NEW YORK BAR EXAMINATION

QUESTIONS AND ANSWERS

CHAPTER I

Agency

Q. A, an infant, is the owner of a certain piece of land. He authorizes B, an adult, to sell said land. B conveys the same to C. After A became of age, it is claimed that he ratified the conveyance. A sues in ejectment. Can he recover?

A. Judgment for A. The question here is, can an infant after arriving at age, ratify the act of his agent performed while he was an infant? This depends upon whether his appointment of an agent is a void or voidable act. If the former, it cannot be ratified; if the latter, it can be. In New York the doctrine is laid down, that the only act an infant is incapable of performing as to contracts is the appointment of an agent or attorney. Whether the doctrine is founded upon solid reasons may be doubted, but there is no doubt that it is law. Fonda v. Van Horn, 15 Wend. 631.

Q. A appoints B, an infant, as his agent to sell certain goods. B sells the goods to C. A afterwards seeks to disaffirm the sale, and brings action to recover back the goods on the ground that B's act was void, as an infant cannot be an agent. Judgment for whom and why?

A. Judgment for C. "It is by no means necessary for a person to be sui juris, or capable of acting in his or her own right, in order

to qualify himself or herself to act for others." Story's Agency,

secs. 6, 7, 9. It is the undoubted law of agency, that a person may do through another what he could do himself in reference to his own business and his own property, because the agent is but the principal acting in another name. This is axiomatic and fundamental. Qui facit per alium facit per se. Story's Agency, sec. 440.

Q. In an action by A against B, the wife of C, to recover for the repairs done to a building belonging to B, it appeared that C, the husband, went to A and stated that his wife wanted the repairs done to the said building. A accordingly made the repairs of the value of $300, which B, the wife, refused to pay, stating that she never authorized her husband to order the said repairs. Conceding the facts as stated, who should have judgment and why?

A. Judgment for B, the wife. There is no presumption that the husband is the agent of the wife from the mere fact of the marital relation. In order to create a liability against the wife, there must be some proof of an actual authority or the wife's ratification of any contract that he may make regarding her property. Aarons v. Klein, 29 Misc. 639.

Q. A sends B, his servant, with a horse of A's to C with instructions to sell the horse to C for $500 but in no case to take any money from C. B sells the horse to C for $400 and makes away with the money. C knows nothing of the instructions to B. What are the rights of A against C? State your reasons.

A. A has no rights. "Where private instructions are given to a general or special agent respecting the mode and manner of executing the agency, intended to be kept secret and not communicated to those with whom he may deal, such instructions are not to be regarded as limitations upon his authority, and notwithstanding he disregard them, his act, if otherwise within the scope of his agency, will be valid and bind his employer." Edwards v. Dooley, 120 N. Y. 540.

Q. A was the freight agent of the defendant corporation, and his duty and authority was to receive and forward freight over the

defendant's road, giving a bill of lading therefor. He issued bills of lading for goods to B, although no goods were shipped by B or delivered to the defendant. B transferred the bills of lading to C who had no notice. C sues the defendant. Can he recover?

A. Yes. "It is a settled doctrine of the law of agency in this state, that where the principal has clothed his agent with power to do an act upon the existence of some extrinsic fact necessarily and peculiarly within the knowledge of the agent, and of the existence of which the act of executing the power is itself a representation, a third person dealing with such agent in entire good faith pursuant to the apparent power, may rely upon the representation, and the principal is estopped from denying its truth to his prejudice." Finch, J., in Bank of Batavia v. R. R., 106 N. Y. 195.

Q. The president and directors of a warehouse company passed a resolution giving to the president of the company authority to sign receipts for the goods in the warehouse. The president issued a receipt to himself, claiming that he had goods in the warehouse when in fact he had none. The president then pledged such receipt to a bank and received money on it. The bank sues the company for the amount of the receipt. Judgment for whom and why?

A. Judgment for the defendant. A general power of authority given to an agent to do an act for his principal, does not extend to a case where it appears that the agent is himself the person on the other side. Where a power is intended to be given to the agent to act as such, in such a case, it must be expressed in language so plain that no other interpretation can rationally be given it. Bank of N. Y. v. Amer. D. & T. Co., 143 N. Y. 552.

(NOTE.) This case must be distinguished from the case of Hanover Nat. Bank v. Amer. D. & T. Co., 148 N. Y. 612, where it was held that: "If an officer of a warehouse company having express authority to issue negotiable warehouse certificates to others for goods deposited, but having no such authority to issue certificates to himself, does issue warehouse certificates in his own favor to the knowledge express or implied of the company's directors, their acquiescence in such acts, after having a reasonable time to put an end thereto, will permit the inference that the act of certifying in his own favor was within the officer's actual authority, and will estop the company from denying as to purchasers for value, that the power to so certify in fact so existed."

Q. In an action by A against B to recover the principal of a certain note, it appeared that B had given A a note for certain money loaned, that when the said note came due, A instructed C, his agent, to collect the interest and take a new note therefor. A did not indorse the note. C collected both the principal and interest, surrendered the note to B, gave the interest to A and made away with the principal. Conceding the above facts as stated, who should have judgment and why?

A. Judgment for A. The agent had express authority to collect the interest only. There was no apparent authority from the mere possession of the note unindorsed, to relieve B from the obligation to pay the note when he paid the same to C. Anyone who deals with an agent does so at his peril; he should, in order to protect himself, take precautions to ascertain the extent of the agent's authority, and one making payment of a note to an agent, must show that the agent had actual authority to receive payment, or that there was apparent authority from the acts in question. Doubleday v. Kress, 50 N. Y. 410.

Q. A loaned to B $5,000. B gave him (A) collateral as security some certificates of stock for $15,000, and at the same time also executed a power of attorney and transfer which was attached to the said certificates. B then sold the certificates of stock to C for the full amount. A tendered to C $5,000 and interest and demanded the return of the certificates of the stock, and upon the refusal of C to do so, A brought suit against him. Judgment for whom and why?

A. Judgment for C. The power of attorney and transfer executed by A gave B apparent authority to sell same. "The assignment and power were intended for these identical shares; they, as well as the certificates were voluntarily intrusted with apparent ownership and right of disposal, not merely by the negligence of the true owner, but by his voluntary act, and for the very purpose of attesting to the world their title and power in case the contingency should arise in which, according to the understanding between them and the plaintiff, they would be justified in resorting to the stock for their indemnity." McNeil v. Bank, 46 N. Y. 325.

(NOTE.) In Bank v. Livingston, 74 N. Y. 223, it was held that where one went to the bank and requested a loan on certain certificates of stock, stating that he wanted it for another, and which he himself held as collateral to secure a loan he himself made to the owner of the said certificates, and the bank requested him, before making the loan, that he should obtain a transfer and power of attorney, and accordingly he did get a transfer and power of attorney from the owner, the bank could not foreclose the lien as against the owner, on the ground that the bank had notice that the stock did not belong to the party to whom they made the loan, and that the transfer and power did not give him apparent authority to pledge the certificates for a loan. The transfer and power of attorney would have given him the apparent power to sell the stock if he had claimed to be the owner.

Q. A who is trustee of the X estate appoints B to act in his stead. B fraudulently misapplies $5,000 of the trust funds. A is sued for the amount. Is he liable?

A. A is absolutely liable. In general the power conferred upon an agent is based upon special confidence or trust which the principal has in the agent's personal ability or integrity, and such power, in the absence of authority express or implied, cannot be redelegated by the agent so as to bind the principal. The maxim of Delegatus non potest delegare applies in such a case. The authority of an agent to receive money is most clearly a personal trust and confidence which cannot be delegated. Bodine v. Ins. Co., 51 N. Y. 123.

(NOTE.) An agent cannot delegate any portion of his authority requiring the exercise of discretion or judgment, otherwise, however, as to powers or duties merely ministerial or mechanical. Bank v. Norton, 1 Hill, 501. Where an agent has authority to employ subagents, he will not be liable for their acts or omissions, unless in their appointment he is guilty of fraud or gross negligence, or improperly co-operates in the acts or omissions. But where the agent has no authority, either express or implied, to appoint a subagent, he will be responsible to his principal for the acts of a subagent appointed by him. Elwell v. Chamberlain, 31 N. Y. 611.

Q. The X Bank of New York receives a note payable in Chicago from A and forwards it to the Traders' Bank of Chicago for collection. The Traders' Bank negligently fails to collect. A sues the New York Bank. Can he recover?

A. Recovery allowed. The doctrine that a bank receiving a note, draft or bill of exchange in one state for collection in another