proceedings were pending against one Gardner. A
note was given to Paton by Gardner, guaranteed in
writing by Stewart, upon the consideration that the
bankruptcy proceedings be dismissed. The pro-
ceedings were not dismissed, but Paton brought suit
against Stewart on his guaranty of the note.
(2) Milwaukee Harvester Co. v. Windels, 39 111.
App. 521. Windels was plaintiff's agent for the sale
of its machinery, and part of his contract of agency
CASES ON GUARANTY AND SURETYSHIP 229
was that he should guarantee notes given by pur-
chasers of machinery. Long after making his con-
tract of agency, he guaranteed a note and was sued
on his guaranty when the note was not paid by the
maker. He defended on the ground that there was
no consideration for his guaranty, being one made
after his contract of agency.
(3) Tatum v. Tatum, 36 N. C. 113. Herbert
Tatum was guardian to certain wards and Henry
Tatum was surety on his bond. Herbert conveyed
certain slaves, without consideration, to Dudley
Tatum while he was heavily indebted to his wards.
The wards obtained judgment against Herbert on
his bond, and Henry, as surety, was compelled to pay
it. He then brought suit against Dudley. Has he
any right of action ?
(4) Morgan v. Smith, 70 N. Y. 537. Defendant
and his brother Andrew were cosureties on a lease.
The lessees became indebted to plaintiff in the sum
of $3000. Andrew was released from his obligation
as surety, and the plaintiff brought suit against
defendant alone for the full amount of the indebted-
ness. Can the plaintiff recover any judgment and,
if so, how much ?
(5) Seaver v. Young, 16 Vt. 658. Alanson Seaver
gave a bond to James Seaver, the plaintiff, to support
his mother during her life and to save James harm-
less from any expense for her support. Young was
surety on the bond. Alanson did not support his
mother and James incurred expense in so doing. To
230 CASES ON GUARANTY AND SURETYSHIP
recover the money so spent he sued Young, as surety
on Alanson's bond, who defended on the ground that
James had not been compelled by law to expend the
money and that therefore the surety on the bond
was not liable.
(6) Wood v. Bar stow, 27 Mass. 368. Defendant
was surety on the bond of an executor. A legatee
under the will made demand on the executor for the
payment of her legacy, but he said he was unable to
pay it. Suit was then begun against defendant, as
surety, who defended on the ground that no demand
had been made on him.
(7) Darwin v. Rippey, 63 N. C. 318. One Shu-
ford made a bond, with Rippie as surety, to pay
Darwin $125. The bond produced in court read
" one hundred and twenty-five dollars in specie," and
it was shown that the words " in specie " had been
added after the execution of the bond and without
Rippie's knowledge or consent. Has Rippie any de-
fense to the action against him as surety ?
(8) Baker v. Briggs, 25 Mass. 121. Ryan made
a note to Baker on which Briggs was surety. After
the making of the note, Baker told Briggs that Ryan
had paid the note and that he, Briggs, was free from
it. There was no consideration for this statement,
and it was not true that the note was paid, but Briggs
relied on it and failed to avail himself of security
against Ryan as he otherwise might have done.
When the note was not paid, Baker sued Briggs.
Has Briggs any defense ?
CASES ON GUARANTY AND SURETYSHIP 231
(9) Port v. Robbins, 35 la. 208. One Benson
made a note to Ashton and gave a mortgage on a
stock of goods as security for the note. Robbins
was surety on the note. Ashton discharged the
mortgage to Benson without Robbins's knowledge or
consent, and thereafter indorsed the note to Port,
who brought suit thereon against Benson as prin-
cipal debtor and Robbins as surety. Has Robbins
any defense to the action ?
(10) Rapelye v. Bailey, 3 Conn. 438. Roger Bai-
ley, the defendant, wrote to plaintiff as follows :
My brother, Roswell, is wishing to go into business in New
York, by retailing goods in a small way. Should you be dis-
posed to furnish him with such goods as he may call for, from
300 to 500 dollars' worth, I will hold myself accountable for the
payment, should he not pay, as you and he shall agree.
Roswell became indebted to plaintiff, but Roger
heard nothing about the transactions until this suit
was begun on his guaranty. Has Roger any defense ?
(n) Bank v. Klingensmith, j Watts (Pa.), 523.
One Story made a note, on which the defendant was
surety, payable to the plaintiff bank. The note was
not paid and the bank took judgment against both
Story and the defendant. Story being about to
leave the state with his property, Klingensmith
went to the cashier of the bank and asked him to
issue execution on the judgment at once. The
cashier refused, saying that Story was good for the
note and that the bank would release Klingensmith
from his liability. Story did not pay the note, and
232 CASES ON GUARANTY AND SURETYSHIP
the bank sued Klingensmith, as surety. He de-
fended on the ground that he had been released, and
the bank replied that there was no consideration for
its promise.
(12) Sibley v. Stull, 15 N. J .L. 332. Hood made
his bond to Stull in the sum of $1100 for a good con-
sideration. Stull assigned the bond to Sibley and
for consideration guaranteed the payment of all
sums to become due on the bond, when they be-
came due, and for the payment thereof by the maker
of the bond. Hood did not pay, and Sibley sued
Stull on his guaranty without giving him any notice
of non-payment, or demanding payment from Hood.
Can Sibley recover judgment ?
LESSON LXII
CONTRACTS OF AGENCY
123. DEFINITION.
124. How FORMED.
125. KINDS OF AGENTS.
126. OBLIGATIONS OF PARTIES.
123. Definition. Agency is a relation between
two persons in which one, called the agent, acts for
the other, called the principal.
Any person competent to make contracts may be a
principal, and any person competent to transact the
business which the principal engaged him to transact
may be an agent. The principal is the sole judge as
to the agent's ability to do his work.
124. How Formed. An agency is generally
created by contract. This contract may be made
orally, except when the relation is to continue for a
period longer than one year from the date of making
the contract, when, according to the Statute of
Frauds, it must be in writing, and where the duties
to be performed by the agent include the execution
of sealed instruments that are required to be recorded.
Where the period of service is to continue for some
233
234 CONTRACTS OF AGENCY
time, it is much better to enter into a written con-
tract in which the terms may be clearly stated.
Where the agent is to execute documents which by
law are required to be recorded, the authority under
which the agent acts must be evidenced by a written
instrument called a power of attorney, sealed, signed,
and acknowledged with the same formality required
for the document which is to be executed by the
agent, in order that the power of attorney may be
recorded with it.
An agency may be created by ratification^^ Where
an agent has exceeded his authority, or where one
person acts for another without any authority, the
principal, or the one for whom such person assumes
to act, may ratify such action either by express words
or by accepting the benefits thereof. When an un-
authorized act is ratified by the principal, the effect
is to give it the same validity as if the authorization
had preceded the act, except where the rights of
other innocent parties intervene. The ratification,
to be valid, must be made with full knowledge of all
the essential facts connected with the transaction,
and must be of the entire transaction. If induced
by fraud, mistake, or concealment, it is not valid.
An agency may be created by estoppel. By estop-
pel is meant the legal inability to deny an apparent
fact because of conduct or failure to act tending to
confirm the fact. An agency by estoppel is created
when a party allows another to represent himself as
his agent without attempting to show that no such
CONTRACTS OF AGENCY 235
agency exists. For example, if A represents to C
that he is B's agent, and B knowing of the repre-
sentation allows C to rely on it, an agency by estop-
pel is created, and when C has acted in reliance upon
the supposed agency B is estopped from denying
that the agency existed.
An agency may be created by necessity. This
occurs when the relation between two persons is
such that one of them is given by law authority to
bind the other in certain contracts. For example, a
wife is the agent, by necessity, of her husband in all
matters pertaining to supplies for the house, or suit-
able articles for herself or other members of the
family. The captain of a vessel is the agent, by
necessity, of the owner for the purchase of necessary
materials or the making of necessary repairs to enable
him to complete a voyage, when it would be difficult
to communicate with the owner.
125. Kinds of Agents. An agent who has full
authority to bind his principal in all matters pertain-
ing to the principal's business is called a general agent,
while an agent who has authority to do only special
acts is called a special agent. It is very important
that third parties who deal with agents know whether
they are special or general agents. A general agent
will bind his principal so long as he acts within the
scope of his apparent, authority, even, though he
may act in direct opposition to the definite instruc-
tions of his principal, providing such instructions are
not known to the third party. The special agent
236 CONTRACTS OF AGENCY
will bind his principal only when he keeps within the
scope of his ^^authority. In dealing with a special
agent, one should insist upon knowing just what
authority has been given him by his principal. In
very important matters the agent should show a
power of attorney from his principal, showing with
what authority he had been clothed.
126. Obligations of Parties. The principal is
obligated to pay the agent for his service unless it is
apparent that the agent performed the service
gratuitously. The agent may recover for his serv-
ices the contract price, when one has been agreed
upon, and a reasonable amount, when no definite
sum has been named.
The principal must make good to the agent any loss
which may result as a consequence of any act per-
formed within the agent's authority, if that act was
lawful, and even if unlawful, if the agent did not
know that it was unlawful. For example, an auc-
tioneer who sells stolen goods, without knowing that
they were stolen, may hold his principal liable for
any resulting loss that he may sustain.
Immoral acts, or acts against the public welfare,
cannot be authorized, and one who performs such
acts for another is alone responsible.
The principal is also obligated to pay the necessary
expenses incurred by the agent for the principal's
benefit.
Liability of Principal. - - The principal as well as
the agent will be liable for fraud, negligence, or any
CONTRACTS OF AGENCY 237
other tort committed by his agent while acting within
the scope of his authority. The principal will also
be liable for malicious acts of the agent who, at the
time of committing such acts, is performing the duties
intrusted to him by the principal. If the malicious
acts of the agent are committed by the agent while
temporarily acting outside of the scope of his author-
ity, the principal will not be liable. The motorman,
who, while running his car, maliciously injures a
driver of a coal wagon, renders his principal liable for
the damage, but the motorman who stops his car
and leaves it to inflict an injury upon a driver of a
coal wagon is alone responsible for his act. In all
cases of malicious wrong the agent is liable, and in
cases where the principal is liable, as stated above,
the injured party may proceed against either.
It is the duty of the agent to obey all instructions
of the principal in so far as they do not require him
to perform any wrongful act. The agent must ex-
ercise judgment and skill wherever these attributes
are required, and in undertaking to perform service
for a principal, the agent impliedly warrants that
he has the necessary judgment and skill. The agent
must also act in good faith and the secrets of his
principal's business must be kept to himself. He
can make no personal profit at the expense of his
principal. In all transactions within the scope of
the business for which the agency was created the
principal's interests must be placed above those of the
agent.
238 CONTRACTS OF AGENCY
LESSON LXIII
CONTRACTS OF AGENCY CONTINUED
127. SUBAGENTS.
128. TERMINATION OF AGENCY.
127. Subagents. An agent is expected to per-
form personally the work intrusted to him by the
principal, if the work is of such a nature that the
principal can reasonably be supposed to have engaged
him because of his special skill or ability. When
the service to be performed is merely ministerial or
routine duty, the agent may employ a subagent to
act for him. In such cases the subagent is liable to
the agent for his conduct, and the agent to his prin-
cipal. In some cases it is apparent from the nature
of the work to be performed that the principal in-
tended the agent to employ others to assist him. In
such cases the agent is not liable to the principal for
the acts of his associates, as they are agents of the
principal employed under the implied authority con-
ferred upon the first agent by the principal. It is
sometimes expressly agreed between the principal
and agent that assistants shall be employed. In
such cases the assistants become the agents of
the principal.
128. Termination. An agency may be termi-
nated :
(a) By limitation when the time for which the
CONTRACTS OF AGENCY 239
agency was formed has expired, or the work for
which the agent was employed has been completed.
(b) By mutual agreement when the agent and prin-
cipal enter into a contract with each other to ter-
minate the relation before the time agreed upon has
expired.
(c) By revocation of the agent's authority by the
principal or by the agent's renouncing the agency.
Either the principal or agent has the power to ter-
minate the agency at any time, as the law will not
compel two men to associate in this relation. If,
however, either terminates the relation contrary to
the contract between them, without the consent of
the other, the one so terminating will be liable for
damages resulting from the breach of contract.
When the principal revokes the authority of the
agent, he must notify third parties who are likely to
deal with the agent, and should give notice to the
public of such revocation. Otherwise he will be
bound by any acts of the agent which would have
been within the scope of his authority had the
agency continued.
(d) By death, insanity, or bankruptcy of either the
principal or agent. The acts of the agent are the
acts of the principal, and at the death of the principal
he ceases to have capacity to contract. When the
principal has been declared insane and has no further
power to contract, his agent cannot bind him by any
act. In the case of bankruptcy of either principal
or agent, it becomes necessary to turn the property
240 CASES ON AGENCY
of the bankrupt over to his trustee, and therefore
no contracts with reference to this property can be
made by the principal or agent.
(e) By declaration of war between the countries of
the principal and agent where they are citizens of
different countries. This becomes necessary because
of the law that contracts may not be made between
citizens of two countries that are at war with each
other.
There is one kind of agency in which the principal
cannot revoke the agent's authority. This is an
agency coupled with an interest. In such an agency
the agent has an interest in the subject matter of the
agency. For example, A owes B fifty dollars. A
gives his horse to B with instructions to sell him for
one hundred dollars and to keep his commission and
the fifty dollars which A owes B, returning the
balance. Such an agency is not revoked by the
death, insanity, or bankruptcy of the principal, nor
can it be revoked by the principal without the
agent's consent.
LESSON LXIV
129. CASES ON AGENCY.
(i) Rahn v. The Singer Manufacturing Co., 132
U. S. 518. Corbett was employed by the Singer
Manufacturing Co. to sell sewing machines on
" Canvasser's Salary and Commission Contract."
CASES ON AGENCY 241
It was agreed between Corbett and the company that
he should devote his entire time to the sale of sewing
machines ; the company was to furnish him with a
wagon ; the horse and harness were to be furnished by
Corbett and were to be used exclusively in canvassing
for the sale of Singer machines. While driving care-
lessly, Corbett ran into Rahn, inflicting serious in-
jury. This action was brought by Rahn against the
Singer Manufacturing Co. to recover damages.
(2) Rice v. Wood y 113 Mass. 133. Rice was em-
ployed by a third party, on commission, to dispose
of certain real estate and later, without the knowledge
of that third^ person, he entered into a contract with
Wood under which he was to exchange certain stocks
for real estate and was promised a commission for his
services. Wood knew that Rice was employed by
the owner of the real estate to sell it, and with knowl-
edge of this fact, he was introduced by Rice to the
owner of the real estate and the exchange was effected.
This action was brought by Rice to secure the com-
mission which Wood had promised to give him.
(3) McArthurv. Times Printing Co., 48 Minn. 319.
In September, 1889, C. A. Nimrocks and others were
engaged in organizing the Times Printing Co. to
publish a newspaper. During that month, Nim-
rocks made a contract with McArthur in behalf of the
contemplated company in which it was agreed that
McArthur should act as advertising solicitor for a
period of one year from October 1st. The corpora-
tion was not fully organized until October i6th, but
242 CASES ON AGENCY
the publication of the paper was begun October 1st,
at which date McArthur entered upon the duties of
advertising solicitor in accordance with his agree-
ment. He continued in this position until the follow-
ing April, when he was discharged. All of the officers,
stockholders, and directors of the company knew of
the contract between Nimrocks and McArthur at
the time the company was organized. No objection
was ever made to it. This action was brought by
McArthur to recover damages for breach of contract.
(4) Exchange National Bank v. Third National
Bank, 112 U. S. 276. The Exchange National Bank
of Pittsburgh had in its possession certain drafts
drawn on Walter M. Conger, Se.c., -Newark Tea Tray
Co., Newark, N. J. These drafts were sent to the
Third National Bank of New York for collection.
The Third National Bank of New York sent them to
a bank in Newark. It was understood by all of the
banks that the drafts were drawn on the Tea Tray
Company and not on Walter M. Conger personally.
The Newark bank took Conger's individual accept-
ance but gave no notice of this fact until the drawers
and indorsers of the drafts had become insolvent.
This action was brought to hold the Third National
Bank of New York responsible for the negligence of
the Newark bank to which the drafts were sent for
collection.
(5) Blackstone v. Buttermore, 53 Penn. St. 266.
Buttermore was the owner of certain land, and he
gave Davidson a power of attorney. He further
CASES ON AGENCY 243
stated in the same instrument that " this authority
is irrevocable before the first day of May next." On
the iQth of April, Davidson entered into an agreement
for the sale of the land to Blackstone. Buttermore
refused to carry out the sale, as he had previously re-
voked the power of attorney given to Davidson, and
Blackstone had received notice of this revocation.
This action was brought to enforce the contract.
(6) Claflin v. Lenheim, 66 N. Y. 301. Lenheim
was the owner of a store in Meadville, Pa. For
several years prior to July, 1867, Claflin had sold
goods to Lenheim through his brother, H. S. Len-
heim, who had charge of the store at Meadville. In
August, 1867, a bill of goods amounting to $8000
was purchased for the Meadville store and there was
some dispute between Claflin and Lenheim regarding
it. The difference between the parties was settled
in a court of law. About this time, the store at
Meadville was destroyed by fire. Lenheim con-
ducted a second store at Great Bend, Pa. After
the trouble referred to between Claflin and Len-
heim in 1867, no further purchases were made for
either the Great Bend store or the Meadville store
until October, 1869, when Lenheim ordered goods of
Claflin for the Great Bend store. A month or two
later, H. S. Lenheim purchased goods in the name of
his brother for the Meadville store. Lenheim, the
defendant, claimed that his brother was not author-
ized to make the purchase and refused to pay for the
goods on the ground that his brother had no author-
244 CASES ON AGENCY
ity to purchase the goods in his name. Evidence
was given tending to prove that no formal notice had
been given by defendant Lenheim to Claflin that his
brother was no longer his representative.
t (7) Me Kindly v. Dunham, 55 Wis. 515. In
August, 1879, W. L. Kilbourn called upon Dunham
and exhibited business cards of McKindly's company
in Chicago. He obtained an order from Dunham for
1000 cigars of a certain brand made by McKindly.
The order was sent to McKindly who shipped the
goods to Dunham with the bill of $30 payable in
60 days. About 30 days afterward, Kilbourn called
upon Dunham and asked him for payment of the bill.
Dunham paid the bill and took a receipt from Kil-
bourn. This money never reached McKindly. This
action was brought to recover the amount from Dun-
ham. The evidence showed that Kilbourn was to
solicit orders from country merchants, and if such
orders as he might secure were accepted and filled by
McKindly, he, Kilbourn, should receive a commission
on them.
(8) Liebscher v. Kraus, 74 Wis. 387. This action
was brought against Kraus as a joint maker of the
following note :
$637.40. MILWAUKEE, January i, 1887.
Ninety days after date, we promise to pay to Leo Liebscher,
or order, the sum of six hundred and thirty-seven dollars and
forty cents, value received.
San Pedro Mining and Milling Company,
F. KRAUS, President. .
CASES ON AGENCY 245
(9) Davis v. Hamlin, 108 111. 39. Davis was the
confidential agent of Hamlin, who was the lessee of
a theater. Just before the expiration of Hamlin's
lease, Davis secretly leased the premises from the
owner for a new term, taking the lease in his own
name. Hamlin brought an action against Davis to
compel him to turn over the lease to him on the
ground that it was procured while he was acting as
his confidential secretary and presumably for his
benefit.
^ (10) Whitney v. Merchants 1 Union Express Co.,
104 Mass. 1 52. A certain draft drawn upon Plumber
& Co. was given by Whitney to the express company
with definite instructions to present it to Plumber &
Co., and if they refused to honor it, to return it
immediately. The express company presented it to
Plumber & Co., but some question was raised re-
garding the amount and they withheld it until they
could write to Whitney and ascertain the correct
amount. After some correspondence regarding the
matter, the amount was determined to the satisfac-
tion of Plumber & Co. and they were ready to pay it
on the morning of the i6th, but the express company
did not present it, and on the I9th Plumber & Co.
became bankrupt. This action was brought to re-
cover the amount from the express company.
246 CASES ON AGENCY
LESSON LXV
*(i) Eberts v. Selover, 44 Mich. 519. A subscrip-
tion agent canvassing for a history to cost $10 had
a book for signatures, and on this book it was printed
that no terms except those printed thereon should be
binding. A justice of the peace consented to sign,
on condition that his office fees from that time to the
time of delivery of the book should be taken in pay-
ment. This was agreed to, and he was given a
written memorandum by the agent to that effect.
What are the rights of the publisher and the pur-
chaser ?
(2) McCready v. Thorn, 51 N. Y. 454. An action
was brought against the owners to recover for serv-
ices and advances rendered to the master of a ship.
The master was running the vessel under an arrange-