CHAPTER II.

AGENCY.

§1. Agent and servant: Definitions. In its broader sense the word agent denotes a person who represents his principal and acts under his direction, whether in performing merely operative acts or in bringing the principal into relation with third parties. More narrowly, when the employment does not necessarily involve a third party in relations with the principal-for instance when it is such an operative act as plowing the principal's field -the relation is spoken of as that of master and servant, and the relation of principal and agent is confined to the bringing of the principal into contractual relations with third parties. Of course the same person may be for certain acts a servant and for others an agent, as for example when P's plowman purchases oats for the farm horses on P's credit.

Section 1. Competency of the Parties.

§2. Capacity to act as principal. Generally capacity to act as a principal depends on capacity to do directly the act which the appointment contemplates having done through an agent. One can not do through an agent what one is legally incapable of doing in person, but anyone who can make a valid contract can authorize an agent to make it. Conversely, the limits on one's capacity to make binding contracts are the limits of one's capacity to appoint agents.

As the act of appointing an agent is ordinarily the making of a contract, substantially the same rules regarding the capacity of infants, married women, insane persons, and other persons under disability, to contract, are applied to questions regarding their capacity to appoint agents.

83. Same: Corporations. A corporation after it has been organized can authorize an agent to do any act it has been given charter power itself to do. Prior to its incorporation there can be no agency for it, and acts done by persons professing to act in the name of a corporation to be formed are not binding on the corporation unless it adopts them as its own subsequent to the incorporation.1

§ 4. Same: Partnerships. The partners jointly may appoint agents, and generally each partner has implied authority to appoint agents to carry out any of the purposes for which the firm exists.2

§ 5. Same: Unincorporated associations. Since these organizations are not legal entities they can not as organizations appoint agents. They are not even partnerships, so that individual members can not appoint agents to bind the society; but the members acting as joint principals may jointly appoint an agent. Ordinarily such appointments are binding only on those members who expressly or impliedly assent to them and mere membership in the society is not sufficient to constitute an assent. So in a suit brought by the publishers of a college annual against the senior class of Tufts College it was proved that all the members of the class but one were present at a meeting, voted to elect one A their business manager, and authorized him to make arrangements for publishing the book. Those voting, or assenting by presence and silence to the vote, were held liable, but the absent member was held not liable for the acts of the agent. But a member may by previous assent be bound by the act of a majority, as for example where he signs a constitution which recognizes the power of a majority to bind the society by its action.

§ 6. Capacity to act as agent. As far as third parties are concerned, anyone may act as agent in representing a principal in dealings with them, except in cases of special sorts of agents, such as attorneys at law, where the law fixes certain requirements, and in the case of the usual provisions of the statute of

1 Bell's Gap Ry. Co. v. Christie, 79 Pa. 54. Tillier v. Whitehead, 1 Dallas 269.

• Willcox v. Arnold, 162 Mass. 577.

frauds, which prevents the agent who makes the memorandum required by the statute from being in fact the other principal.* As between the agent and the principal, the ordinary rules of contractual capacity apply. If the agent is an infant he may disaffirm his contract of employment, but if he chooses to abide by it the principal is bound on his side.

Section 2. Formation of the Relation.

§7. Essentials of the relation. The ordinary way in which the relation of agency is formed is by a contract between the principal and the agent, by which the agent agrees to act as the principal's representative, and the principal to compensate the agent for his services. But the agreement may fall short of being a contract. All that is essential is an appointment by the principal and an acting under it by the agent. In every agency there is mutual consent of the principal and his representative.

§ 8. Implied assent. It is not necessary that this consent be expressed in words. It may be implied from the circumstances of a case. Thus when a wife, whose husband's work frequently took him away from home for considerable periods, during which time she managed the household, borrowed money for use in a family matter, the circumstances were held to show, even in the absence of any express appointment, that she was her husband's agent."

§ 9. Gratuitous agency. It is not necessary that the agent receive any compensation for his services. In the case of Hill v. Morey, A, a neighbor of P's, merely out of friendliness offered to assist P in cutting down brush on the latter's woodlot. P permitted him to help, and A during the work carelessly cut trees on an adjacent lot belonging to T. A was held to be P's agent so

Farebrother v. Simmons, 5 B. & Ald. 33.

Meader v. Page, 39 Vt. 306.

Hill v. Morey, 26 Vt. 178.

For purposes of convenience the initials P, A, and T will be used instead of the real names of parties in the cases discussed. P will stand for the name of the party who is a principal, A for the name of his agent, and T for the name of the third party.

as to make P liable for the trespass. He had acted for P, P had permitted him to do so, and nothing further was needed to establish an agency. As between P and A, however, a mere gratuitous promise by A to act as P's agent could not be enforced by P.

§ 10. Ratification: Definition. It sometimes happens that an agent overstepping the authority he has been given, or one who has never been appointed an agent assuming to act in that capacity, does an act on a principal's behalf and in his name. For example, A, a farm hand, without authority to purchase land for P, his absent employer, learns of an exceptional opportunity to buy a field adjoining P's farm at a bargain, and ventures to buy it on his master's credit, T, its owner, thinking A has the requisite authority. A then writes to P of what he has done. As the act was without any authority on A's part, P is not obligated by it and may disavow it. But he has a right to assent to it and treat it as his own. If he chooses this alternative he is said to ratify A's unauthorized act. The contract made by A is binding on T, and P and A are placed in the same relation as if A had been previously authorized by P to act as he did. A does not receive any authority for future transactions, but merely as to a consummated act he is treated as if he had been an agent, and the results of ratification for all the parties are similar to those resulting from a regularly authorized transaction carried out through an agent.

§ 11. Ratification is irrevocable. An important corollary of the above doctrine is that a valid ratification once made can not be withdrawn by the principal.

§ 12. Act must be performed for existing principal. The principal who ratifies must have been a person in existence and capable of being ascertained at the time the agent made the contract. Frequently the promoters of a projected corporation do acts and make contracts in the name of the corporation prior to its organization. Such contracts can not later be ratified by the company.

§ 13. Act must be done on behalf of a principal disclosed to third party. The agent can not make a contract on the chance that someone not in his contemplation at the time may step in

and take it over. Such a person's attempt at ratification would be invalid. Moreover the agent can not make a contract in his own name and obligate himself to a third party, and then, without the consent of the third party, assign it to someone who will profess to ratify it as principal. He can not show that he had this principal in mind if he does not disclose at least the fact that he is acting as an agent.

§ 14. The principal must be competent to do the act. If the agent enters into a contract on behalf of a principal who could not make it, whether because of incapacity on his part, as in the case of infants where their contracts are held void, or because the contract is itself illegal and therefore void, the principal can not ratify it. A principal may, however, adopt the wrongful act of his quasi agent so as to make himself civilly responsible therefor. Thus if the agent, in the course of the transactions which the principal ratifies, commits a tort, the ratification will impose liability on the principal for the tort.s

§ 15. Intervening rights of strangers must be respected. Where, prior to the attempt at ratification, parties unconnected with the original transaction between the quasi agent and the third party have in good faith obtained rights in the subject matter of the transaction, the principal can no longer ratify. Thus where an unauthorized agent had contracted to sell to Ta ranch belonging to P, but before P learned of this he himself had transferred his title to another party, F, P could not then ratify A's contract and so escape from his own transactions with F.

§ 16. Intervening rights of third parties must be respected. In America generally, the third party with whom the quasi agent has contracted may withdraw if, on finding out that the agent had no authority, he communicates his intention to withdraw to the agent or the principal before the principal has ratified.1o

§17. Transaction cannot be ratified in part only. A principal cannot ratify as to what will benefit him, and repudiate as to the rest. He must take the burdens of his quasi agent's act

8 See § 17, below.

McDonald v. McCoy, 121 Cal. 55.

10 Dodge v. Hopkins, 14 Wis. 630; Andrews v. Etna Co., 92 N. Y. 596, contra.