made so on either side, to subserve the ends of third parties. If the agent continues to act as such, and his so acting is subsequently ratified by the principal, or if the principal's assent is evinced by other circumstances, then third parties may safely pay money for the use of the principal into the agent's hands; but not otherwise. It is not enough that there was an agency prior to the war. In case the payment to the agent would impose new obligations on the principal, his assent to the payment will not be presumed, but must be proved. Insurance Company v. Davis, 5 Otto, 429.

§ 398. Where an attorney in Virginia, with a claim intrusted to him before the war by a citizen of Kentucky, collected it during the war, in Confederate money, and invested it in Confederate bonds by order of a Virginia state court, it was held he was liable for the value of the Confederate money at the date he received it. Botts v. Crenshaw, Chase's Dec., 225. § 399. Where a loyal citizen living in the south came north during the rebellion and became a refugee within the Union lines, a previously constituted agency was not revoked, and property purchased by such agent for the principal belongs to the latter. Quigley v. United States,* 13 Ct. Cl., 368.

$ 400. Before the war a partnership was established in Mississippi for the raising of cotton, and one D. was the agent of both partners, and resided on the spot. During the war one partner lived in the north and one in the south, and the latter managed the business. In 1862 the southern partner divided the property, turning over part to the agent, and removing the rest to Texas. The agent acquiesced in the arrangement. After the war, the partner in the north ratified the arrangement, and it was held that the agency continued valid, and that he had a valid title to the share left him by the other partner, all parties having acted in good faith and not in fraud of the government. Douglass v. United States,* 14 Ct. Cl., 10.

$ 401. The overseer of a plantation in Alabama had authority from the owner to sell all the products except cotton. During the war the legal owner resided at the north, and the overseer sold some of the cotton to the Confederate government, but it was not delivered. At the close of the war, the owner, on learning of the sale, repudiated it. The cotton having been seized by the Federal government, the owner was entitled to recover its value. Taylor v. United States,* 5 Ct. Cl., 705.

§ 402. A power of attorney is suspended during the continuance of a rebellion, which puts the principal and agent in the relation of public enemies. Stoddart v. United States,* 4 Ct. Cl., 517.

§ 403. Before the war A., a citizen of Kentucky, deposited in a bank in North Carolina, bonds of B. for collection. Payments were made before the war, and the proceeds transmitted to A. After the breaking out of the war, B. paid, and the bank accepted, the amount of the bonds and interest in Confederate notes. At the close of the war A. repudiated the transaction. In a suit in equity against the bank and B., it was held that the agency was not terminated by the breaking out of hostilities. The bank might have refused to act, or it might have retained the bonds for delivery to A., but if it acted at all, it was bound to act with care and diligence, and the acceptance of Confederate notes in payment of a debt due a citizen of a loyal state, was not the exercise of such diligence. Anderson v. The Bank, Chase's Dec., 538.

X. SUB-AGENTS.

SUMMARY-Liability of principal, § 404.

§ 404. Where a draft is sent to an agent for collection, and is transmitted by him to his sub-agent, the owner of the draft may maintain an action against the sub-agent for money had and received. And it seems that the sub-agent cannot retain the money collected by him, on account of a debt due him from his principal, although he had no notice as to the ownership of the draft when he received it for collection. Wilson v. Smith, §§ 405, 406. See § 329. [NOTES.-See SS 407-410.]

WILSON v. SMITH.

(3 Howard, 763-771. 1844.)

CERTIFICATE OF DIVISION from U. S. Circuit Court, District of Georgia.

STATEMENT OF FACTS.- Certificate of division of opinion from the circuit court of the United States for the district of Georgia. A bill was sent to St. John for collection, and by him transferred to his sub-agent, the defendant. The bill was collected and credited to the account of St. John, who was at the

time indebted to the defendant, the debt being secured. St. John died insolvent. The defendant was not informed as to the ownership of the bill. The question was, "Whether there was such privity of contract between the plaintiffs and defendant, either express or implied, as would enable the plaintiffs to maintain the action for money had and received."

§ 405. A sub-agent is liable to the owner of a bill for money collected on the

same.

Opinion by TANEY, C. J.

We think the question certified has been settled by the decision of this court, and that it is unnecessary to go into an examination of the English laws which were cited in the argument. It is admitted that the bill was the property of the plaintiff, and was transmitted to St. John, at Augusta, for collection, and by him transmitted to the defendant, at Savannah, where the drawer resided, and that no consideration was paid for the bill, either by the defendant or St. John. According to the usual course of dealing among merchants, the transmission of the paper to St. John gave him an implied authority to send it for collection to a sub-agent at Savannah, for it could not have been expected by the plaintiff that St. John was to go there in person, either to procure the acceptance of the bill, or to receive the money, nor could St. John have so understood it. So far, therefore, as the question of privity is concerned, the case before us is precisely the same with that of the Bank of the Metropolis v. The New England Bank, 1 How., 234. In that case the bills upon which the money had been received by the plaintiff in error were the property of the New England Bank, and had been placed by it in the hands of the Commonwealth Bank for collection, and were transmitted by the last-mentioned bank to the Bank of the Metropolis, in Washington, where the bills were payable. And upon referring to the case it will be seen that the court entertained no doubt of the right of the New England Bank to maintain the action for money had and received against the Bank of the Metropolis; and the difficulty in the way of its recovery in the action was not a want of privity, but arose from the right of the Bank of the Metropolis to retain, under the circumstances stated in the case, for its general balance against the Commonwealth Bank. In that case as in the present, the agent transmitting the paper appeared, by the indorsements upon it, to be the real owner, and the party to whom it was transmitted had no notice to the contrary, and the money received was credited to the Commonwealth Bank. We think the rule very clearly established, that whenever, by express agreement between the parties, a sub-agent is to be employed by the agent to receive money for the principal, or where an authority to do so may fairly be implied from the usual course of trade or the nature of the transaction, the principal may treat the sub-agent as his agent, and when he has received the money may recover it in an action for money had and received. and he cannot retain the money on account of a debt due him from

§ 406. his principal. Another question has been raised in the argument, that is, whether the defendant has a right to retain on account of the money due to him from St. John? As this point has not been certified, it is not regularly before the court; yet as it has been fully argued on both sides, and evidently arises in the case, it seems proper to express our opinion upon it, as it may save the parties from further litigation and expense. Upon this part of the case, as well as upon the question certified, we think the case of the Bank of the Metropolis v. The New England Bank, 1 How., 234, decisive against the defendant. It appears from

the statement that he made no advances and gave no new credit to St. John on account of this bill. He merely passed it to his credit in account. Now if St. John had owed him nothing, upon the principles we have already stated, the plaintiff would be entitled to recover the money; and we see no reason why he should be barred of his action because St. John was debtor to the defendant, since the case shows that he incurred no new responsibility upon the faith of this bill, and his transactions with St. John remained in all respects the same as they would have been if this bill had never been transmitted to him. In the case of the Bank of the Metropolis and the New England Bank, it appeared in evidence that there had for a long time been mutual dealings between these two banks in the collection of money for each other, and that balances were suffered to remain, and credit given upon the faith of the paper transmitted or expected to be received, according to the usual course of their business with one another. And the court held, that if credit had been so given, the party giving it had the same right to retain as if he had made an advance of money; the hazard he ran by the extension of the credit giving him as just and equitable a right to retain as if he had incurred responsibility by an advance of money. The right to retain, in that case, depended upon the fact that credit was given. But in the case at bar this fact is expressly negatived, and there is no ground, therefore, upon which he can retain, according to the principles decided in the case referred to.

As this point, however, is not in strictness regularly before this court, we shall confine our answer to the question sent here for decision, and shall direct it to be certified to the circuit court, that there was such a privity of contract between the plaintiffs and defendant as would enable the former to maintain the action for money had and received.

§ 407. Liability of principal.- Though the principal is liable for the acts of a sub-agent, he is not liable for the acts of an agent of an intermediate independent employee. So where a creditor employed a collection agency to collect a claim, and the agency employed an attorney, who, knowing the insolvency of the debtor, persuaded him to confess judgment, and transmitted the proceeds to the agency, which never turned them over to the creditor, and the debtor within four months was proceeded against in bankruptcy, in an action by the assignee against the creditor for the amount collected on the judgment, it was held that the knowledge of the attorney of the debtor's insolvency was not imputable to the creditor so as to render him liable, especially as he had never received the proceeds of the judgment. Hoover v. Wise, 1 Otto, 311.

§ 408. Need not be known to principal.—It is not necessary that a sub-agent should be known to, or in any way recognized by, the principal in order to bind the latter. Authority is sometimes implied from the very nature of the duties and powers committed to a general agent to employ sub-agents, and where this is the case, the principal is bound by the acts of the sub-agent, although the latter may never be known nor recognized by him. Gum v. Equitable Trust Co., 1 McC., 61.

$409. Liability to principal.— A sub-agent is not liable to the principal ex contractu for moneys received by him for the agent. There is no privity of contract between the sub-agent and the principal. So where the assistant of a postmaster deposited money in the name of the postmaster and himself, it was held the assistant was not responsible to the United States, and that the same rule applies to assistants of public offices as to other sub-agents, though exceptions might arise. Trafton v. United States, 3 Story, 653.

§ 410. A bank to which commercial paper is sent for collection by the owner is liable to respond to him for any default of the sub-agent to whom the paper is intrusted for collection. Kent v. The Dawson Bank, 13 Blatch., 239, following English, New York and Ohio adjudications. Contra, Connecticut, Massachusetts, Pennsylvania and Illinois. See § 297.

253

SUMMARY

·Insurance agent, percentage on premiums, § 411.- Lien on fund, § 412:

§ 411. Where an insurance agent was to receive a certain percentage on the premiums received by the company on renewals of insurance procured by the agent, the agent was not entitled to such percentage without proof that the premiums had been actually paid to the company. Manning v. Ins. Co., §§ 413-416. See §§ 325, 426.

§ 412. An agreement to pay an agent a certain per cent. of a fund for collecting the same creates a lien on the fund in his favor. Thus, where it was agreed to pay an agent a part of a claim against the United States, and afterwards the claim was assigned to him to enable him to collect it, it was held that he had a lien on the fund to the extent of his interest, which he might enforce in equity against one who collected the fund as assignee of the principal. Dowell v. Cardwell, $$ 417-423. See § 669.

[NOTES. See §§ 424-432.]

MANNING v. INSURANCE COMPANY.

(10 Otto, 693-699. 1879.)

ERROR to U. S. Circuit Court, Southern District of New York.
Opinion by MR. JUSTICE STRONG.

STATEMENT OF FACTS.- The John Hancock Mutual Life Insurance Company, on the 2d day of December, 1868, employed Manning and one Hall as its general agents for New York and other states, to secure applications for life insurance, and to collect and pay over premiums on insurances effected. It was stipulated that the agreement should continue in force three years from September 1, 1867, and that it might thereafter be terminated by either party on giving six months' notice. By the contract, the compensation allowed to Hall and Manning was twenty per cent. on the ordinary premiums upon all policies (excepting those paid for by single payment) for the first year, and seven and one-half per cent. for the second and subsequent years of assurance. An additional allowance was also made for traveling and incidental expenses. It was further stipulated that these allowances should continue to be paid for twentyfive years from the date of each policy, should any continue so long in force; and further, that the agents should remit monthly all moneys collected by them, and return all uncollected policies and receipts sent to them for collection by the company. The contract declared that commissions should accrue only as the premiums were paid to the company. On the 13th of May, 1870, Hall assigned his interest in the contract to Manning, with the approval of the company. On the 17th day of September, 1870, a new arrangement in lieu of the former was made between the parties, by which it was agreed that Manning should thenceforward receive for his compensation $5,000 per annum, the commission to sub-agents to be twenty-five and seven and one-half per cent.; that Manning should collect the renewals of the old business of Hall, and Hall and Manning, and receive the renewal commissions which said renewals were entitled to under the former contract. This contract was terminable at the option of the company at any time within three years. About the 1st of June, 1871, the company discharged Manning from its service, for reasons which the verdict in the case establishes to have been lawful and sufficient, and brought this suit to recover its money in his hands.

Among other defenses set up against the claim of the plaintiff, the defendant offered to show that a set-off existed in his favor for commissions collected and received by the plaintiff from May 1, 1871, to December 23, 1871, and in

terest thereon to the time of the trial. To sustain this (after having made proof of notice to the plaintiff to produce the books and papers necessary to show the amount of renewal premiums received by it from policies obtained through his agency during the period mentioned, and the books and papers. not being produced), he gave evidence to prove that on the 2d of June, 1871, there were policies in force upon which the annual premiums would be $87,000, as it appeared in his accounts with his sub-agencies; that his annual commissions upon the premiums would amount to $5,391.14; and that, computing the amount which would be due him, accruing between June 2, 1871, when he was discharged, and December 23, 1871, when the suit was commenced, they amounted to about $4,754.97. But no direct proof whatever was given that any of the policies in force on the 1st of May, 1871, or on the 2d of June, 1871, had been renewed or extended, or that any of the annual premiums becoming payable after those dates had been paid to or received by the plaintiff. Upon this evidence the circuit court instructed the jury, in effect, that if the defendant had been removed from his agency without justifiable cause, they might find from it what amount the plaintiff should have received of renewal premiums; but if they found he was justifiably removed, there was no proof for their consideration of the amount of the renewal premiums received or collected in the hands of the company upon which he was entitled to commissions. In another part of the charge the same instruction was given, though in different order. It was, that if by his own conduct the defendant rendered his removal necessary, before he could recover from the plaintiff his portion of the renewals, it would be incumbent upon him to show, not only how many policies had been taken by his agency, and the premiums due upon them, but also that the premiums had been paid to the plaintiff. On the other hand, if by its wrongful act of removing him the plaintiff deprived him of the means of collecting the premiums, then when he had shown that renewal premiums to a certain amount were due and payable upon life policies at the time when he was removed, which because of its own act the plaintiff was bound to collect, if collectible, he was entitled to the presumption that they were collected as they became due, and, therefore, the burden would rest upon the company to show that policies had lapsed, or that without its fault it had been unable to collect the renewal premiums. To so much of these instructions as ruled, in effect, that if the defendant was rightfully dismissed from the employment of the plaintiff, there was no evidence for the consideration of the jury as to the amount of the renewals, and, of course, of the amount of commissions thereon, exception was taken, and it is now assigned for error.

§ 413. Where a contract with an agent was that commissions should become due only as renewal payments were made to the company, it was incumbent on the agent to show that the payments were made.

We think, however, the defendant has no reason to complain. The charge was, at least, quite as favorable to him as he had any right to ask. By his contract with the plaintiff it was expressly stipulated that the "commissions should accrue only as the premiums are paid to the company." It was incumbent upon him, therefore, to prove, not merely that they were due, which might possibly have been paid, but that they had been actually paid, and paid not merely to his sub-agents, but paid to the plaintiff. If they had been thus paid, the plaintiff held the money, to the extent of the commissions, for his use. If they had not been paid to the plaintiff, it had nothing in hand which belonged to him. His set-off was in the nature of an action for money had