sued. (a) Whoever deals with an agent constituted for a special purpose, deals at his peril, when the agent passes the precise limits of his power; though if he pursues the power as exhibited to the public, his principal is bound, even if private instructions had still further limited the special power. (b) 1 Thus, where a holder of a bill of exchange desired A. to get it discounted, but positively refused to indorse it, and A. procured it to be indorsed by B., it was held, that the original holder was not bound by the act of A., who was a special agent under a limited (a) Gordon v. Buchanan, 5 Yerger (Tenn.) 71. Tate v. Citizens Ins. Co. 13 Gray, 79. (b) The principle that pervades the distinction on this subject rests on sound and elevated morality. There must be no deception anywhere. The principal is bound by the acts of his agent, if he clothe him with powers calculated to induce innocent third persons to believe the agent had due authority to act in the given case. On the other hand, if there be no authority, nor the show or color of authority from the principal, to do an act beyond his powers, the party who deals with the agent in any such transaction must look to the agent only. In the case of Williams v. Walker, decided by the Asst. V. Ch. of New York, in January, 1845, 2 Sandf. Ch. 325, it was held, after a learned discussion of the authorities, that the agent or money scrivener for defendant, who had possession of her bond and mortgage, and received interest for her and part of the principal, was entitled to receive the same, and the payments were valid; but that after the bond was withdrawn from his possession, and delivered to the owner of it, payments of the principal afterwards to him were not good against the owner of the bond, as he was not her general agent, for the inference of agency was founded on the possession of the securities. 1 Dunning v. Roberts, 35 Barb. (N. Y.) 463. Bank of Genesee v. Patchin Bk. 18 N. Y. 316. Hatfield v. Reynolds, 34 Barb. (N. Y.) 612. Demerile v. Meserve, 39 N. Hamp. 521. Wilkinson v. Candlish, 5 Exch. 91. Towle v. Leavitt, 3 Foster, 360. Hunter v. Iron and Machine Co. 20 Barb. (N. Y.) 493. Young v. Wright, 4 Wis. 144. In Mechanics' Bank v. N. Y. & N. H. R. R. Co. 4 Duer, 480, 8 Kernan, 599, the plaintiff's demanded the transfer of certain shares of stock, the certificate of which in due form had been pledged to them. It was admitted, that the stock was a fraudulent issue made by the transfer-agent who had authority only to transfer stock, not to issue it. It was held by the Court of Appeals, reversing the judgment of the Superior Court, that the certificate was void and that the corporation was not responsible for the act of its agent because it was clearly beyond his authority. A distinction was drawn between acts within the apparent powers of the agent and acts apparently, but not really, within his powers. For the former, the principal is liable, as he is responsible for the appearance of his agent's powers; but not for the latter, as the agent alone, if any one, is responsible for the appearance of his acts. This distinction is illustrated by the cases of Grant v. Norway, 2 Eng. L. & Eq. 337; Hubberstey v. Ward, 18 Ibid. 551; Coleman v. Riches, 29 Ibid. 323, where it was held that the master of a ship, or a wharfinger, cannot bind their employers by receipts or bills of lading for goods, which they have not received, though such documents are apparently within their authority. Where a company transfers stock on its books by a forged power of attorney by one of two joint owners, it is held in England, that the company is liable to the other joint owner to the extent of his interest. Taylor v. Midland R. Co. 28 Beavan, 287. Sloman v. Bank of England, 14 Sim. 475. Davis v. Same, 2 Bing. 402. authority not to indorse the bill. (c) So, in the case of Batty v. Carswell (d) A. authorized B. to sign his name to a note for 250 dollars, payable in six months, and he signed one payable in sixty days; and the court held that A. was not liable, because the special authority was not strictly pursued. On the other hand, if the servant of a horse-dealer, and who sells for him, but with express instructions not to warrant as to soundness, does warrant, (c) Fenn v. Harrison, 3 Term Rep. 757. Unless the manner of doing a particular business be prescribed, even a special agent will be deemed clothed with the usual means of accomplishing it; and if he makes false representations on the subject, to induce purchasers to enter into the contract, the principal is affected by them, and responsible for the deceit. He who created the trust, and not the purchaser, ought to suffer. Hern v. Nichols, 1 Salk. 289. Sandford v. Handy, 23 Wendell, 260. Putnam v. Sullivan, 4 Mass. 45. North River Bank v. Aymar, 3 Hill (N. Y.) 262. The power of the agent to affect the contract in the name of his principal by an innocent misstatement, was elaborately discussed in Cornfoot v. Fowke, 6 Mees. & W. 358. A., by his agent, leased a house to B. which had a nuisance adjoining it, of which A. was apprised, but did not communicate the fact to his agent, who was ignorant of it, and said, in answer to the inquiry of the lessee, if there were any objections to the house, that there were not. There was no fraudulent intention on the part of the owner, for he was merely passive, and gave no directions to his agent, who acted in good faith. The court held that the contract was valid, as there was no fraud in either principal or agent, and the representation of the latter, collateral to the contract, could not affect the principal in a case free from fraud. Lord C. B. Abinger strongly dissented, on the ground that the knowledge of the principal was the knowledge of the agent, and I think he was sustained by strong principles of policy." (d) 2 Johns. 48. 2 The case of Cornfoot v. Fowke, 6 Mees. & W. 358, has been condemned in Fitzsimmons v. Joslin, 21 Vermont, 129, and the opinion of Lord Abinger sustained. It was there held, that the principal would be implicated to the fullest extent for that which he knew, if he took the benefit of the agent's act. If there was fraud in the transaction, whether of the principal or the agent, the contract was equally vitiated. In the recent case of National Exchange Co. v. Drew, 32 Eng. L. & Eq. 1, it was said by Lord Cranworth that the case of Cornfoot v. Fowke was decided solely on the pleadings, which alleged fraud, whereas there was clearly no fraud in either principal or agent; and Lord St. Leonards said that if the defendant had alleged misrepresentation merely, he must have prevailed. See further, on fraudulent representations by agents, Crump v. Mining Co. 7 Gratt. 352; Concord Bank v. Gregg, 14 N. Hamp. 331. 3 In a late case, the court declared the law to be, that "the power of binding by negotiable notes can be conferred only by direct authority of the party to be bound, or by the delegation of a power which cannot be otherwise executed." Paige v. Stone, 10 Metcalf, 160. To the same effect is Temple v. Pomeroy, 4 Gray, 128. See, also, Rossiter v. Rossiter, 8 Wendell, 494; Story on Agency, §§ 64-68. It may not be easy to reconcile a late case in Ohio, where an authority to employ an attorney was held to embrace the authority to give a promissory note in payment of his services, with the prevailing doctrine on this subject. Layet v. Gano, 17 Ohio, 466. A power to indorse, it seems, is not sufficient evidence from which to infer a power to receive notice of dishonor. Bank of Mobile v. King, 9 Ala. 279. the master is held to be bound; because the servant, having a general authority to sell, acted within the general scope of his authority, and the public cannot be supposed to be acquainted with the private conversations between the master and servant. (e) So, if a broker, whose business is to buy and sell goods in his own name, be intrusted by a merchant with the possession and apparent control of his goods, it is an implied authority to sell, and the principal will be concluded by the sale. There would be no safety in mercantile dealings if it were not so. If the principal sends his goods to a place where it is the ordinary business of the person to whom they are confided to sell, a power to sell is implied. (f) If one sends goods to an auction-room, it is not to be supposed that they were sent there merely for safe-keeping. The principal will be bound, and tho purchaser safe, by a sale under those circumstances. (g) * 622 *The presumption of an authority to sell in these cases, is inferred from the nature of the business of the agent; and it fails when the case will not warrant the presumption of his being a common agent for the sale of property of that description. If, therefore, a person intrusts his watch to a watchmaker to be repaired, the watchmaker is not exhibited to the world as owner, and credit is not given to him as such, merely because he has possession of the watch, and the owner would not be bound by his sale. (a) (e) Ashhurst J., in 3 Term Rep. 757. Bayley J., in 15 East, 45. If an agent be appointed to sell personal property, the law implies an authority to warrant the soundness the article in behalf of his principal. Hunter v. Jameson, 6 Ired. (N. C.) 252. C. J. Ruffin, contra. The declarations of an agent, acting within the scope of his authority, and made in the course of the transaction, are evidence as part of the res gesta. Franklin Bank v. Steam Navigation Co. 11 Gill. & Johns. 28. (f) Saltus v. Everett, 20 Wendell, 267. (g) Pickering v. Busk, 15 East, 38. An implied agency is never construed to extend beyond the obvious purposes, and the general usage, scope, and course of the business for which it is apparently created, yet the incidental powers of certain agencies, such for instance as those of a master of a ship and the cashier of a bank, are not easily reduced to precise limits. Good sense, sound discretion, and the necessary purposes of the trust, must guide the application of the implied power according to the circumstances of the Mr. Justice Story, in his Commentaries on Agency, §§ 114–123, has collected and digested, with his usual care, the leading cases in which the application for this implied authority in the case of cashiers and masters of vessels has been sustained. (a) Lord Ellenborough. 15 East, supra. case. But see Upton v. Suffolk County Mills, 11 Cush. 586. A factor or merchant, who buys or sells upon commission, or as an agent for others, for a certain allowance, may, under certain circumstances, sell on credit, without any special authority for that purpose, though, as a general rule, an agent for sale must sell for cash, unless he has express authority to sell on credit. (6) He may sell in the usual way, and, consequently, it is implied that he may sell on credit without incurring risk, provided it be the usage of the trade at the place, and he be not restrained by his instructions, and does not unreasonably extend the term of credit, and provided he uses due diligence to ascertain the solvency of the purchaser. (c) But the factor cannot sell on credit in a case in which it is not the usage, as the sale of stock, for instance, unless he be expressly authorized, because this would be to sell in an unusual manner. (d) Nor can he bind his principal to (b) An agent is a nomen generalissimum, and includes factors and brokers, who are only a special class of agents. A factor is distinguished from a broker by being intrusted by others with the possession and disposal, and apparent ownership of property, and he is generally the correspondent of a foreign house. A broker is employed merely in the negotiation of mercantile contracts. He is not trusted with the possession of goods, and does not act in his own name. 1 Domat. b. 1, tit. 17, sec. 1, art. 1. Story on Agency, 28, 33. Baring v. Corrie, 2 B. & Ald. 137, 143, 148. His business consists in negotiating exchanges, or in buying and selling stocks and goods; but in modern times, the term includes persons who act as agents to buy and sell, and who charter ships and effect policies of insurance. A stock-broker cannot sell upon credit, for that is not the usual course of his business. (c) Van Allen v. Vanderpool, C. 413. Cases Johns. 69. Goodenow v. Tyler, 7 Mass. 36. James v. M'Credie, 1 Bay (S. C.) 294. Emery v. Gerbier, 2 Wash. C. cited in Wharton's Dig. of Penn. tit. Agent and Factor, A 24. lips, 1 Gallison, 360. Willes C. J., in Scott v. Surman, Willes, 400. Houghton v. Matthews, 3 Bos. & Pull. 489. Leverick v. Meigs, 1 Cowen, 645. Greely v. Bartlett, 1 Greenl. 172. Forrestier v. Bordman, 1 Story C. C. 43. Story on Agency, §§ 110, 209. (d) Wiltshire v. Sims, 1 Campb. N. P. 258. State of Illinois v. Delafield, 8 Paige, 527. S. C. 26 Wendell, 192. In this last case it was held, that an agent for a state, authorized to borrow money on a sale of stock, cannot sell on credit without express authority, even though, by the usages of trade, it be the custom to sell such stocks on a credit, when they are the private property of individuals. It was further held, that if the agent for a state unauthorizedly sell its stock on credit, or below par, to a purchaser chargeable with notice of his want of authority, the state may repudiate the contract, and follow the property in the hands of such purchaser, and before it has been passed away to a bona fide holder without notice. 1 It seems, if a factor hurries a sale, and does not make it in the usual course, it will be void. Shaw v. Stone, 1 Cush. 248. * But an agent, employed by government to collect debts, may, in the exercise of a judicious discretion, give the debtor reasonable indulgence and time for payment. United States v. Hudson, 3 McLean C. C. 156. * 623 other modes of payment * than a payment in money at the time of sale, or on the usual credit. If a factor, at the expiration of the credit given on a sale, takes a note payable to himself at a future day, he makes the debt his own. (a) He cannot bind his principal to allow a set-off on the part of a purchaser. (b) If the factor, in a case duly authorized, sells on credit, and takes a negotiable note, payable to himself, the note is taken in trust for his principal, and subject to his order; and if the purchaser should become insolvent before the day of payment, the circumstance of the factor having taken the note in his own name, would not render him personally responsible to his principal. (c) Even if the factor should guaranty the sale, and undertake to pay if the purchaser failed, or should sell without disclosing his principal, the note taken by him as factor would still belong to the principal, and he might waive the guarantee and claim possession of the note, or give notice to the purchaser not to pay it to the factor. In such a case, if the factor should fail, the note would not pass to his assignees, to the prejudice of his principal; and if the assignees should receive payment from the vendee, they would be responsible to the principal; for the debt was not in law due to them, but to the principal, and did not pass under the assignment. (d) The general doctrine is, that where the principal can trace his property into the hands of an agent or factor, he may follow either the identical article or its proceeds, into the possession of the factor, or of his legal representatives or assignees, unless they should have paid away the same in (a) Hosmer v. Bebee, 14 Martin (Louis.) 368. So, if a factor sells on credit, and takes the notes of the vendee, and has them discounted for his own accommodation, he becomes responsible for the debt. Myers v. Entriken, 6 Watts & Serg. 44. The same results follow if he blend the moneys of the principal with his own, and releases the vendee. He is bound to keep his principal duly informed of matters material to his interest. Brown v. Arrott, Idem, 402. Story on Agency, § 196. (b) Guy v. Oakley, 13 Johns. 332. (c) Messier v. Amery, 1 Yeates, 540. Goodenow v. Tyler, 7 Mass. 36. Surman, Willes, 400. Scott v. (d) Godfrey v. Furzo, 3 P. Wms. 185. Ex parte Dumas, 1 Atk. 234. Tooke v. Hollingworth, 5 Term Rep. 226. Garratt v. Cullum, cited in Scott v. Surman, Willes, 405, and also by Chambre J., in 3 Bos. & Pull. 490. Kip v. Bank of N. Y. 10 Johns. 63. Thompson v. Perkins, 3 Mason, 232. 1 Rich v. Munroe, 14 Barb. (N. Y.) 602. |