by one without right, whereby another receives some injury in person or property, or reputation. The general rule of law is that the prin- cipal is liable for all torts committed by an agent which the principal (i) expressly commands, or (2) subsequently ratifies, or (3) which are committed by the agent in the course of his employment and for the principal's benefit (69 Pa., 210). What the law con- siders the course of employment depends upon the cir- cumstances of each case. Thus, if an agent sells adulterated substances, or commits an assault in the course of his employment, his principal may be held responsible by the injured party. But the principal will not be liable for torts committed by the agent out- side the scope of the authority delegated to him. Corporations are liable to the same extent and in the same manner as individuals (106 Pa., 125), and when there exists authority for the agent to employ sub-agents either the individual or the corporation will be bound to the same extent as the torts of the agent would bind them. (58 Federal Rep., 174.) There are several torts that should receive special mention. The principal is liable, if he authorizes his agent to do an act and the agent uses excessive force, (42 Pa., 365, and 134 Pa., 396, when the principal cautioned the agent against the use of excessive force), LEGAL EFFECT OF RELATION OF AGENCY 33 or is negligent (155 Pa., 62), or acts wantonly or maliciously in the course of such employment (42 Pa., 372, and 9 Phila., 189, but see 91 Pa., 259 where it is held that the company is not liable for the malicious ejectment of a passenger from the car by a conductor. It will be seen that if by malicious is meant personal spite, there is no conflict, for in this case the act is not done on the principal's account or for his purpose). Fraud. — Again, the principal is responsible for the fraudulent acts of his agent done in the course or the apparent scope of the employment (i Grant, 17). Thus, the principal would be liable, if the agent should issue a bill of lading without having received the goods for which it purports to have been issued (108 Pa., 529), or if the agent should embezzle funds received by him for his principal ( 1 56 Pa., 181 ) . But the prin- cipal would not be liable, if the fraudulent act was made possible by the collusion (i W. N. C, 46) or negligence (181 Pa., 40) of him who seeks to hold the principal liable, or if the fraud was compassed in doing an act not within the apparent scope of the agent's authority (63 Pa., 381). MiSREPRESENTAT'iONS. — Morcovcr, the principal is bound by the declarations and representations made by his agent in the course of the business entrusted to him (i Whart., 185) and within the real (115 Pa., 112) or apparent (12 W. N. C, 73), scope of his authority. Hence, the fraudulent representations of an agent act- ing in the course of his employment (89 Pa., 464), and within the scope of his authority (89 Pa., 464), will bind the principal, even though the fraud be per- petrated without the knowledge or consent of the prin- cipal. 34 PRINCIPLES OF PENNSYLVANIA LAW But the principal is not bound by the misrepresen- tations of the agent when the misrepresentations are without the apparent scope of the agent's authority (24 Pa., 320), or where they are made with the con- currence of the party who seeks to hold the principal liable (7 W. N. C, 122). Liability of Third Persons to Principals. The liabilities of third persons to the principal may be considered under the general heads of their liabilities- (a) in contract and (b) in tort, and (c) miscellaneous, liabilities. In Contract. — When an agent, in the appar- ent scope of his authority, enters into a contract, with third parties for a disclosed or undisclosed prin- cipal, such principal may enforce the contract against such third parties in the same manner as though he had made it personally (5 Pa., 41). The third party- can not off-set against the claim of the principal any claim which he might have against the agent, unless he can show (a) that the principal was not disclosed to him, and that (b) he did not know and had no means of knowing that the party with whom he was. contracting was a mere agent in the transaction (97 Pa.,. 309)- But like most general rules there are several "well recognized exceptions to the rule that a principal may sue third parties upon a contract made with the agent as principal. First, When the contract is under seal and the existence of the agency is undisclosed (page 28). Second, When the principal who wishes to sue is not named in the negotiable bill or note on which he ■wishes to bring suit (page 29) . In either of these cases- LEGAL EFFECT OF RELATION OF AGENCY 35 the party named in the instrument or his assignee must sue. In Tort. — It is a general rule that possession by the agent is constructive possession in the principal. Therefore, a. third person who wrongfully injures or takes from the agent the property of the principal which he has entrusted to the keeping of the agent is liable to the principal for the tort committed (9 Pa., 13). But this rule does not apply where the property taken from the agent is currency or negotiable paper, since even a thief can give a good title to money and paper that passes like money ; nor does the rule apply to those cases where the principal has clothed his agent with the evidence of ownership of the property. But the evi- dence of ownership must be more than mere possession. There must be some language or fact, showing a clear intention to transfer title (78 Pa., 15), as where he allows his agent to purchase goods in his agent's name. The principal may also recover from a third party, when such third party wrongfully induces an agent to abandon the object of his agency, or in any way inca- pacitates him from performing his duties as agent (see subject of Torts). Miscellaneous Liabilities. — There are five mis- cellaneous liabilities to which special reference should be made. Wrongful Transfer of Property. — First. — When the property of the principal has been transferred to third parties against the express instruction of such principal, he may recover it or its value back again (12 Pa., 229, and 72 Pa., 427,) provided, of course, that he has not clothed his agent with the evidence of owner- 36 PRINCIPLES OF PENNSYLVANIA LAW ship, or the goods have not been transferred to a pur- chaser in good faith, for value, and without notice of the true ownership (12 Pa., 229; see also 78 Pa., 15). Wrongful Transfer of Money. — Second. — So also when a principal's money has been paid to a, third per- son by an agent wrongfully and against the instruc- tions of the principal, such principal may recover it back again,- provided the third person is not a holder in good faith, for value, and without notice (57 Pa., 202) . As in the case of misapplied property, the money may be followed through any number of' hands, so long as it is separable from other property or assets, and the holder did not come into possession for value and with- out notice (57 Pa., 202). Mistake. — Third. — When money of a principal has been paid by an agent to a third person through mis- take, such third person is liable to the principal for the amount paid to him (Keener on Quasi Contracts, Chap. n.) Misrepresentation. — Fourth. — Where there is a breach of warranty or fraudulent representation on the part of the third party, the principal may recover dam- ages for such breach of warranty or misrepresentation. Nor does it matter whether when the contract was made the agent disclosed the principal. (3 Brewsts, 9; see also 179 Pa., 266.) Fraud. — Fifth. — When an agent conspires with a third person to perpetrate a fraud upon his principal, the principal may recover damages from both the agent and third person (6 Pa., L. J., 281). Thus, because of illegal inducements offered by a third person to an agent, the agent enters into a contract on behalf of his principal with such third person. In this case, the principal may LEGAL EFFECT OF RELATION OF a6eNCY 37 rescind the contract and recover damages from the third person for the attempted fraud. (See 24 Pa., 384, and 10 Pa., c. c. 490.) He may also recover from the agent. C— BETWEEN AGENT AND THIRD PARTIES. The legal effect of the relation of agency as between agent and third parties logically divides itself into two general heads. First, The mutual rights and obliga- tions arising from contracts. Second, The mutual rights and obligations arising from tort. In Contracts. There are five general questions to be con- sidered in treating the contractual obligations and rights of the agent and third parties, (i) where the principal is alone bound by the contract; (2) where the agent is alone bound by the contract; (3) where both principal and agent are bound by the contract ; (4) where neither principal nor agent is bound by the con- tract; (5) liability of the third person to the agent upon the contract. Where the Principal Alone is Bound. — As has been stated before, the principal is alone bound on all contracts when the agent acts within the apparent scope of his authority for a disclosed principal, or when the principal subsequently ratifies an unauthorized con- tract entered into by his agent. (Page 26; see also 126 Pa., 353, 165 Pa., 539 and 175 Pa., 432.) Where Agent Alone IS Bound. — The agent alone is liable to an action for deceit if he wilfully misrepre- sents his authority and the third party is ignorant of the true facts (10 W. N. C, 493, and 43 Pa., 418). 38 PKIN'CIPLES OF PENNSYLVANIA LAW He is alone liable to an action for breach of warranty of authority if he recklessly, negligently, or mistakenly holds himself out as having authority when in fact he has no such authority (loi Pa., 311). Moreover, he is personally responsible if he know- ingly acts for either an incompetent (*4 Q. B. D., 661) or fictitious principal (*I49 U. S., 411)- Thus, if A, an agent, contracts with B in the name of an unincor- porated club, A is liable on the contract. So, also, if the credit was extended to the agent and not the body he represents, the agent is liable (6 W. & S., 67, and 6 Binn, 228). The other members of the club are only liable when it can be shown that they authorized A to make the contract or subsequently ratified his acts (158 Pa., 428, and 97 Pa., 500). Again, the agent alone may be liable when the third party elects to give the agent exclusive credit. But it has been held in a Massachusetts case that the third party can not extend the exclusive credit to the agent unless he actually knows the principal and recog- nizes the buyer as his agent (2 Met., Mass., 319). So also the agent is alone liable when an agent in his own name, makes a contract under seal, and the seal is not superfluous and can not be disregarded (153 Pa., 427) ; or where the agent's name appears as the maker of a negotiable instrument (153 Pa., 427). Where both Principal and Agent are Bound. — Both the principal and agent are bound on a parol or written contract — except a sealed or nego- tiable instrument — entered into by an agent in his own name for an undisclosed principal, and the third party * These cases are cited because they so clearly illustrate the fundamental principles stated. LEGAL EFFECT GF RELATION OF AGENCY 39 may elect which he will hold liable on the contract. (Page 27.) So, also, on a simple contract — not under seal or negotiable — either the principal or agent is liable, if the agent contracts in his own name for a disclosed principal not named or described in the writ- ing, and if exclusive credit has not been extended the agent. (Page 26.) Again, either principal or agent may be held liable when the agent as such enters into a contract for his principal, for which the custom of the trade usually holds the agent responsible — as in the case of a master of a ship. When the agent has an interest in the subject matter of the contract, the third party may -also elect whether he will hold the principal or the agent responsible, as in the case of an auctioneer. Where Neither Principal nor Agent is JBouND. — Neither the principal nor agent is bound, if the agent enters into a contract before his agency has begun or after it has ceased to exist. (Page 31.) It